The Office of General Counsel issued the following opinion on June 13, 2005 representing the position of the New York Insurance Department.
Re: Health Insurance, Coverage of Chiropractic Services
1. What agency oversees disputes between participating health care providers and managed care organizations?
2. May an insurer contract with a third party to administer claims arising out of a particular modality?
3. Would there be a violation of the Privacy Rule of the Health Insurance Portability and Accountability Act (HIPAA), Public Law No. 104-191 (1996) in transmission of personal health information to such a contractor?
4. May such a contractor require that a health care provider join its network and thus provide services for other insurers that have contracted to utilize its network?
5. May a managed care organization or its administrator refuse to admit a health care provider in its network?
6. May a managed care organization pay a participating health care provider on the basis of a single Common Procedural Terminology (CPT) Code, rather than utilize a number of CPT Codes, as is done by the participating chiropractor?
7. May a managed care organization impose a withhold on payments to participating health care providers?
8. Would a managed care organization be in violation of 1997 N.Y. Laws 426 if it reimburses participating health care providers at a level less than that utilized by the Center for Medicare and Medicaid Services (CMS) of the United States Department of Health and Human Services?
1. Contracts between participating health care providers and Health Maintenance Organizations are under the jurisdiction and subject to the review of the New York State Department of Health. Contracts between participating health care providers and other insurers are, for the most part, not under the jurisdiction of any New York State agency. Contracts between participating health care providers and self-funded plans that are subject to the Employee Retirement Income Security Act (ERISA), 29 U.S.C.A. § 1001 et seq. (West 1999), are not under the jurisdiction of any New York State agency.
2. An insurer, including an HMO, may so contract.
3. The transmission of personal health information to such a contractor would not be a violation of either the HIPAA Privacy Rule or its New York State counterpart, N.Y. Comp. Codes R. & Regs. tit. 11, Part 420 (Regulation 169) (2002).
4. There is nothing in the New York Insurance Law (McKinney 2000 and 2005 Supplement) or the regulations promulgated thereunder that would prohibit such a practice.
5. There is no statute in New York that would require a managed care organization to accept all health care providers.
6. The use of CPT codes by managed care organizations is within the organizations discretion, provided that they are used within the restrictions imposed by the holder of the copyright and that the benefits required under all relevant insurance policies and contracts are provided.
7. Such withholds are permissible.
8. There is no methodology or fee schedule mandated by statute or regulation for calculation of reimbursement by health insurers or Health Maintenance Organizations of chiropractors.
First, the inquirer is a chiropractor in New York and has contracted with a number of managed care organizations. In previous correspondence with the Insurance Departments Consumer Services Bureau concerning complaints against managed care organizations, the inquirer was informed that the Insurance Department had no jurisdiction over relations between participating health care providers and managed care organizations. Accordingly, the inquirer asked who has such jurisdiction.
Second, the inquirer indicates that a number of managed care organizations have contracted with third parties to administer their chiropractic benefits. The inquirer believes that such contracting is discrimination against chiropractors. In addition, the inquirer questions whether the transmittal of personal health information of his patients would constitute a violation of the HIPAA Privacy Rule.
In addition, he believes that because such third parties may have a financial interest in minimizing benefits, there is an inherent conflict of interest that redounds to the detriment of insured patients.
Third, the inquirer is a participating chiropractor with ABC which operates two insurers, (1) Insurer A, an indemnity insurer licensed in accordance with New York Insurance Law Article 42 (McKinney 2000 and 2005 Supplement) and (2) Insurer B, an HMO with a Certificate of Authority from the Commissioner of Health pursuant to New York Public Health Law Article 44 (McKinney 2002 and 2005 Supplement). Recently ABC has notified participating chiropractors that it has contracted with DEF. DEF has two subsidiaries operating in New York, (1) JKL, which functions for ABCs indemnity insurer, and (2) MNO, which functions for ABC's HMO.
JKL has amended its contract with chiropractors to require that, as a condition of contracting with JKL, the chiropractor must also contract with MNO. MNO has informed chiropractors that, as a condition to being in its network, they will be obligated to function for other insurers that have contracted with it. The inquirer believes that this constitutes an infringement of his freedom to contract.
Fourth, while with respect to limiting the number of chiropractors the inquirer has specified only one third party administrator, PQR, which administers the chiropractic benefit for New York State employees, the inquirer indicates that the "problem" has arisen with respect to other insurers and third party administrators. The inquirer indicates that he has been refused entrance into the chiropractic network maintained by PQR and other third parties. He further indicates that he has been informed by PQR that it limits the number of chiropractors in its network so that each participating chiropractor has a substantial number of potential patients to make up for the smaller amounts that chiropractors are reimbursed. The inquirer concludes that this "discrimination" is not practiced against other health care professionals, especially physicians.
Fifth, the inquirer indicates that many insurers, either directly or through an administrator, will bundle all chiropractic services under one CPT code, 98940, although there are other codes that could be applied to a chiropractors services. In addition, you indicate that one insurer, STU, denies some services with the notation "Provider not allowed to bill for service", which the inquirer believes implies that his provision of that service is beyond his authorized scope of practice. The inquirer further asserts that the use of this notation hinders his patients when they submit claims to secondary insurers.
Sixth, the inquirer complains that many insurers, either directly or through third parties, impose "risk withholds", which require the inquirer to share in the financial risk with the insurer. In addition, the inquirer complains that one insurer, STU, interferes with his ability to collect an otherwise applicable co-pay. In support of that contention, the inquirer has furnished an Explanation of Benefits (EOB) for a patient who has a $25 co-pay. The EOB indicates that it will allow $27.38 for a procedure where the inquirer charged $40, places $3.56 in a "Risk Pool", leaving $23.82, which CDPHP allocates to "Co-Pay/Deductible". The inquirer fears that, since the EOB is available to the patient, the patient will believe the inquirer is acting improperly in collecting the full $25 co-pay.
Finally, the inquirer has furnished an EOB issued by a contractor for the CMS under the Medicare program and an EOB issued by a private insurer. For each procedure, the reimbursement under Medicare is larger than the reimbursement provided by the private insurer.
There are three main types of managed care organizations, indemnity insurers, HMOs, and self-funded employee welfare benefit plans. Each type of organization may opt to administer its benefits directly or contract all or part of such administration to a third party.
Indemnity insurers are regulated solely by the Insurance Department. The regulation of HMOs is bifurcated between the Department of Health, which regulates quality of care, and the Insurance Department, which regulates subscriber contracts and much of the HMOs finances. In accordance with ERISA, 29 U.S.C.A. § 1144(b)(1)(B) (West 1999), self-funded employee welfare benefit plans are not to be deemed insurers under state law and may not be regulated as such.
New York Insurance Law § 4801(c) (McKinney 2000) defines a managed care contract:
a managed care health insurance contract or managed care product 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. . . .
Section 1 of 1997 N.Y. Laws 426 sets forth the Legislative intent:
The legislature recognizes that multiple health professions are trained and licensed to diagnose and treat the same or similar conditions through the use of modalities, therapies, services and philosophies that vary from profession to profession. It is the specific intent of this legislature to assure that health insurance policies, plans and contracts that provide coverage for the diagnosis and treatment of conditions, complaints, ailments, disorders or injuries by any health care profession, that may be diagnosed and treated by a doctor of chiropractic, must provide access to and equivalent coverage for the diagnosis and treatment of those conditions, complaints, ailments, disorders or injuries by a duly licensed doctor of chiropractic, within the lawful scope of chiropractic practice even if different terminology, philosophy, services, treatments or modalities are used by the various health professions; and such equivalent coverage shall not be abridged by any regulation heretofore promulgated or to be promulgated.
Among the substantive changes made by 1997 N.Y. Laws 426 was the enactment of New York Insurance Law §§ 3216(i)(21) (McKinney 2000 and 2005 Supplement), regulating individual policies of commercial health insurers, and 3221(k)(11) (McKinney 2000 and 2004 Supplement), regulating the group policies of commercial insurers,:
(1) Every contract issued by a health service corporation . . . which is a managed care product . . . that includes coverage for physician services in a physician's office, and every managed care product that provides major medical or similar comprehensive-type coverage, shall include coverage for chiropractic care, as defined in section six thousand five hundred fifty-one of the education law, provided by a doctor of chiropractic licensed pursuant to article one hundred thirty-two of the education law, in connection with the detection or correction by manual or mechanical means of structural imbalance, distortion or subluxation in the human body for the purpose of removing nerve interference, and the effects thereof, where such interference is the result of or related to distortion, misalignment or subluxation of or in the vertebral column. However, chiropractic care and services may be subject to reasonable deductible, co-payment and co-insurance amounts, reasonable fee or benefit limits, and reasonable utilization review, provided that any such amounts, limits and review: (a) shall not function to direct treatment in a manner discriminative against chiropractic care, and (b) individually and collectively shall be no more restrictive than those applicable under the same policy to care or services provided by other health professionals in the diagnosis, treatment and management of the same or similar conditions, injuries, complaints, disorders or ailments, even if differing nomenclature is used to describe the condition, injury, complaint, disorder or ailment. . . .
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(5) The coverage required by this subsection shall not be abridged by any regulation promulgated by the superintendent.
New York Insurance Law § 4303(y) (McKinney 2000 and 2005 Supplement), regulating subscriber contracts of not-for-profit heath insurers and all HMOs, has an identical requirement.
Jurisdiction Over Participating Provider Contracts
New York Public Health Law § 4403 (McKinney 2002 and 2005 Supplement) establishes the general requirements for issuance of Certificate of Authority by the Commissioner of Health. More specific requirements have been established by regulation by the Commissioner of Health. Among the requirements is N.Y. Comp. Codes R. & Regs. tit. 10, § 98-1.5(b)(6)(i) & (ii) (2001), which requires that contracts with health care providers be submitted to it for review. There are specific requirements concerning contracts between HMOs and participating health care providers.
Accordingly, questions and complaints by participating health care providers concerning their relationship with an HMO should be addressed to the Department of Health.
While contracts between other insurers and participating health care providers are not generally subject to review by the Insurance Department, there are specific requirements for managed care contracts. New York Insurance Law § 4803 (McKinney 2000) provides:
(a) An insurer which offers a managed care product shall, upon request, make available and disclose to health care professionals written application procedures and minimum qualification requirements which a health care professional must meet in order to be considered by the insurer for participation in the in-network benefits portion of the insurer's network for the managed care product. . . .
(b) (1) An insurer shall not terminate a contract with a health care professional for participation in the in-network benefits portion of the insurer's network for a managed care product unless the insurer provides to the health care professional a written explanation of the reasons for the proposed contract termination and an opportunity for a review or hearing as hereinafter provided. This section shall not apply in cases involving imminent harm to patient care, a determination of fraud, or a final disciplinary action by a state licensing board or other governmental agency that impairs the health care professional's ability to practice. . . .
(c) Either party to a contract for participation in the in-network benefits portion of an insurers network for a managed care product may exercise a right of non-renewal at the expiration of the contract period set forth therein or, for a contract without a specific expiration date, on each January first occurring after the contract has been in effect for at least one year, upon sixty days notice to the other party; provided, however, that any non-renewal shall not constitute a termination for purposes of this section.
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(e) No insurer shall terminate or refuse to renew a contract for participation in the in-network benefits portion of an insurer's network for a managed care product solely because the health care professional has (1) advocated on behalf of an insured; (2) has filed a complaint against the insurer; (3) has appealed a decision of the insurer; (4) provided information or filed a report pursuant to section forty-four hundred six-c of the public health law; or (5) requested a hearing or review pursuant to this section.
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It appears, based upon a review of the one provider contract the inquirer has furnished, that of DEF, that the contract is in compliance with New York Insurance Law § 4803(b). If a participating health care provider believes that a managed care insurer, other than an HMO, either directly or through a third party, is in violation of New York Insurance Law §4803, a complaint may be made to:
Consumer Service Bureau
New York State Insurance Department
One Commerce Plaza
Albany, NY 12257.
As indicated above, no state agency has jurisdiction over relations between participating health care providers and self-funded employee welfare benefit plans.
Third Party Administrators
In the inquirer's letters he has conflated Third Party Administrators (TPA) and Independent Practice Associations (IPA). A TPA is an outside entity retained by an insurer or self-funded employee welfare benefit plan to administer all or part of the insurers or employee welfare benefit plans benefits. An IPA is an entity that puts together a network of health care providers and makes that network available to insurers or self-funded employee welfare benefit plans. While the same entity may perform both activities, the functions are separate.
The Insurance Department does not regulate TPA, qua TPA, although if a TPA performs a function that requires a license, such as adjusting, it must be appropriately licensed. As to IPAs, a regulation of the Health Department, N.Y. Comp. Codes. R. & Regs. tit. 10, § 98-1.5(b)(6)(iv) provides with respect to IPAs:
(a) the certificate of incorporation of the IPA contains powers and purposes limited to arranging by contract for the delivery or provision of health services by individuals, entities and facilities licensed or certified to practice medicine and other health professions, and, as appropriate, ancillary medical services and equipment, by which arrangements such health care providers and suppliers will provide their services in accordance with and for such compensation as may be established by a contract between the corporation and one or more health maintenance organizations which have been granted a certificate of authority pursuant to the provisions of article 44 of the Public Health Law of the State of New York, as amended;
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(c) any general powers and purposes contained in the certificate, as authorized by section 202 of either the Business Corporation Law or the Not-for-Profit Corporation Law, are by express provision in the certificate to be exercised only as powers and purposes incidental to accomplishing the primary IPA powers and purposes of the corporation; and
(d) the IPA's certificate of incorporation has been reviewed by the Education and Insurance Departments and the Commissioner of Health, has been filed with the Secretary of State and, when presented for filing, had annexed thereto the waiver, approval or consent of the Education and Insurance Departments and the commissioner;
In addition to HMOs, IPAs may also function for indemnity insurers which issue a managed care product and for self-funded employee welfare benefit plans. Whether such functioning is permissible would have to be made by the Health Department. The assertion of jurisdiction by the Insurance Department over IPAs is limited.
Contrary to the inquirer's assertions, TPAs and IPAs function for insurers, including HMOs, with respect to a number of benefits. While the inquirer is correct that insurers may treat chiropractors differently than other health care professionals, such distinctions are not a function of the use of TPAs or IPAs. Therefore, the use of TPAs and/or IPAs is not in violation of 1997 N.Y. Laws 426, which was enacted for the benefit of insurance policyholders and subscribers, not health care providers.
Sharing of Financial Risk
The sharing of financial risk by a health care provider or IPA would fall within the New York Insurance Law § 1101 (McKinney 2000 and 2005 Supplement) definition of doing an insurance business. However, the Insurance Department has considered the requirement of New York Public Health Law § 4403(1)(c) that HMOs share financial risk as an implied exemption from the New York Insurance Law § 1102 (McKinney 2000 and 2005 Supplement) requirement that those doing an insurance business be licensed by the Insurance Department.
In order to regulate the sharing of financial risk, the Insurance Department has promulgated N. Y. Comp. Codes R. & Regs. tit. 11, Part 101 (2002) (Regulation 164). N.Y. Comp. Codes R. & Regs. Tit. 11, § 101.4(b) (2002) provides:
Notwithstanding any agreement to the contrary, the insurer retains full financial risk on a prospective basis for the provision of health care services pursuant to any applicable policy or contract. At all times, the insurer must be able to demonstrate to the satisfaction of the superintendent that the insurer can fulfill its non-transferable obligation to provide coverage for health care services to subscribers in any event, including the failure, for any reason, of a financial risk transfer agreement with a provider. In considering whether an insurer has satisfied its obligation to retain full financial risk, on a prospective basis, the superintendent shall consider the financial condition of the insurer and the health care provider . . .
Even if, because of the amounts involved, an IPA does not have to meet the financial requirements of Regulation 164, N.Y. Comp. Codes R. & Regs. tit. 11, § 101.10 (2002), it is the position of the Insurance Department that an insurer, including an HMO, is responsible for the provision of benefits in accordance with the insurance policy or subscriber contract. While TPAs do not share financial risk, the same rule, that there may be delegation of authority but not responsibility, applies and policyholders and subscribers are entitled to all benefits set forth in their policies and contracts.
Accordingly, insureds are entitled to all the rights conferred by New York Insurance Law Article 49 (McKinney 2000) and New York Public Health Law Article 49 with respect to an insurers medical necessity decisions.
Both insurers, including HMOS, and heath care providers are, in accordance with 45 C.F.R. § 160.103 (2002), considered covered entities under the HIPAA Privacy Rule. The HIPAA Privacy Rule, 45 C.F.R. § 160.103 also defines a business associate:
[B]usiness associate means, with respect to a covered entity, a person who: (i) On behalf of such covered entity . . . other than in the capacity of a member of the workforce of such covered entity or arrangement, performs, or assists in the performance of (A) A function or activity involving the use or disclosure of individually
identifiable health information . . . or (B) Any other function or activity regulated by this subchapter; or (ii) Provides, other than in the capacity of a member of the workforce of such covered entity, legal, actuarial, accounting, consulting, data aggregation . . . management, administrative, accreditation, or financial services to or for such covered entity, or to or for an organized health care arrangement in which the covered entity participates, where the provision of the service involves the disclosure of individually identifiable health information from such covered entity or arrangement, or from another business associate of such covered entity or arrangement, to the person.
It is the belief of the Insurance Department, subject to a determination by the United States Department of Health and Human Services, that IPAs and TPAs that have been contracted by an insurer, including an HMO, to provide services with respect to benefit administration are business associates of the insurer.
The HIPAA Privacy Rule, 45 C.F.R. § 164.504(e)(2) (2002), requires that contracts between covered entities and their business associates obligate the business associates to comply with the substantive requirements of the Privacy Rule.
In accordance with the requirements of the Gramm-Leach-Bliley Act, Public Law No. 106-102 (1999), the Insurance Department has promulgated a regulation on privacy of personal information. N.Y. Comp. Codes R. & Regs. tit. 11, Part 420 (Regulation 169). Regulation 169 provides, N.Y. Comp. Codes R. & Regs. tit. § 420.21 (2001), that if a licensee is in compliance with the HIPAA Privacy Rule, it need not comply with Regulation 169. However, if a licensee need not, or fails to, comply with the HIPAA Privacy Rule, N.Y. Comp. Codes R. & Regs. tit. 11, § 420.17(b) (2001) provides:
Nothing in this section shall prohibit, restrict or require an authorization for the disclosure of nonpublic personal health information by a licensee for the performance of the following insurance functions by or on behalf of the licensee: claims administration; claims adjustment and management . . . any activity that permits disclosure without authorization pursuant to the federal Health Insurance Portability and Accountability Act privacy rules promulgated by the U.S. Department of Health and Human Services . . . . Additional insurance functions may be added with the approval of the superintendent to the extent they are necessary for appropriate performance of insurance functions and are fair and reasonable to the interest of consumers.
Accordingly, the transmission of protected health information to a TPA or IPA would not, in and of itself, constitute a violation of either the HIPAA Privacy Rule or Regulation 169.
Mandatory Network Participation
New York Insurance Law § 4224(c) & (d) (McKinney 2000 and 2005 Supplement) prohibits "tie-ins" for the sale of health insurance. There is no provision in the New York Insurance Law or the regulations promulgated thereunder, or to the Insurance Departments knowledge in the New York Public Health Law (McKinney 2002 and 2005 Supplement) or the regulations promulgated thereunder, dealing with such requirements imposed by IPAs.
Whether such a requirement would be in violation of either Federal, 15 U.S.C.A. §§ 1 (West 1997) and 14 (West 1997), or State, New York General Business Law § 340 (McKinney 2004), anti-trust statutes is beyond the expertise of the Insurance Department.
Restrictions on Membership in Networks
Unlike some jurisdictions, New York does not have an "any willing provider" statute requiring that HMOs and other managed care organizations accept all qualified health care providers in their networks. It is the understanding of the Insurance Department that, so long as an HMOs network meets the standard of New York Public Health Law § 4403(5)(a), "adequate to meet the comprehensive health needs of its enrollees and to provide an appropriate choice of providers sufficient to provide the services covered under its enrollee's contracts", an HMO may refuse to enroll additional health care providers in its network.
In addition, given the limited range of services that may be provided by a chiropractor, New York Education Law § 6551 (McKinney 2001), as contrasted with the scope of practice of a physician, New York Education Law § 6521 (McKinney 2001), a different standard for determining whether to admit a chiropractor to a network would not be violative of 1997 N. Y. Laws 426.
Such codes have been developed by the American Medical Association:
CPT is a listing of descriptive terms and identifying codes for reporting medical services and procedures performed by physicians. The purpose of the terminology is to provide a uniform Language that will accurately describe medical, surgical, and diagnostic services, and will thereby provide an effective means for reliable nationwide communication among physicians, patients, and third parties.
While such codes are used by insurer and other third party payors for other health care providers, it is the position of the Insurance Department that, so long as the use of CPT codes is within the limitations imposed by the AMA and the use of a particular code does not violate either the applicable insurance policy or contract or the contract between the insurer and the participating health care provider, whether an insurer utilizes a particular CPT code for payments to a health care provider is not a matter within the Insurance Departments concerns.
In addition, New York Insurance Law § 4900(h) (McKinney 2000) provides:
For the purposes of this article none of the following shall be considered utilization review: . . . (3) The review of the appropriateness of the application of a particular coding to a patient, including the assignment of diagnosis and procedure . . .
New York Public Health Law § 4900(8) (McKinney 2002) has an identical provision affecting HMOs. Accordingly, a health care provider has no appeals rights under either New York Insurance Law Article 49 or New York Public Health Law Article 49 with respect to a choice by a insurer as to which CPT code to utilize in making payments to such provider.
As to the notation by STU on Explanations of Benefits, the appropriate connotation is that the contract between the health care provider and the HMO does not allow a billing for that procedure, not that the service is beyond the scope of practice.
A withhold is defined in Regulation 164, N.Y. Comp. Codes R. & Regs. tit. 11, § 101.3(l) (2002):
The term withhold shall mean a percentage of payments or set dollar amounts deducted from a health care provider's contractual payment and that may or may not be returned to the health care provider, depending on specific predetermined factors, including any necessary approvals by the insurer's board of directors.
Withholds are a recognized form of sharing of financial risk between managed care organizations and participating health care providers. Since they are utilized with a wide range of health care providers, they are not a violation of 1997 N.Y. Laws 426.
As to the Explanation of Benefits provided by STU, it is apparent that the figure represents the difference between the allowed amount and the withhold. While the HMO could have chosen a different nomenclature, there is no intimation in the Explanation of Benefits and, according to the inquirer in the contract between STU and health care providers, that the full co-pay is not to be collected.
Reimbursement Rates for Chiropractors
The Memorandum in Support of the legislative proposal, Senate Bill 5994 (Sen. Velella), that became 1997 N.Y. Laws 426 provided:
There has been concern expressed about the cost impact of including a mandate for chiropractic services as a required part of a health insurance benefit package. This bill addresses this concern by permitting insurers and HMOs to subject chiropractic coverage to reasonable deductible, co-payment and co-insurance amounts, benefit limits and utilization review requirements. However, such limitations must not operate in a manner discriminative against the chiropractic school of practice.
The Medicare program covers chiropractic services within the scope of practice of a chiropractor under the same conditions as if a physician provided the services. 42 U.S.C.A. § 1395x(r)(5) (West 1982 and 2003 Supplement). The regulations under which CMS operates, 42 C.F.R. §§ 410.20(b)(5) (2000) and 414.2 (2000), also require that chiropractors operating within their authorized scope of practice are to be reimbursed in the same manner as physicians. The actual methodology, 42 C.F.R. § 414.20 et seq (2000) is based on a complicated relative value calculation.
By contrast, there is no statute or regulation in New York that requires that services of a chiropractor be paid for in an equivalent manner as the services of a physician. Nor is there, outside the context of automobile no-fault or workers compensation, any statute or regulation prescribing fee schedules for chiropractors.
Accordingly, the Insurance Department cannot conclude, based upon the information the inquirer furnished, that any insurer is in violation of 1997 N.Y. Laws 426 or any other provision of the New York Insurance Law.
For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.