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

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on October 21, 2003, representing the position of the New York State Insurance Department.

RE: Health Insurance, Necessity of Pre-authorization for Treatment

Question Presented:

May an insurer require pre-authorization before it will cover pre-natal care for a normal pregnancy?

Conclusion:

Since there is no statutory or regulatory provision governing this issue, the insurance policy or contract would control. In addition, if the health care provider were a participating provider for the insurer, the contract between the insurer and the health care provider might also contain relevant provisions.

Facts:

An obstetrician who is a participating physician with a Health Maintenance Organization holding a Certificate of Authority from the Commissioner of Health pursuant to New York Public Health Law Article 44 (McKinney 2002 and 2003 Supplement) has a patient covered by the HMO. The patient has also purchased a separate Point of Service policy issued by an affiliated domestic accident & health insurer licensed pursuant to New York Insurance Law § 1102 (McKinney 2000). Both the HMO and commercial insurer are corporate subsidiaries of the same holding company.

In the past, the physician has provided pre-natal care to women with similar coverage from the HMO/insurer combination and has not requested pre-authorization for the care. Now, contrary to its previous practice, the HMO has informed the physician that it will not make payment for the pre-natal care because pre-authorization was not secured.

Analysis:

An HMO is defined, New York Public Health Law § 4401 (McKinney 2002):

1. ‘Health maintenance organization’ . . . means any person, natural or corporate, or any groups of such persons who enter into an arrangement, agreement or plan or any combination of arrangements or plans which propose to provide or offer, or which do provide or offer, a comprehensive health services plan.

2. ‘Comprehensive health services plan’ . . . means a plan through which each member of an enrolled population is entitled to receive comprehensive health services in consideration for a basic advance or periodic charge. A plan may include the provision of health care services which are covered by the organization at the election of enrollees by health care providers not participating in the plan pursuant to a contract, employment or other association to the extent authorized in section forty-four hundred six of this article; provided, however, that in no event shall an enrollee elect to have a non-participating provider serve as the enrollee's primary care practitioner responsible for supervising and coordinating the care of the enrollee.

3. ‘Comprehensive health services’ means all those health services which an enrolled population might require in order to be maintained in good health, and shall include, but shall not be limited to, physician services (including consultant and referral services) . . . . Such term may be further defined by agreement with enrolled populations providing additional benefits necessary, desirable or appropriate to meet their health care needs.

Most HMOs, by contract, require that a subscriber appoint a Primary Care Physician (PCP) to act as a "gatekeeper" for specialty services. However, New York Public Health Law § 4406-b(1) (McKinney 2002) has a special rule for pregnancy:

The health maintenance organization shall not limit a female enrollee's direct access to primary and preventive obstetric and gynecologic services from a qualified provider of such services of her choice from within the plan to less than two examinations annually for such services or to any care related to a pregnancy. In addition, the health maintenance organization shall not limit direct access to primary and preventive obstetric and gynecologic services required as a result of such annual examinations or as a result of an acute gynecologic condition, provided that such qualified provider discusses such services and treatment plan with the enrollee's primary care practitioner in accordance with the requirements of the health maintenance organization

Since many HMO subscribers wished the opportunity to occasionally seek treatment from a non-participating health care provider New York Public Health Law § 4406(2)(a) (McKinney 2002) was enacted to provide:

Upon approval of the commissioner, an organization may implement an out-of-plan benefits system that allows enrollees to use providers not participating in the plan pursuant to a contract, employment or other association. . . .

In addition, since some subscribers desired the opportunity to utilize out of network providers beyond the limitations allowed pursuant to New York Public Health Law § 4406(2), several HMO’s, including the one in question formed separate insurers under the New York Insurance Law to write Point of Service (POS) policies.

New York Insurance Law § 4801(c) (McKinney 2000) defines the term "managed care health insurance contract":

a ‘managed care health insurance contract’ . . . shall mean a contract which requires that all medical or other health care services covered under the contract, other than emergency care services, be provided by, or pursuant to a referral from, a designated health care provider chosen by the insured (i.e. a primary care gatekeeper), and that services provided pursuant to such a referral be rendered by a health care provider participating in the insurer's managed care provider network. . . . [And] that services provided pursuant to such a referral be rendered by a health care provider participating in the insurer's managed care provider network, in order for the insured to be entitled to the maximum reimbursement under the contract

While HMO subscriber contracts are, in accordance with New York Public Health Law § 4406(1), subject to approval by the Insurance Department, contracts between HMOs and their participating health care providers are regulated by the Department of Health. Both such contracts may, in accordance with New York Public Health Law § 4406-b(1), require coordination between the obstetrician and the PCP.

In addition, since some HMOs may contract with different health care providers, depending upon the contract form in question, the patient in question may be covered under a contract for which the obstetrician is not a participating health care provider.

The inquiry did not furnish sufficient information for this Department to opine as to whether the HMO/insurer is acting properly. Accordingly, it is suggested that the obstetrician review both his contract with the HMO and the patient’s contracts with the HMO/POS Insurer. If a review of the contracts does not provide an answer to this situation, a request for additional assistance may be made to:

Ms. Vallencia Lloyd
Director
Bureau of Managed Care Certification
Department of Health
Tower Building
Empire State Plaza
Albany, NY 12237

For further information about this opinion you may contact Principal Attorney Alan Rachlin at the New York City Office.