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 November 3, 2003 representing the position of the New York State Insurance Department.

Re: Explanations of Benefits; Release to Insured’s Supplier

Issue:

Is an insurer obligated to furnish a supplier of drugs or durable medical equipment, which is a non-participating health care provider, with a copy of an Explanation of Benefits form (EOB) that it issues?

Conclusion:

There is no requirement in the New York Insurance Law) McKinney 2000 and 2003 Supplement) that an insurer provide a non-participating health care provider with an EOB on a claim.

Facts:

The inquirer’s firm furnishes enteral formulae to individuals. Since the formulae are expensive, if the customer is insured, the inquirer’s firm does not require advance payment and will accept as full payment whatever the insurance company reimburses, when such reimbursement is received by the insured. The inquirer has requested that a healthcare provider ("the Provider"), for which the inquirer is a non-participating supplier, furnish the inquirer with the date and amount of payment it has made to an insured. While other units of the Provider will inform the inquirer’s firm as to the details of EOBs, one unit of the Provider will only inform the inquirer’s firm whether it has issued an EOB, but will not furnish the inquirer’s firm with any details concerning its handling of the claim. Accordingly, the firm has no way of knowing whether the Provider has paid the claim, and if it has, the amount of the payment.

Analysis:

The Provider operates two insurers in New York: ABC HealthCare Insurance Company of New York, an insurer licensed pursuant to New York Insurance Law Article 11 (McKinney 2000 and 2003 Supplement), and ABC Healthcare of New York, a health maintenance organization with a certificate of authority from the Commissioner of Health pursuant to New York Public Health Law Article 44 (McKinney 2002 and 2003 Supplement). Based upon the information furnished, it appears that only the insurer is involved.

If a policy or contract provides coverage for prescription drugs, New York Insurance Law § 3221(k)(11) (McKinney 2000 and 2003 Supplement), governing group policies of health insurance issued by commercial insurers, requires that it must cover enteral formulae prescribed as medically necessary by a physician. Since prescription drug coverage is not a mandated benefit in New York, not all of the Provider’s New York insureds are covered for enteral formulae.

The unit of the Provider that is inquired about here is dedicated to handling claims arising from a contract between New York State and participating localities. Pursuant to that contract, insureds may secure enteral formulae through a program called ABC Advantage, which is operated under contract to the Provider. Under the contract with New York State, the Provider does not cover enteral formulae not purchased from recognized suppliers.

The contract with New York State provides that if the insured uses a participating provider through ABC Advantage, he or she will incur no co-insurance amount. If a non-participating provider is utilized, the Provider will reimburse the insured individual 50% of the amount that is paid to a participating provider. The Department understands that, pursuant to separate contracts between the Provider and its ABC Advantage contractor and the contractor and the actual suppliers of the enteral formulae, reimbursement amounts may be considered proprietary to the Provider and the contractor.

New York Insurance Law § 3234 (McKinney 2000) provides:

Every insurer, including health maintenance organizations operating under article forty-four of the public health law . . . is required to provide the insured or subscriber with an explanation of benefits form in response to the filing of any claim under a policy or certificate providing coverage for hospital or medical expenses, including policies and certificates providing nursing home expense or home care expense benefits.

. . .

(d) This section shall not apply to medicare supplemental insurance policies or certificates or limited benefits health insurance policies or certificates designed primarily to supplement medicare benefits.

New York Insurance Law § 3235 (McKinney 2000) imposes comparable requirements with respect to Medicare Supplement policies and contracts.

While there is no statutory requirement that EOBs be furnished to non-participating health care providers, many insurers will, as a courtesy, furnish a copy of them to such providers. However, the Provider may consider its contractual agreement with its providers proprietary.

For further information you may contact Principal Attorney Alan Rachlin at the New York City office.