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

Eliot Spitzer
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on December 12, 2007, representing the position of the New York State Insurance Department.

Re: Review and Payment of Healthcare Bills

Question Presented:

1) Does a health insurer that requests “medical necessity” documentation more than 30 days after receiving a health care provider’s bill for rendered services violate N.Y. Ins. Law § 3224-a (McKinney 2006) if the insurer does not make payment within 45 days of receipt of the bill?

2) May a penalty be imposed on an insurer that does not pay the health care services bill within 45 days of its receipt and requests additional documentation more than 30 days after receiving the bill?

Conclusion:

1) Yes. A health insurer that requests “medical necessity” documentation more than 30 days after receiving a health care provider’s bill for rendered services violates Insurance Law § 3224-a if the insurer does not make payment within 45 days of receipt of the bill.

2) Yes. Pursuant to Insurance Law § 3224-a(c), a penalty may be imposed on an insurer that does not pay the health care services bill within 45 days of its receipt and requests additional documentation more than 30 days after receiving the bill.

Facts:

A health insurer requested “medical necessity” documentation more than 45 days after its in-network participating provider (“Provider”) submitted its bills for payment. An inquiry was made as to whether New York law imposes time limitations upon insurers on their payment and review of healthcare bills.

Analysis:

Insurers licensed to write accident and health insurance, corporations licensed pursuant to Insurance Law Article 43, and HMOs certified pursuant to New York Public Health Law Article 44 (“insurers”) are subject to the healthcare claims and bill processing standards set forth by Insurance Law § 3224-a. Insurance Law § 3224-a(a) states:

Except in a case where the obligation of an insurer or an organization or corporation licensed or certified pursuant to article forty-three of this chapter or 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.

Thus, an insurer subject to Insurance Law § 3224-a must pay a health care provider for the services rendered within 45 days of receiving the provider’s bill, except where the obligation to make the payment is not reasonably clear or there is a reasonable basis supported by specific information available for review by the superintendent that the claim or bill for health care services rendered was submitted fraudulently.

Insurance Law § 3224-a(b) requires an insurer to request all additional information needed to determine whether it is liable for paying a health care provider’s bill within thirty days of receiving the bill, where the obligation to pay is not reasonably clear due to, among other things, a good faith dispute about the benefits covered under a contract or agreement which includes, pursuant to Insurance Law § 3224-b(a)(3)(ii), a determination that such service is not medically necessary.

Accordingly, an insurer that requests “medical necessity” documentation more than 30 days after receiving a health care provider’s bill for rendered services would violate Insurance Law § 3224-a if the insurer did not make payment within 45 days of receipt of the bill.

An insurer that fails to comply with the time limitations set forth in Insurance Law § 3224-a for reviewing and paying health care service bills is subject to penalty pursuant to Insurance Law § 3224-a(c). That statute reads as follows:

Each claim or bill for health care services processed in violation of this section shall constitute a separate violation. In addition to the penalties provided in this chapter, any insurer or organization or corporation that fails to adhere to the standards contained in this section shall be obligated to pay to the health care provider or person submitting the claim, in full settlement of the claim or bill for health care services, the amount of the claim or health care payment plus interest on the amount of such claim or health care payment of the greater of the rate equal to the rate set by the commissioner of taxation and finance for corporate taxes pursuant to paragraph one of subsection (e) of section one thousand ninety-six of the tax law or twelve percent per annum, to be computed from the date the claim or health care payment was required to be made. When the amount of interest due on such a claim is less than two dollars, an insurer or organization or corporation shall not be required to pay interest on such claim.

Hence, a penalty may be imposed on an insurer that does not pay the health care services bill within 45 days of its receipt and requests additional documentation more than 30 days after receiving the bill.

For further information you may contact Associate Attorney Sally Geisel at the New York City Office.