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The Business Council of New York State, Inc. opposes S.2551 (Hannon) / A.7253 (Montesano), which would impose yet another coverage mandate on group health plans. Group health plans in New York State are already among the most expensive in the nation. The bill does not take into account the pending implementation of the federal health care reform which, require state-imposed insurance mandates, in excess of those required in the federal essential benefits menu, to be paid for by state revenues – not premium dollars. Now is clearly not the time for the state to show a lack of fiscal discipline and impose costly coverage mandates for which they have identified no revenue source to pay. The increased costs that would result from this legislation will be quickly reflected in premiums charged to employers and - increasingly - shared by employees.
Specifically, this bill would require health plans which cover out-of-network services to reimburse out-of-network medical services as a percentage of the 80th percentile of the actual charges billed for that service by an out-of-network provider in the same specialty and in the same geographic area. It also requires that health plans make available a policy in each geographic region of the state that would provide out-of-network coverage for at least 80% of the FAIR Health UCR.
These requirements would result in a higher premium cost for those purchasing out-of-network products. The out-of-network provider actual charge data submitted to health plans will be aggregated by FAIR Health, it will be sorted by specialty and geographic region, and FAIR Health will determine the 80th percentile "usual and customary" rate charged by providers. It is this rate at which health plans will be required to set their reimburse methodologies under this legislation, and it is this rate which will need to be built into health insurance premiums to recover the costs. Importantly, these out-of-network service providers are free to "bill" for these services at rates well above actual payment levels negotiated between plans and in-network providers. These elevated charges will be mandated as the basis for payment rates for these out-of-network providers - in effect, ultimately giving them unilateral control over their reimbursement rates.
Health plans currently use several different methods to determine out-of-network reimbursement rates - all expressly permitted as part of the Attorney General's 2009 agreements with health plans – these include a percent of in-network rates, a percent of the Medicare Resource-Based Relative Value Scale, or a fee schedule. This legislation proposes one method (FAIR Health), essentially removing any leverage health plans have to negotiate with health care providers to participate as part of networks. This legislation encourages medical providers to opt out of network participation all together, to take the higher reimbursement rate this bill authorizes.
Furthermore, the bill does not do enough to prevent "surprise billing" and "balance billing" and does nothing to rein in the cost of health care or promote efficiencies in the delivery of care without compromising quality.
The enactment of this legislation will translate into increased health insurance premiums to cover the costs associated with the mandated use of UCR, and will make coverage less affordable for employers and employees as health care providers opt out of in-network participation to take the greater reimbursements that will result from this bill.
For all these reasons the Business Council respectfully opposes the passage of S.2551 / A.7253.