Supplement No. 2 to Insurance Circular Letter No. 8 (2020)
June 26, 2020

TO:	All Insurers Authorized to Write Accident and Health Insurance in New York State, Article 43 Corporations, Health Maintenance Organizations, Student Health Plans Certified Pursuant to Insurance Law § 1124, Municipal Cooperative Health Benefit Plans, Prepaid Health Services Plans, Utilization Review Agents, and Licensed Independent Adjusters
RE:	Coronavirus and Resumption of Preauthorization and Concurrent and Retrospective Review, Utilization Review Requirements, and Payments to Participating Hospitals

STATUTORY REFERENCES: N.Y. Insurance Law §§ 3224-a, 4902, 4903, 4904, and 4914; Public Health Law §§ 4902, 4903, 4904, and 4914; and Chapter 56 of the Laws of 2020

I. Purpose

The Governor of New York has declared a state of emergency to help New York more quickly and effectively contain the spread of the novel coronavirus (“COVID-19”). Insurance Circular Letter No. 8 (2020) and Supplement No. 1 to Insurance Circular Letter No. 8 (2020) suspended existing rules for preauthorization and concurrent and retrospective medical necessity reviews for hospital services until June 18, 2020 and provided other relief to hospitals, including expediting payment of hospital claims and directing negotiations for financial assistance of hospitals if financially feasible and prudent.

The purpose of this circular letter is to advise insurers authorized to write accident and health insurance in this state, Article 43 corporations, health maintenance organizations, student health plans certified pursuant to Insurance Law § 1124, municipal cooperative health benefit plans, prepaid health services plans (collectively, “issuers”), independent agents performing utilization review under contract with such issuers, and licensed independent adjusters, that preauthorization and concurrent and retrospective review have been permitted to resume as of June 19, 2020, with a period of transition for preauthorization reviews as specified below. In addition, this circular letter directs issuers to continue to expeditiously resolve and pay hospital claims and work with participating hospitals to assist with cash flow issues.

This circular letter supplements Insurance Circular Letter No. 8 (2020) issued on March 20, 2020 and Supplement No. 1 to Insurance Circular Letter No. 8 (2020) issued on April 22, 2020.

II. Preauthorization and Concurrent Review for Hospital Services

Insurance Law and Public Health Law §§ 4903 permit issuers to require preauthorization for health care services, other than emergency services, and permit issuers to concurrently review health care services for medical necessity. In Circular Letter No. 8 (2020) and Supplement No. 1 to Insurance Circular Letter No. 8 (2020), the Department of Financial Services (“Department”) directed issuers to suspend preauthorization and concurrent review for services provided at hospitals until June 18, 2020. Issuers have been permitted to resume preauthorization and concurrent review since June 19, 2020. However, some services may have been scheduled before June 18, 2020, but provided after June 18, 2020 for which hospitals were unable to obtain preauthorization due to the suspension of preauthorization. Recognizing that circumstance, with respect to services provided by hospitals from June 19, 2020 through July 6, 2020, issuers are directed to implement preauthorization requirements in a reasonable manner, with each issuer taking into account its actual practice in conducting preauthorization permitted prior to June 19, 2020. However, for such previously scheduled services, a hospital should use its reasonable best efforts to provide 48 hours’ notice to the issuer after services are provided at a hospital.

III. Retrospective Review for Inpatient and Outpatient Services at In-Network Hospitals

Insurance Law and Public Health Law §§ 4903 permit issuers to retrospectively review health care services for medical necessity. Insurance Circular Letter No. 8 (2020) advised issuers to suspend retrospective review for emergency services and inpatient services provided at in-network hospitals. Supplement No. 1 to Insurance Circular Letter No. 8 (2020) directed issuers not to conduct retrospective review for any services provided at in-network hospitals until after June 18, 2020, with certain limitations. Issuers have been permitted to resume retrospective review since June 19, 2020 for services provided on and after that date.

Upon resumption of retrospective review for inpatient and outpatient services provided at in-network hospitals on and after June 19, 2020, issuers are directed to ensure that documentation requirements for retrospective review are reasonable, including recognition that, at the height of the COVID-19 pandemic in this state, the New York State Department of Health (“DOH”) relaxed certain documentation requirements and hospitals shifted resources away from administrative functions to direct patient care. Additionally, with respect to COVID-19 patients, issuers must take into consideration the intensity of care required for treatment. Issuers are directed to refrain from down-coding claims for services provided to COVID-19 patients absent evidence that a hospital is engaging in intentional and inappropriate upcoding of claims or in fraudulent or abusive billing practices.

IV. Retrospective Medical Necessity Denials Prohibited for Emergency Department and Inpatient Hospital Services for COVID-19

As described in Supplement No. 1 to Insurance Circular Letter No. 8 (2020), issuers are again reminded that Chapter 56 of the Laws of 2020 added Insurance Law § 4902(a)(13) and Public Health Law § 4902(1)(k) to prohibit issuers from denying emergency department and inpatient hospital services as not medically necessary on retrospective review if the services were rendered to an insured by a general hospital certified pursuant to Public Health Law Article 28 to treat COVID-19 during a declared state of emergency. The effective date of these provisions was agreed upon and intended to apply to services performed immediately. However, due to an inadvertent bill drafting issue, the effective date section specifies that the amendment applies to services performed on or after January 1, 2021. It is the Department’s understanding that the January 1, 2021 date will be changed to April 1, 2020. Issuers should therefore not deny emergency department and inpatient hospital treatment provided during the state of emergency for diagnosed or suspected COVID-19 cases as not medically necessary on retrospective review.

V. Utilization Review of Inpatient and Outpatient Services at In-Network Mental Health and Substance Use Disorder Facilities

With respect to utilization review of inpatient and outpatient services provided until June 18, 2020 at in-network facilities licensed, certified, or otherwise authorized by the New York State Office of Addiction Services and Supports (“OASAS”) and facilities licensed or otherwise authorized by the New York State Office of Mental Health (“OMH”), issuers are reminded that documentation requirements for utilization review, including retrospective review, should be reasonable and take into consideration the extraordinary circumstances that existed at the time the health care services were provided. Because of the pandemic, facilities may not be able to provide the typical level of documentation as resources have been shifted away from administrative functions to direct patient care. In addition, DOH, OMH and OASAS have relaxed certain documentation requirements for the same reason. Issuers should keep this situation in mind and ensure that requests for documentation for utilization review are reasonable in light of these unusual circumstances.

VI. Internal and External Appeal Timeframes for Hospitals

Insurance Law § 4904(c) and Public Health Law § 4904(3) provide that a health care provider has a period of no less than 45 days after receipt of notice of an adverse determination to file an internal appeal with the issuer. Insurance Law § 4914(b)(1) and Public Health Law § 4914(2)(a) provide that the insured’s health care provider has 60 days to initiate an external appeal after the health care provider receives notice of a final adverse determination. Supplement No. 1 to Insurance Circular Letter No. 8 (2020) tolled the timeframes for a hospital to submit an internal or external appeal until June 18, 2020. Since June 19, 2020, the timeframes have no longer been tolled for provider appeals.

VII. Expediting Payment of Hospital Claims

Insurance Law § 3224-a provides that issuers must pay claims within 30 days of electronic submission or within 45 days of paper submission unless the obligation to make payment is not reasonably clear due to certain good faith disputes regarding coverage or the amount of the claim. Supplement No. 1 to Insurance Circular Letter No. 8 (2020) directed issuers to immediately process for payment all undisputed outstanding claims for services rendered prior to March 7, 2020, and all claims for services rendered on or after March 7, 2020 and until June 18, 2020, subject to further evaluation as the COVID-19 pandemic developed. In addition, issuers were also directed to quickly and efficiently resolve any claims for services rendered prior to March 7, 2020 disputed by either party.

Issuers should continue to work with hospitals to quickly and efficiently resolve claims for services rendered prior or subsequent to March 7, 2020 that are disputed by either party. In processing claims for payment, it is understood that issuers may confirm member eligibility, coverage, and cost-sharing. Also, an issuer should contact the Department if payments due to the issuer from the State for Medicaid managed care coverage hinder that issuer’s ability to comply with this section after consideration of any reductions in cost experienced by the issuer as a result of reduced hospital utilization.

VIII. Other Payments to Hospitals

Some hospitals have faced unprecedented cash flow issues due to COVID-19. While elective surgeries have resumed, some hospitals continue to experience significantly reduced revenue as patient volume has yet to return to normal levels. Through October 1, 2020, issuers are directed to continue to work with such hospitals in their networks that have requested assistance. Issuers should particularly focus on safety-net, rural and community or independent hospitals. Issuers should provide such assistance if financially feasible and prudent, including considering the liquidity and solvency of the issuer, and if the hospitals can directly demonstrate the need for such assistance. Issuers should consider a number of factors, including, but not limited to, the number of days cash a hospital has on hand, whether the hospital has received federal or state funding during the COVID-19 pandemic, and whether the hospital has other sources of financial assistance. Where assistance is warranted, the issuer and the hospital should continue to work together to develop a mutually acceptable plan to assist the hospital, which may include, to the extent an issuer does not currently provide such payment or other advances, periodic interim payments during the state of emergency for COVID-19. If requested, the Department will work with the issuer and the hospital to facilitate discussions and resolve any issues.

IX. Applicability to Third-Party Administrators of Self-Funded Plans

Third-party administrators that are licensed by the Department as independent adjusters are strongly encouraged to seek to apply the provisions of this circular letter to their administrative services arrangements with self-funded plans.

X. Conclusion

It is in the interest of all stakeholders to ensure that patients continue to get the care that they need during the COVID-19 pandemic. The limitations on prior authorization and concurrent and retrospective review in this circular letter, Circular Letter No. 8 (2020), and Supplement No. 1 to Circular Letter No. 8 (2020) shall not apply to “non-essential elective surgeries and non-urgent procedures” that the Governor or Commissioner of Health may allow, within the meaning of DOH’s “COVID-19 Directive to Increase Availability of Beds by a Minimum of 50% and Provide Necessary Staffing and Equipment,” dated March 23, 2020.

Please direct any questions regarding this circular letter to Colleen Rumsey, Supervising Attorney, Health Bureau, by email at [email protected].

 

Very truly yours,

 

Lisette Johnson
Chief, Health Bureau