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Press Release

March 24, 2014

Contact: Matt Anderson, 212-709-1691; matthew.anderson@dfs.ny.gov

SUPERINTENDENT LAWSKY SENDS LETTER TO LEGISLATURE URGING PASSAGE OF LEGISLATION IN STATE BUDGET TO PROTECT CONSUMERS FROM SURPRISE, OUT-OF-NETWORK MEDICAL BILLS

Governor Cuomo's Executive Budget Proposal Holds Consumers Harmless from Surprise Out-of-Network Medical Bills

New Analysis Shows DFS Has Received At Least 10,000 Complaints on Insurance Reimbursements

Benjamin M. Lawsky, Superintendent of Financial Services, sent a letter today to members of the New York State Legislature urging passage of legislation in the state budget to protect consumers from surprise out-of-network medical bills. He also joined a broad coalition of health care and consumer advocates – including the AARP, American Cancer Society Action Network, Consumers Union, Health Care for All New York, New York Families for Autistic Children (NYFAC), and others – today at an event in Albany in support of Governor Cuomo's Executive Budget proposal to address that issue.

Superintendent Lawsky wrote in his letter to the Legislature: “Far too often we see New Yorkers who have insurance, do everything right, and try their best to stay in network, but still get hit with a surprise bill that can run into the tens of thousands of dollars. That type of unanticipated financial wallop can knock a family down for the count. Indeed, unexpected health care costs are one of the leading causes of personal bankruptcy in America.”

Governor Cuomo’s Executive Budget includes legislation that protects New Yorkers from surprise, out-of-network medical bills. It holds consumers harmless by taking them out of the process for determining out-of-network reimbursements for surprise bills – essentially treating consumers as if
they stayed in-network. Instead, it creates a fair and independent mediation process, which determines the appropriate reimbursement between doctors and insurers without involving the consumer. His proposal also improves disclosure requirements on insurers, doctors and hospitals, allowing consumers to more easily know which providers are out-of-network, how much those providers expect to charge, and how much the insurer expects to cover.

Superintendent Lawsky's letter to the Legislature also notes that a new DFS analysis shows that the Department and its predecessor agency have received at least 10,000 complaints about insurance reimbursements from New York consumers since 2008.

Superintendent Lawsky wrote: “It is important to remember that those are more than just numbers. Behind many of these complaints is a struggling family trying to take care of a loved one with health problems and make ends meet.”

“Surprise medical bills are an expensive and unfair burden for patients and their families,” said Chuck Bell, programs director for Consumers Union, publisher of Consumer Reports.  “Consumers around the state are fed up with the unnecessary risks and hassles of surprise bills for out-of-network care, and they are demanding change. Governor Cuomo’s proposed legislation provides a well-designed, comprehensive solution to a very difficult problem.  The governor’s plan systematically targets the root causes of surprise bills, and creates a comprehensive framework to dramatically reduce their incidence and severity.”

“Patients with cancer are under financial stress in addition to the serious health problems they face.  The interests of patients must come first and they should be held harmless if they didn't have a chance to know a procedure was not covered by their insurance,” said Michael Burgess, Director of Government Relations at the American Cancer Society Cancer Action Network. “The legislature must end this outrageous situation which threatens bankruptcy for some patients “

“New Yorkers deserve a system in which patients get accurate, up-to-date information about the network status of their doctors, and about what they will have to pay for medical care,” says Claudia Knafo, a concert pianist who received a $97,000 surprise bill for neck surgery in 2012.  “We deserve
to be safe from huge financial liability, when we do end up getting surprised by out-of-network bills.  I understand the governor’s proposed bill would provide all these protections that I did not have, and I passionately support it.”
 

“Too often, New York patients are billed for services outside of their network that they didn’t choose or know they would be receiving, particularly in emergency situations.  For older patients, the unexpected bills can break their delicate kitchen table economies,” said Beth Finkel, State Director for AARP in New York State. “AARP commends the Governor for his leadership in tackling this crucial health care issue and Superintendent for Financial  Services Ben Lawsky for moving to protect New Yorkers from surprise medical bills that could break the bank. This legislation is much needed in New York.  We thank the Governor for proposing it and we strongly believe the Legislature should support it and make it a part of a final state Budget."

"Each year that goes by without passage of this legislation, thousands more people are hit with devastating medical bills," said Heidi Siegfried, Project Director of New Yorkers for Accessible Health Coverage. "We call on our lawmakers to to protect consumers by passing this legislation with this budget."

The text of Superintendent Lawsky's letter to the Legislature is included below. To view a PDF copy of the letter, please visit, link.

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FROM:           Benjamin M. Lawsky, Superintendent of Financial Services

TO:                 Members of the Legislature

SUBJECT:     Protecting Consumers from Surprise Out of Network Billing



Surprise, out-of-network medical bills are one of the most common consumer complaints we receive at the Department of Financial Services (DFS).


A new DFS analysis shows that the total number of consumer complaints we have received on insurance reimbursements has hit an unwelcome milestone. In total, DFS and its predecessor agency have now received at least 10,000 complaints on that issue from New York consumers.

It is important to remember that those are more than just numbers. Behind many of these complaints is a struggling family trying to take care of a loved one with health problems and make ends meet.

That’s why I also write today to respectfully urge you to pass legislation in the state budget to protect New Yorkers from surprise, out-of-network medical bills.

Governor Cuomo’s Executive Budget includes legislation to address that issue – holding consumers harmless by taking them out of the process for determining out-of-network reimbursements for surprise bills, essentially treating consumers as if they stayed in-network. Instead, it creates a fair and independent mediation process, which determines the appropriate reimbursement between doctors and insurers without involving the consumer.

His proposal also improves disclosure requirements on insurers, doctors and hospitals, allowing consumers to more easily know which providers are out-of-network, how much those providers expect to charge, and how much the insurer expects to cover.

Governor Cuomo’s proposal would mean fewer New York families will go to the mailbox one day and find the unwelcome surprise of a medical bill they have to pay for tens of thousands of dollars when they did everything they could to stay in network.

Over the past several days and nights, the Cuomo Administration, the Assembly, and the Senate have had good faith discussions on this issue. I thank you for those efforts. There are differences between the various proposals under consideration, but I believe we can push this critical issue over the finish line. Moreover, we are all dedicated to a shared goal of better safeguarding the health and finances of New Yorkers. We are committed to working with you in good faith to protect consumers from being blindsided surprise, out-of-network medical bills and becoming trapped in a resulting financial nightmare.

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Background on Surprise Out of Network Bills and the Governor’s Proposal

We are improving the quality and affordability of health insurance coverage by successfully implementing Affordable Care Act reforms and launching the State’s new online health insurance marketplace, known as the New York State of Health. However, the matter of unexpected medical bills is a persistent problem for consumers.

DFS has documented this problem, noting that unexpected and, sometimes, excessive medical bills from out-of-network providers contribute to consumer medical debt, which continues to be a significant cause of personal bankruptcy. Surprise medical bills occur when a consumer does everything possible to use hospitals and doctors that are in the consumer’s insurance plan, but nonetheless receives a bill from a specialist or other medical provider by whom the consumer did not know he or she would be treated, and who was outside his or her plan’s network of providers.

Worse, a relatively small but significant number of out-of-network specialists appear to take advantage in emergency care situations in particular, where the consumer has little choice or ability to “shop” for an appropriate provider.  Too frequently, out-of-network specialists charge excessive fees -- many times larger than what private or public insurers typically allow. In one example, a New Yorker who severed his finger in an accident went to participating hospital and ultimately received an $83,000 bill from a plastic surgeon who reattached the finger but – unbeknownst to the patient -- was outside the insured’s network of providers.

The problem of surprise bills is not limited to emergency situations. They also can occur when a consumer schedules health care services in advance and an in-network provider, such as an anesthesiologist, is not available. In these instances, consumers are not told that the provider is out-of-network, not informed about how much the provider will charge, or not advised how much the insurer will cover. This lack of disclosure not only ill serves the consumer, but also undermines the efficiency of the health insurance market because consumers cannot effectively comparison shop for benefits or services.

Even consumers with insurance plans that include out-of-network benefits are not immune from problems. When shopping for coverage, it is nearly impossible for consumers to compare out-of-network benefits effectively because insurers use highly complex benchmarks to determine out-of-network reimbursement methods.

In other cases, consumers are forced to go to an out-of-network provider simply because an in-network provider is not reasonably available. If the health plan denies a patient the right to go out-of-network, then the patient has little recourse and may be exposed to significant medical bills.

We must protect New Yorkers from these surprise out-of-network medical bills. DFS recognizes that there are competing issues in crafting solutions to these problems. New rules aimed at addressing these issues should acknowledge the right of providers to remain out-of-network, and should avoid placing undue burdens that deter specialists from providing emergency care or other needed services aimed at delivering care to patients. Governor Cuomo has proposed legislation that balances these interests in the following manner:

Protection from Surprise Medical Bills

New Yorkers should be protected from liability for surprise medical bills when obtaining emergency services or non-emergency services from a participating hospital or ambulatory surgical center. Most times, consumers do not have a choice when it comes to obtaining emergency health care services. In non-emergency situations, patients should have access to a provider within their health plan’s network. Patients also should know in advance when they will be treated by an out-of-network provider. If patients are not informed in advance, they should be held harmless for the added costs associated with the provision of out-of-network services.

Once the consumer is removed from the equation, payment disputes between out-of-network providers and health plans will be resolved efficiently and fairly. Establishing an independent dispute resolution system to determine fair payment for out-of-network emergency bills and surprise medical bills
will accomplish these objectives. An independent review system will balance the rights of medical providers, hospitals, and insurers while helping ensure consumers are not exposed to large bills that they could not have reasonably anticipated in advance of the provision of services.

Disclosure

Consumers need the ability to compare apples to apples when shopping for insurance plans, and must have the ability to discern upfront how much their health care service will cost before receiving the service in question. Consumers have a right to know, before undertaking a procedure or service, the amount that providers and/or hospitals will charge for health care services, along with the amount that their insurer will reimburse for the services.

Network Adequacy

Enhanced network adequacy protections will enable consumers to access the providers they need without going out-of-network.  But in the event that an insurer does not have an appropriate provider in-network, the consumer should have the right to go out-of-network without incurring any additional
expense.

Make Out-of-Network Coverage Available

When an insurer offers out-of-network coverage for all services, and not just when an appropriate participating provider is unavailable, consumers should have the option to obtain a meaningful and understandable benefit based on the usual and customary cost of health care services.  Consumers
complain that benefits based on set fee schedules (such as the Medicare rate) pay only a fraction of what out-of-network providers actually charge. The usual and customary rate more closely tracks the actual charges of out-of-network providers.  Requiring insurers who offer out-of-network benefits to make available at least one option based on the usual and customary rate will improve appreciably the ability of consumers in our state to access out-of-network providers without incurring large, unexpected bills.

Change is Needed Now

As New York moves forward with health care reforms, we should take this opportunity to make these changes to protect consumers from surprise out-of-network bills and improve our health care system.  Working families, employers, and businesses located throughout the Empire State deserve no
less.

[FOOTNOTE ONE: This analysis is for the period since 2008, when complaint data for the Department and its predecessor agency’s current complaint system is available.]

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