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

George E. Pataki
Governor

Howard Mills
Superintendent

Please refer to Office of General Counsel Opinion No. 08-07-07 (July 15, 2008) for a clarification of this opinion.

The Office of General Counsel issued the following opinion on October 5, 2006 representing the position of the New York State Insurance Department.

Re: Utilization review and the prudent lay person standard

Question Presented:

When a person is admitted to a hospital through the emergency room for mental health and chemical dependency and remains in the hospital for a period of days, how long after the admission is it acceptable for an insurer or HMO to apply the medically necessary standard for utilization review rather than the prudent lay person standard?

Conclusion:

A determination would need to be made on a case by case basis.

Facts:

No specific fact pattern was presented.

Analysis:

N.Y. Ins. Law § 3216(i)(9) (McKinney 2006) mandates individual accident and health insurance policies cover treatment of an emergency condition in hospital facilities and defines an "emergency condition" as follows:

Every policy which provides coverage for inpatient hospital care shall also include coverage for services to treat an emergency condition in hospital facilities. An ‘emergency condition’ means a medical or behavioral condition, the onset of which is sudden, that manifests itself by symptoms of sufficient severity, including severe pain, that a prudent layperson, possessing an average knowledge of medicine and health, could reasonably expect the absence of immediate medical attention to result in (A) placing the health of the person afflicted with such condition in serious jeopardy, or in the case of a behavioral condition placing the health of such person or others in serious jeopardy, or (B) serious impairment to such person's bodily functions; (C) serious dysfunction of any bodily organ or part of such person; or (D) serious disfigurement of such person.

A similar requirement exists under N.Y. Ins. Law § 3221(k)(4)(B) (McKinney 2006) for group policies of commercial health insurers, and N.Y. Ins. Law § 4303(a)(2) (McKinney Supp. 2006), for contracts of not-for-profit health insurers and all health maintenance organizations (HMOs). N.Y. Ins. Law § 4900(c) (McKinney 2000) also defines "emergency condition" in similar terms for utilization review purposes.

N.Y. Ins. Law § 4900(h) (McKinney 2000) defines "utilization review" in relevant part:

[T]he review to determine whether health care services that have been provided, are being provided or are proposed to be provided to a patient, whether undertaken prior to, concurrent with or subsequent to the delivery of such services are medically necessary.

N.Y. Ins. Law § 4902(a)(8) (McKinney 2000) requires that emergency services are not subject to prior authorization and that reimbursement for emergency services should not be denied on retrospective review; provided however, that such services are medically necessary to stabilize or treat an emergency condition.

Emergency services rendered by hospital facilities would be medically necessary if they were provided in treatment of an emergency condition, as determined by using the prudent layperson standard.

If a person is admitted to a hospital through the emergency room for mental health and chemical dependency and remains in the hospital for a period of days, there would need to be a case-by-case determination by the insurer or HMO as to whether to apply the medically necessary standard for utilization review rather than the prudent lay person standard.

For further information you may contact Senior Attorney Elizabeth Barrett at the New York City Office.