NY State Senate Bill 2021-S2640

Senate Bill S2640

2021-2022 Legislative Session

Authorizes healthcare 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 Senate Committee Health 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

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 05, 2022	referred to health
Jan 22, 2021	referred to health

2021-S2640 (ACTIVE) - Details

Current Committee:: Senate 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:: 2015-2016: S4736
2017-2018: S2247
2019-2020: S5875

2021-S2640 (ACTIVE) - Summary

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

2021-S2640 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S2640

SPONSOR: GALLIVAN
 
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 tech-
nology 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 hospi-

tals 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-par-
ty 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 tech-
nology services based on a percentage of fees billed or collected, a
flat fee, or any other arrangement, provided that the licensed profes-
sionals (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 assist-
ants (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, typi-
cally 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 statuto-
rily 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 efficien-
cy 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
out source 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, profes-
sional billing and health information technology vendors whose customary
pricing practices are not consistent with the unique New York limita-
tions. 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:

2019-20: S.5875/A.97 Advanced to 3,-,1 Reading/Referred to Health

2017-2018: S.2247 - Passed Senate/referred to health

2016: S.4736 - Passed Senate, died in Assembly

 
FISCAL IMPLICATIONS:

None.

 
EFFECTIVE DATE:
The act shall take effect immediately.

2021-S2640 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   2640
 
                        2021-2022 Regular Sessions
 
                             I N  S E N A T E
 
                             January 22, 2021
                                ___________
 
 Introduced  by Sen. GALLIVAN -- 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:
   § 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.

                                                            LBD04171-01-1

 S. 2640                             2
 
 TO  OR  COMPENSATING  FOR  THE  REFERRAL  OF PATIENTS TO THE FACILITY OR
 LICENSED PROFESSIONAL.
   § 2. Section 6509-a of the education law, as amended by chapter 555 of
 the laws of 1993, is amended to read as follows:
   § 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. 2640                             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.
   §  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.
   § 4. This act shall take effect immediately.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.