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, 2004, representing the position of the New York State Insurance Department.

Re: Prompt Pay Law

Question Presented:

Are payments to a participating health care provider from a Health Maintenance Organization with a Certificate of Authority from the Commissioner of Health for services rendered to a subscriber of another HMO subject to the requirements of the Prompt Pay Law?

Conclusion:

Under the circumstance as described, the New York Prompt Pay Law, New York Insurance Law § 3224-a (McKinney 2000), would not be applicable.

Facts:

A health care provider has contracted with an HMO that has a Certificate of Authority from the Commissioner of Health in accordance with New York Insurance Law § 4403(1) (McKinney 2002) to provide services to the HMO’s subscribers. The HMO in question (HMO 1) has an affiliation agreement with another HMO (HMO 2), which is licensed in another jurisdiction.

The contract between the provider and HMO 1 provides, in part:

Reciprocity with other Plans. [HMO 1] participates in reciprocity programs with other HMOs affiliated with the national association to cover their members who may seek treatment outside their service area. [Health Care Provider] agrees to accept and treat members of those other Plans who participate in the reciprocity programs, bill in accordance with the reciprocity program for covered services, accept [HMO 1]’s rate of reimbursement as payment in full, and collect from the member any copayments, coinsurance, or permitted deductibles applicable under the member’s health benefits plan.

The agreement between the provider and HMO 1 also provides that the health care provider will be paid by HMO1 on a fee for service basis. There is no contract between the provider and HMO 2 and the provider is not aware of the provisions of any reciprocity agreement between HMO 1 and any other HMO.

The provider has rendered services to a subscriber of HMO 2 and has been informed by HMO 1 that payment for such services by HMO 1 must await receipt by HMO 1 of payment to it by HMO 2.

Analysis:

It is presumed that HMO2 operates in another state and does not have a Certificate of Authority from the Commissioner of Health in accordance with New York Public Health Law § 4403(1) (McKinney 2002)

New York Insurance Law § 3224-a (McKinney 2000) provides, in pertinent part:

In the processing of all health care claims submitted under contracts or agreements issued or entered into pursuant to . . . 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-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-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.

. . . .

(d) For the purposes of this section: . . . (2) ‘health care provider’ shall mean an entity licensed or certified pursuant to article twenty-eight, thirty-six or forty of the public health law, a facility licensed pursuant to article nineteen, twenty-three or thirty-one of the mental hygiene law, a health care professional licensed, registered or certified pursuant to title eight of the education law, a dispenser or provider of pharmaceutical products, services or durable medical equipment, or a representative designated by such entity or person.

The introductory language of New York Insurance Law § 3224-a, "pursuant to article 44 of the public health law," clearly limits its requirements to insurers and HMOs licensed in New York. Since HMO2 is not licensed in New York, New York Insurance Law § 3224-a is not applicable.

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