The Business Council of New York State, Inc., strongly opposes S.5068-A / A.7489-B, which would impose yet another coverage mandate on group health plans – the 55th such mandate by our count - and result in increased costs. Group health plans in New York State are already among the highest cost in the nation, for a variety of reasons, including New York’s long list of expensive coverage mandates. 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 choose to cover out-of-network services to reimburse out-of-network medical services at 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. In “plain english” 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 develop an algorithm to determine the 80th percentile “usual and customary” rate charged by providers. It is this rate at which health plans will be required to reimburse 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 automatically be used to set mandatory payment rates for these out-of-network providers - in effect, giving them unilateral control over their reimbursement rates.
Out-of-network care and reimbursement is a serious concern and requires thoughtful and careful discussion before public policy embeds a methodology into state law. This legislation removes the ability of health plans to negotiate efficiencies into out-of-network rates and would encourage medical providers to opt out of network participation all together, to take the higher reimbursement rate this bill authorizes.
Only those health plans which use "usual and customary" rates for out-of-network reimbursements must use FAIR Health data to determine their rate of reimbursements, but many health plans currently do not use UCR to calculate out-of-network reimbursement. This was the case prior to the Attorney General agreements, and became more prevalent after the Attorney General agreements.
Other options used by health plans to determine out-of-network reimbursement rates - all expressly permitted as part of the Attorney General’s agreements with health plans - include a percent of in-network rates, a percent of the Medicare Resource-Based Relative Value Scale, or a fee schedule.
While health care consumers may desire full freedom of choice, that is an impractical objective as insurance rate setting is based on utilization, risk, and reserves. The ability of health plans to negotiate with providers for in-network services allows them to offer plans with multiple levels of price and coverage. This legislation puts that model at extreme risk by proposing one method (FAIR Health), and one out-of-network rate (80th percentile), essentially removing any leverage health plans have to negotiate with health care providers to participate as part of networks.
The cost of health care and health insurance remains the number one concern of Business Council members. According to US Census Data 61 percent of New York’s population is covered by private health insurance; 35 percent of New Yorkers are covered by some form of government health insurance; with approximately 5 percent of the population uninsured.
This bill does nothing to rein in the cost of health care or promote efficiencies in the delivery of care without compromising quality. Rather, enactment of the bill would translate into increased health insurance premiums to cover the costs associated with the mandated reimbursement thresholds, and may make private coverage less available and affordable for employers and employees as health care providers opt out of in-network participation to take the greater reimbursement guaranteed in this bill. It may also force some New Yorkers out of private employer sponsored coverage and into some form of government-sponsored coverage.
For these reasons, The Business Council opposes S.5068-A / A.7489-B.