The New York State Department of Financial Services (DFS) today issued a circular letter directing New York-regulated health insurers to provide cash flow relief to, and ease administrative burdens on, New York State hospitals during the COVID-19 pandemic.

“Hospitals continue to be on the front lines during this state of emergency and are stretched financially and administratively,” said Superintendent Linda A. Lacewell. “This directive will help provide much-needed cash flow to hospitals at a critical time in our fight against COVID-19.”

“This directive will ease the financial burdens facing many hospitals throughout the state, especially community, rural and safety-net hospitals, as they struggle to respond to the COVID-19 pandemic,” said Commissioner of the New York State Department of Health Dr. Howard Zucker. “Hospitals are on the frontlines in the battle against COVID-19. This directive will help ensure they have the resources they need to continue to fight.”

Many hospitals are under severe financial stress due to the suspension of elective surgical procedures and increased costs resulting from COVID-19. During this time of emergency, it is in the public interest for all stakeholders to support hospitals, particularly community, rural and safety-net hospitals, to ensure that patients continue to get the care that they need. Recognizing the importance of protecting the public and of maintaining the financial stability of hospitals, the health insurance industry has stepped up and worked closely with DFS to provide necessary relief to hospitals during this crisis. 

Building on the collaboration with the insurance industry to date, the relief provided to hospitals in today’s circular letter includes insurers’ immediate payment of outstanding hospital claims, suspension of preauthorization requirements for all hospital services, and prohibition of retrospective review of claims during the COVID-19 pandemic. In addition, health plans are directed to work with hospitals to provide additional financial assistance where feasible and necessary.

DFS worked with the Healthcare Association of New York State (HANYS), Greater New York Hospital Association (GNYHA), New York Health Plan Association (NYHPA), and the New York State Conference of Blue Cross and Blue Shield Plans (NYSCOP).

"HANYS thanks Governor Cuomo and Superintendent Lacewell for recognizing how the COVID-19 crisis has put enormous clinical and financial strains on hospitals.” said HANYS President Bea Grause, RN, JD. “We appreciate DFS taking this strong action to eliminate administrative barriers to care for all hospital-based treatment during this crisis. Furthermore, requiring plans to infuse cash through expedited payment of monies owed and to work with hospitals to provide additional financial assistance is the right thing to do, and an important step toward hospitals being able to continue providing care during this crisis.”

“With downstate hospitals under enormous financial stress from COVID-19—the largest health systems are each losing $350 million to $450 million a month and our smaller hospitals are fighting for their survival—DFS’s directive will deliver much-needed fiscal relief,” said GNYHA President Kenneth E. Raske. “I am grateful to Governor Andrew Cuomo, DFS Superintendent Linda Lacewell, and her entire team for supporting New York’s hospital community during this challenging time.”

The circular letter directs New York regulated-health insurers to: 

• Immediately process for payment outstanding hospital claims
• In collaboration with DFS, work with hospitals in insurers’ networks to provide additional financial assistance if needed and feasible, focusing on community, rural, and safety-net hospitals
• Suspend preauthorization requirements for all services performed at hospitals, including lab work and radiology, until June 18, 2020.
• Not conduct retrospective reviews of hospital claims until June 18, 2020, subject to limited exceptions, and
• Not make medical necessity denials related to emergency department and inpatient hospital treatment for COVID-19.

This circular letter follows DFS Circular Letter No. 8 (2020) on suspending preauthorization and administrative requirements, including certain utilization review and notification requirements for hospitals, which was developed in collaboration with the insurance industry and hospitals.

• Read a copy of the circular letter on the DFS website.

For additional DFS regulatory actions on the COVID-19 pandemic, visit the DFS website.