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 28, 2002, representing the position of the New York State Insurance Department.

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

Question Presented:

Where a physician has filed its claims electronically (via the Internet) directly with an insurer or HMO, when has the insurer or HMO received the claim for purposes of N.Y. Ins. Law § 3224-a (McKinney 2000)?

Conclusion:

An insurer or HMO is in "receipt of a claim" under N.Y. Ins. Law § 3224-a (McKinney 2000) when the insurer or HMO’s computer system has received the electronic transmission sent by the physician.

Facts:

A physician previously inquired about the electronic filing of claims, which the Department responded to. The Department, when it responded, believed that an electronic clearinghouse had been involved in the electronic claims filing. However, the physician thereafter stated that it electronically transmitted its claims directly to the insurer or HMO, and did not transmit its claims through an electronic clearinghouse.

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 transmits an electronic claim filing (via the Internet) directly to an insurer or HMO, and the transmission is successful (that is, it has been received by the computer system of the 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.

For further information you may contact Senior Attorney Sally Geisel at the New York City Office.