New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on January 14, 2002, representing the position of the New York State Insurance Department.

Re: N.Y. Ins. Law § 3224-a(b) "Receipt of Claim"

Questions Presented:

1) Is an insurer or HMO in "receipt of a claim" under N.Y. Ins. Law § 3224-a (McKinney 2000) when a physician’s claim is filed electronically through an electronic clearinghouse employed by the physician that rejects, and does not forward to the insurer or HMO, such claim?

2) Has a physician’s claim been received by an insurer or HMO under N.Y. Ins. Law § 3224-a (McKinney 2000) when the claim is filed electronically through an electronic clearinghouse employed by the physician that successfully forwards such claim to the intended insurer or HMO?

Conclusion:

1) No. A physician’s claim that has been filed electronically through an electronic clearinghouse employed by the physician that rejects such claim, and does not forward such claim to the intended insurer or HMO, does not constitute receipt of the claim by the insurer or HMO under N.Y. Ins. Law § 3224-a (McKinney 2000).

2) Yes. A physician’s claim that has been filed electronically through an electronic clearinghouse employed by the physician, which successfully forwards such claim to the intended insurer or HMO, constitutes receipt of the claim by the insurer or HMO under N.Y. Ins. Law § 3224-a (McKinney 2000).

Facts:

A health care provider made an inquiry regarding the use of an electronic clearinghouse for claims filing purposes. The health care provider electronically files claims in "batches" through an electronic clearinghouse that reviews its claim filing for accuracy and completeness. When the claim filing does not meet the clearinghouse’s standards, the clearinghouse rejects the filing, and does not forward the filing to the intended insurer or HMO. When the clearinghouse considers the filing "clean" (acceptable for further processing), it forwards the filing to the intended insurer or HMO. The health care provider pays the clearinghouse for this service.

Analysis:

N.Y. Ins. Law § 3224-a (McKinney 2000) states in relevant part:

In the processing of all health care claims submitted under contracts or agreements issued or entered into pursuant to articles thirty-two, forty-two and forty-three of this chapter and article forty-four of the public health law and all bills for health care services rendered by health care providers pursuant to such contracts or agreements, any insurer or organization or corporation licensed or certified pursuant to article forty-three of this chapter or article forty-four of the public health law shall adhere to the following standards:

(a) Except in a case where the obligation of an insurer or an organization or corporation licensed or certified pursuant to article forty-three of this chapter or article forty-four of the public health law to pay a claim submitted by a policyholder or person covered under such policy or make a payment to a health care provider is not reasonably clear, or when there is a reasonable basis supported by specific information available for review by the superintendent that such claim or bill for health care services rendered was submitted fraudulently, such insurer or organization or corporation shall pay the claim to a policyholder or covered person or make a payment to a health care provider within forty-five days of receipt of a claim or bill for services rendered.

(b) In a case where the obligation of an insurer or an organization or corporation licensed or certified pursuant to article forty-three of this chapter or article forty-four of the public health law to pay a claim or make a payment for health care services rendered is not reasonably clear due to a good faith dispute regarding the eligibility of a person for coverage, the liability of another insurer or corporation or organization for all or part of the claim, the amount of the claim, the benefits covered under a contract or agreement, or the manner in which services were accessed or provided, an insurer or organization or corporation shall pay any undisputed portion of the claim in accordance with this subsection and notify the policyholder, covered person or health care provider in writing within thirty calendar days of the receipt of the claim:

(1) that it is not obligated to pay the claim or make the medical payment, stating the specific reasons why it is not liable; or

(2) to request all additional information needed to determine liability to pay the claim or make the health care payment.

Upon receipt of the information requested in paragraph two of this subsection or an appeal of a claim or bill for health care services denied pursuant to paragraph one of this subsection, an insurer or organization or corporation licensed pursuant to article forty-three of this chapter or article forty-four of the public health law shall comply with subsection (a) of this section.

This statute is commonly known as the "prompt pay law". It was enacted to provide protection to both patients and health care providers in connection with the timely payment of claims by insurers and health maintenance organizations. Insurers and HMO’s are ultimately responsible for compliance with this law despite any contractual delegation of the claims payment process. See Insurance Department Circular Letter No. 12 (2000), and New York Health Plan Assoc., Inc. v. Levin, 187 Misc.2d 527, 723 N.Y. S. 2d 819 (Albany Co. 2001).

When a health care provider electronically transmits its claim filing to an electronic clearinghouse, the role of the clearinghouse is to review the claim filing for accuracy and completeness to ensure that the filing does not contain clerical errors or omissions. The clearinghouse is employed by the health care provider to perform this service for it. Thus, at this juncture, the electronic clearinghouse acts on behalf of the health care provider in reviewing the claim filing, and does not act as the "agent" or "representative" of the insurer or HMO. Hence, the insurer or HMO is not responsible for the actions of the clearinghouse at this point. When an electronic clearinghouse rejects a claim filing, the clearinghouse does not forward the claim filing to the intended insurer or HMO. Thus, receipt of a claim filing by an electronic clearinghouse that rejects the claim filing (and does not forward the claim filing to the insurer or HMO) does not constitute receipt of the claim filing by the insurer or HMO.

However, when an electronic clearinghouse successfully forwards a claim filing to an insurer or HMO, such claim filing constitutes receipt by the insurer or HMO under N.Y. Ins. Law § 3224-a (McKinney 2000). Thereafter, the insurer or HMO is required under N.Y. Ins. Law § 3224-a to either pay the claim within 45 days, or deny the claim, or request additional information, within 30 days from receipt of the claim.

The above opinion is informal and not binding on any court. For further information you may contact Senior Attorney Sally Geisel at the New York City Office.