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GOVERNOR PATAKI SIGNS BILL REQUIRING HMOs TO PAY WITHIN 45 DAYS

Tough New Sanctions Also Imposed on HMOs That Fail to Respond Promptly

New York, September 26, 1997

Governor George E. Pataki today signed legislation requiring the prompt, fair and equitable payment of patient claims, as well as bills submitted to HMOs and insurance companies by doctors and other health care providers.

The new law requires HMOs and insurers to pay claims and bills within 45 days of receipt, makes them pay significant interest on any late payments and imposes stiff fines on companies that violate the law.

"For too long, some HMOs have made patients, doctors and other health care providers wait an unacceptable period of time to be paid," Governor Pataki said. "We have had many complaints from both consumers and health care providers about these practices.

"Now these payments will have to be made quickly, and tough sanctions will be imposed on those HMOs that violate the law," the Governor said. "The Superintendent of Insurance is also now empowered to take strong action against those companies that fail to respond to Insurance Department inquiries about delays in payment."

Superintendent of Insurance Neil D. Levin said, "The Insurance Department, under this new law, can now fine companies up to $500 per day for each claim not paid after the 45 day limit. We can also fine HMOs and insurers up to $500 per day if they do not respond to our inquiries in a timely manner."

"These tough, new sanctions will send a clear message that HMOs and insurance companies must be responsive to their members as well as medical providers or face the consequences," Superintendent Levin said. "We will not allow any HMO or insurance company to undermine the stability of New York State's health care system."

The new law:

  • Sets standards for the prompt, fair and equitable settlements of both patient claims and provider services;
  • Requires HMOs and insurers to pay claims and bills within 45 days of receipt, except in cases where the obligation to make payment is not reasonably clear or where there is evidence that the bill may be fraudulent;
  • Requires in cases where the obligation to pay is not clear, the HMO or insurer must pay the undisputed portion of the claim within 45 days;
  • Specifies that each claim or bill processed after the 45 day period is a separate violation and must include the payment of interest. Interest must be paid at the greater of 12 percent per year or the corporate tax rate determined by the Commissioner of Taxation and Finance;
  • Permits the Superintendent to fine companies up to $500 per claim for each day a claim is processed beyond the 45 day limit. This fine is capped at $5,000 for each separate violation;
  • Permits the Superintendent of Insurance to impose a penalty of up to $500 per day for any HMO or insurer that fails to respond to Insurance Department inquiries in a timely manner. The total penalty may not exceed $7,500 per inquiry; and
  • Permits the Superintendent to impose a penalty of up to $500 per day for any person that fails to cooperate with Insurance Department investigations. The fine can be levied against insurance companies as well as insurance agents or brokers. The total penalty can not exceed $10,000. However those who violate the law five times within a five year period can be fined an additional $50,000.

The new law becomes effective in 120 days.

 

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