NY State Senate Bill 2015-S4736

Senate Bill S4736

2015-2016 Legislative Session

Authorizes health care facilities and professions to pay for the fair market value of practice management, billing or health information technology services

download bill text pdf

Archive: Last Bill Status - In Assembly Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 09, 2016	referred to health delivered to assembly passed senate
Jun 01, 2016	advanced to third reading
May 25, 2016	2nd report cal.
May 24, 2016	1st report cal.1139
Jan 06, 2016	referred to health
Apr 13, 2015	referred to health

Votes

- Jun 9, 2016 - Floor Vote
  S4736
  
  60
  
  Aye
  
  1
  
  Nay
  
  0
  
  Absent
  
  2
  
  Excused
  
  0
  
  Abstained
  - - Floor Vote: Jun 9, 2016
      
      aye (60)
      
      Addabbo Jr.
      
      Akshar
      
      Amedore
      
      Avella
      
      Bonacic
      
      Boyle
      
      Breslin
      
      Carlucci
      
      Comrie
      
      Croci
      
      DeFrancisco
      
      Dilan
      
      Espaillat
      
      Farley
      
      Felder
      
      Flanagan
      
      Funke
      
      Gallivan
      
      Gianaris
      
      Golden
      
      Griffo
      
      Hamilton
      
      Hannon
      
      Hassell-Thompson
      
      Hoylman-Sigal
      
      Kaminsky
      
      Kennedy
      
      Klein
      
      Krueger
      
      LaValle
      
      Lanza
      
      Larkin
      
      Latimer
      
      Little
      
      Marcellino
      
      Marchione
      
      Martins
      
      Montgomery
      
      Murphy
      
      Nozzolio
      
      O'Mara
      
      Ortt
      
      Parker
      
      Peralta
      
      Persaud
      
      Ranzenhofer
      
      Ritchie
      
      Rivera
      
      Robach
      
      Sanders Jr.
      
      Savino
      
      Serino
      
      Serrano
      
      Seward
      
      Squadron
      
      Stavisky
      
      Stewart-Cousins
      
      Valesky
      
      Venditto
      
      Young
      
      nay (1)
      
      Perkins
      
      excused (2)
      
      Diaz
      
      Panepinto
  May 24, 2016 - Health Committee Vote
  S4736
  
  16
  
  Aye
  
  0
  
  Nay
  
  0
  
  Aye with Reservations
  
  0
  
  Absent
  
  1
  
  Excused
  
  0
  
  Abstained
  - - Health Committee Vote: May 24, 2016
      
      aye (16)
      
      Felder
      
      Golden
      
      Hannon
      
      Hassell-Thompson
      
      Hoylman-Sigal
      
      Kaminsky
      
      Larkin
      
      Little
      
      Martins
      
      Montgomery
      
      Murphy
      
      Persaud
      
      Rivera
      
      Stavisky
      
      Valesky
      
      Young
      
      excused (1)
      
      Seward

2015-S4736 (ACTIVE) - Details

See Assembly Version of this Bill:: A10385
Current Committee:: Assembly Health
Law Section:: Public Health Law
Laws Affected:: Amd §2811, Pub Health L; amd §§6509-a & 6530, Ed L
Versions Introduced in Other Legislative Sessions:: 2017-2018: S2247, A193
2019-2020: S5875, A97
2021-2022: S2640

2015-S4736 (ACTIVE) - Summary

Authorizes healthcare facilities and professionals to pay for the fair market value of practice management, billing or health information technology services.

2015-S4736 (ACTIVE) - Sponsor Memo

                                BILL NUMBER:S4736

TITLE OF BILL:

An act to amend the public health and education law, in relation to
the provision of practice management, billing and health information
technology services for healthcare facilities and professionals

PURPOSE:

To allow hospitals and licensed professionals to pay a fee to vendors
of practice management, billing or health information technology
services based on a percentage of fees billed or collected, a flat
fee, or any other arrangement, provided that the hospitals or licensed
professionals (a) are responsible for the contents of claims
submitted, (b) receive the third-party payments in their own name, and
(3) do not receive referrals from the vendor.

SUMMARY OF PROVISIONS:

Section 1 amends section 2811 of the Public Health Law to allow
hospitals and licensed professionals to pay a fee to vendors of
practice management, billing or health information technology services
based on a percentage of fees billed or collected, a flat fee, or any
other arrangement, provided that the facilities or professionals (1)
are responsible for the contents of claims submitted, (2) receive

third-party payments directly in their own name, and (3) do not
receive referrals from the payee.

Section 2 amends section 6509-A of the Education Law to provide that
it is not professional misconduct for licensed professionals to pay a
fee to vendors of practice management, billing or health information
technology services based on a percentage of fees billed or collected,
a flat fee, or any other arrangement, provided that the licensed
professionals (1) are responsible for the contents of claims
submitted, (2) receive third-party payments directly in their own
name, and (3) do not receive referrals from the payee.

Section 3 amends section 6530 of the Education Law to provide that it
is not professional misconduct for a physician, physician assistant or
specialist assistant to pay a fee to vendors of practice management,
billing or health information technology services based on a
percentage of fees billed or collected, a flat fee, or any other
arrangement, provided that the physicians, physician assistants or
specialist assistants (1) are responsible for the contents of claims
submitted, (2) receive third-party payments directly in their own
name, and (3) do not receive referrals from the payee.

Section 4 provides that this act would take effect immediately.

JUSTIFICATION:

The bill would permit healthcare facilities and professionals in New
York to contract for various practice management, billing and health
information services on a percentage basis, as is already permitted in
every other state, as long as certain conditions are satisfied.


Laws in many states, including New York, prohibit "fee-splitting."
They are aimed primarily at situations where a healthcare
professional, typically in order to generate patient referrals from
other licensed or unlicensed persons, splits part of the professional
fee earned from treating the referred patient with the source of the
referral. This practice is potentially problematic because it can
result in increasing the cost of healthcare, may lead to referring
patients based on the economic return on the referral, rather than
clinical appropriateness, and can generate excessive utilization
through the substitution of a financial motive for sound professional
judgment.

New York is one of approximately two-thirds of the states that
statutorily prohibit fee-splitting. Uniquely, however, the New York
statute (and its consistent interpretation by regulators in New York)
does not merely prohibit referral-related fee-splitting: the New York
law also precludes any number of legitimate business arrangements
commonly employed in the health care sector today that actually
promote efficiency and quality by ensuring that the incentives of
providers and vendors are properly aligned. New York's law prohibits
accepted and customary business relationships that permit health care
providers to efficiently outsource practice management and billing
functions to those with appropriate expertise, and to compensate such
vendors based on a percentage of reimbursement collection, which most
accurately reflects the fair market value of the services rendered.

As a result, New York healthcare professionals, either knowingly or
unknowingly, run the risk of being charged with professional
misconduct by entering into agreements with national practice
management, professional billing and health information technology
vendors whose customary pricing practices are not consistent with the
unique New York limitations. Alternatively, to do business in New
York, some companies and professionals have opted to devise
alternative arrangements for paying for billing services that are not
based on the volume of billings, may not appropriately calculate the
fair market value of the services provided and may actually have the
effect of increasing health care costs in the long term.

This bill would allow such arrangements to be structured on a
percentage basis, provided that the parties meet other requirements
designed to eliminate the risks that the fee-splitting prohibition was
intended to address. Specifically, vendors in percentage-based
relationships may not be responsible for the content of claims, so
that there is neither an incentive nor the opportunity to increase the
amount of such claims beyond what is appropriate. In addition,
providers must receive third-party payments directly in their own name
and would pay the vendor the appropriate fee, rather than having the
vendors actually receive the payments directly themselves. Finally, no
referral may flow from the vendor to the provider, thereby eliminating
the potential of payment for referral.

With these requirements, New York's fee-splitting law would remain
among the most stringent. Twenty states have no fee-splitting
prohibitions at all. Twenty-four states have adopted fee-splitting
prohibitions that are narrowly designed to combat the abuses related
to financially-driven referral practices. These statutes specifically
target fees that are shared in return for referrals; about half of the


statutes (11) only apply to fees shared between a referring physician
and the physician to whom the referral was made, while the balance
(13) apply to any person who might bring a patient to a particular
physician in return for compensation from the physicians.  None of the
prohibitions in these states prohibit a physician from paying a
percentage-based fee to a practice management, billing or health
information technology company. Of the five remaining states, three
have broad prohibitions against fee-splitting that nonetheless have
been interpreted as not prohibiting percentage-based arrangements. The
last two, California and Illinois, explicitly permit percentage-based
arrangements, similar to what has been proposed in this bill.

LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

Immediate.

2015-S4736 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  4736

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                             April 13, 2015
                               ___________

Introduced  by  Sen.  HANNON -- read twice and ordered printed, and when
  printed to be committed to the Committee on Health

AN ACT to amend the public health and education law, in relation to  the
  provision of practice management, billing and health information tech-
  nology services for healthcare facilities and professionals

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Section 2811 of the public health law, as added by  chapter
776  of the laws of 1971 and as renumbered by chapter 649 of the laws of
1975, is amended to read as follows:
  S 2811. Discounts and splitting fees with medical  referral  services;
prohibited.   No hospital or facility delivering health care shall grant
or receive a discount to or from any medical referral service or in  any
manner  split  fees  with a medical referral service; PROVIDED, HOWEVER,
THAT NOTHING CONTAINED IN THIS CHAPTER SHALL PROHIBIT SUCH FACILITIES OR
LICENSED PROFESSIONALS FROM PAYING A FAIR MARKET VALUE FEE TO ANY PERSON
OR ENTITY WHOSE PURPOSE IS TO PERFORM PRACTICE  MANAGEMENT,  BILLING  OR
HEALTH  INFORMATION  TECHNOLOGY SERVICES BASED UPON A PERCENTAGE OF FEES
BILLED OR COLLECTED, A FLAT FEE, OR ANY OTHER ARRANGEMENT THAT  DIRECTLY
OR INDIRECTLY DIVIDES FEES, FOR SUCH PURPOSES, PROVIDED THAT:
  1.  THE  PERSON  OR  ENTITY  PROVIDING PRACTICE MANAGEMENT, BILLING OR
HEALTH INFORMATION TECHNOLOGY SERVICES IS NOT RESPONSIBLE FOR THE AMOUNT
OF FEES CHARGED AND COLLECTED FOR THE SERVICES RENDERED BY SUCH FACILITY
OR LICENSED PROFESSIONAL;
  2. ALL CHARGES COLLECTED ARE PAID DIRECTLY TO THE FACILITY OR  TO  THE
LICENSED  PROFESSIONAL  OR ARE DEPOSITED DIRECTLY INTO AN ACCOUNT IN THE
NAME OF AND UNDER THE SOLE CONTROL OF THE FACILITY OR  LICENSED  PROFES-
SIONAL; AND
  3.  THE  PERSON  OR  ENTITY  PROVIDING PRACTICE MANAGEMENT, BILLING OR
HEALTH INFORMATION TECHNOLOGY SERVICES DOES NOT REFER  PATIENTS  TO  THE
FACILITY OR LICENSED PROFESSIONAL AND THAT PAYMENTS MADE ARE NOT RELATED

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10439-01-5

S. 4736                             2

TO  OR  COMPENSATING  FOR  THE  REFERRAL  OF PATIENTS TO THE FACILITY OR
LICENSED PROFESSIONAL.
  S 2. Section 6509-a of the education law, as amended by chapter 555 of
the laws of 1993, is amended to read as follows:
  S 6509-a. Additional  definition  of  professional misconduct; limited
application.  Notwithstanding any inconsistent provision of this article
or of any other provision of law to the contrary, the license or  regis-
tration  of  a  person subject to the provisions of articles one hundred
thirty-two,  one  hundred  thirty-three,  one  hundred  thirty-six,  one
hundred  thirty-seven,  one  hundred thirty-nine, one hundred forty-one,
one hundred forty-three, one hundred forty-four, one hundred  fifty-six,
one hundred fifty-nine and one hundred sixty-four of this chapter may be
revoked,  suspended  or  annulled  or  such person may be subject to any
other penalty provided in section  sixty-five  hundred  eleven  of  this
article  in accordance with the provisions and procedure of this article
for the following:
  That any person subject to the above enumerated articles, has directly
or indirectly requested,  received  or  participated  in  the  division,
transference,  assignment,  rebate, splitting or refunding of a fee for,
or has directly requested, received or profited by means of a credit  or
other  valuable  consideration  as a commission, discount or gratuity in
connection with the furnishing of professional care, or service, includ-
ing x-ray examination and treatment, or for or in  connection  with  the
sale, rental, supplying or furnishing of clinical laboratory services or
supplies,  x-ray  laboratory  services  or  supplies, inhalation therapy
service or equipment, ambulance service, hospital or  medical  supplies,
physiotherapy  or  other  therapeutic  service  or equipment, artificial
limbs, teeth or eyes, orthopedic or  surgical  appliances  or  supplies,
optical  appliances,  supplies or equipment, devices for aid of hearing,
drugs, medication or medical supplies or any other  goods,  services  or
supplies  prescribed for medical diagnosis, care or treatment under this
chapter, except payment, not to exceed thirty-three  and  one-third  per
centum  of  any  fee received for x-ray examination, diagnosis or treat-
ment, to any hospital furnishing facilities for such examination,  diag-
nosis  or  treatment.   Nothing contained in this section shall prohibit
such persons from practicing as partners, in groups or as a professional
corporation or as a university faculty  practice  corporation  nor  from
pooling  fees  and  moneys received, either by the partnerships, profes-
sional corporations, university faculty practice corporations or  groups
by  the  individual members thereof, for professional services furnished
by any individual professional member, or employee of such  partnership,
corporation or group, nor shall the professionals constituting the part-
nerships, corporations or groups be prohibited from sharing, dividing or
apportioning the fees and moneys received by them or by the partnership,
corporation  or  group  in accordance with a partnership or other agree-
ment; provided that no such practice as  partners,  corporations  or  in
groups  or  pooling  of  fees  or moneys received or shared, division or
apportionment of fees shall be permitted with respect to care and treat-
ment under the workers' compensation law except as expressly  authorized
by  the  workers'  compensation law.   Nothing contained in this chapter
shall prohibit a medical or dental expense indemnity corporation  pursu-
ant  to  its contract with the subscriber from prorationing a medical or
dental expense indemnity allowance among two or  more  professionals  in
proportion  to  the  services  rendered by each such professional at the
request of the subscriber, provided that prior to payment  thereof  such
professionals  shall submit both to the medical or dental expense indem-

S. 4736                             3

nity corporation and to the subscriber statements itemizing the services
rendered by each such professional and the charges  therefor.    NOTHING
CONTAINED  IN THIS CHAPTER SHALL PROHIBIT SUCH PROFESSIONALS FROM PAYING
A  FAIR  MARKET  VALUE  FEE  TO ANY PERSON OR ENTITY WHOSE PURPOSE IS TO
PERFORM PRACTICE MANAGEMENT, BILLING OR  HEALTH  INFORMATION  TECHNOLOGY
SERVICES  BASED  UPON  A  PERCENTAGE OF FEES BILLED OR COLLECTED, A FLAT
FEE, OR ANY OTHER ARRANGEMENT THAT DIRECTLY OR INDIRECTLY DIVIDES  FEES,
FOR SUCH PURPOSES, PROVIDED THAT:
  (1)  THE  PERSON  OR  ENTITY PROVIDING PRACTICE MANAGEMENT, BILLING OR
HEALTH INFORMATION TECHNOLOGY SERVICES IS NOT RESPONSIBLE FOR THE AMOUNT
OF FEES CHARGED AND COLLECTED FOR THE SERVICES RENDERED BY SUCH  PROFES-
SIONAL;
  (2) ALL CHARGES COLLECTED ARE PAID DIRECTLY TO THE PROFESSIONAL OR ARE
DEPOSITED  DIRECTLY  INTO  AN  ACCOUNT IN THE NAME OF AND UNDER THE SOLE
CONTROL OF THE PROFESSIONAL; AND
  (3) THE PERSON OR ENTITY PROVIDING  PRACTICE  MANAGEMENT,  BILLING  OR
HEALTH  INFORMATION  TECHNOLOGY  SERVICES DOES NOT REFER PATIENTS TO THE
PROFESSIONAL AND THAT PAYMENTS MADE ARE NOT RELATED TO  OR  COMPENSATING
FOR THE REFERRAL OF PATIENTS TO THE PROFESSIONAL.
  S  3. Subdivision 19 of section 6530 of the education law, as added by
chapter 606 of the laws of 1991, is amended to read as follows:
  19. Permitting any person  to  share  in  the  fees  for  professional
services,  other  than: a partner, employee, associate in a professional
firm or corporation, professional subcontractor or consultant authorized
to practice medicine, or a legally authorized trainee  practicing  under
the  supervision  of  a  licensee.  This  prohibition  shall include any
arrangement or agreement whereby the  amount  received  in  payment  for
furnishing  space, facilities, equipment or personnel services used by a
licensee constitutes a percentage of, or is  otherwise  dependent  upon,
the  income  or  receipts  of the licensee from such practice, except as
otherwise provided by law with respect to a facility  licensed  pursuant
to  article twenty-eight of the public health law or article thirteen of
the mental hygiene law.  NOTHING CONTAINED IN THIS CHAPTER SHALL PROHIB-
IT SUCH PROFESSIONALS FROM PAYING A FAIR MARKET VALUE FEE TO ANY  PERSON
OR  ENTITY  WHOSE  PURPOSE IS TO PERFORM PRACTICE MANAGEMENT, BILLING OR
HEALTH INFORMATION TECHNOLOGY SERVICES BASED UPON A PERCENTAGE  OF  FEES
BILLED  OR COLLECTED, A FLAT FEE, OR ANY OTHER ARRANGEMENT THAT DIRECTLY
OR INDIRECTLY DIVIDES FEES, FOR SUCH PURPOSES, PROVIDED THAT:
  (A) THE PERSON OR ENTITY PROVIDING  PRACTICE  MANAGEMENT,  BILLING  OR
HEALTH INFORMATION TECHNOLOGY SERVICES IS NOT RESPONSIBLE FOR THE AMOUNT
OF  FEES CHARGED AND COLLECTED FOR THE SERVICES RENDERED BY SUCH PROFES-
SIONAL;
  (B) ALL CHARGES COLLECTED ARE PAID DIRECTLY TO THE PROFESSIONAL OR ARE
DEPOSITED DIRECTLY INTO AN ACCOUNT IN THE NAME OF  AND  UNDER  THE  SOLE
CONTROL OF THE PROFESSIONAL; AND
  (C)  THE  PERSON  OR  ENTITY PROVIDING PRACTICE MANAGEMENT, BILLING OR
HEALTH INFORMATION TECHNOLOGY SERVICES DOES NOT REFER  PATIENTS  TO  THE
PROFESSIONAL  AND  THAT PAYMENTS MADE ARE NOT RELATED TO OR COMPENSATING
FOR THE REFERRAL OF PATIENTS TO THE PROFESSIONAL.
  S 4. This act shall take effect immediately.

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