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

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on April 25, 2008 representing the position of the New York State Insurance Department.

Re: Hospital Balance Billing

Question presented:

May a hospital balance bill a psychiatric patient who is hospitalized, but stays longer than the contract between the hospital and insurer provides, and whose stay for the last few days is not deemed medically necessary by the insurer?

Conclusion:

This Department regulates insurers—not hospitals. Questions concerning the billing practices of a hospital under these circumstances should be directed to the New York State Department of Health, which regulates contracts between hospitals and managed care organizations.

Facts:

The inquirer reports that it is a law firm that represents several New York hospitals in their business with health insurers. The contract between a hospital and insurer states that the insurer will cover a psychiatric patient’s stay in the hospital for up to 30 days. One such patient is admitted to the hospital, but the insurer concludes that only 27 days of that patient’s stay is medically necessary. However, the patient stays in the hospital for more than 30 days. Therefore, the inquirer asks whether the hospital may bill the patient for any days he or she stays at the hospital beyond the 30 days.

Analysis:

As an initial matter, the inquirer has not provided the Insurance Department with a copy of a specific contract, nor with any information regarding the sort of insurer about which it inquires (health maintenance organization, not-for-profit health insurer governed by Article 43 of the Insurance Law, or a private insurer). Nor has the inquirer indicated if the contract addresses whether the insurer reimburses the hospital for the patient’s stay on days 27 through 30. In a telephone conversation on March 19, 2008, the inquirer indicated that it was not referring to any particular hospital or insurer, but rather, sought a general answer to the inquiry.

Broadly speaking, reimbursement rates between an insurer and a hospital that is participating in the insurer’s network are negotiated pursuant to a contract. The New York Insurance Law does not address whether a hospital may bill a patient for continued care beyond that which is covered under the provider contract. Since the Insurance Department regulates insurers—not hospitals—any steps that a hospital may take should be addressed to the appropriate regulatory authority. The New York State Department of Health regulates contracts between hospitals and managed care organizations.

For further information, you may contact Senior Attorney Sapna Maloor at the New York City Office.