BILL NUMBER: S705
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the public health law, in relation to fair pricing for
low-complexity, routine medical care
 
PURPOSE:
To enact site neutral payment policy for certain healthcare services in
New York State. To ensure that routine outpatient services do not cost
New Yorkers arbitrarily high prices as a result of hospital market power
or consolidation in healthcare. To effect benchmark-based price caps
that bring the highest costs down to align with prices found in doctors'
offices.
 
SUMMARY OF PROVISIONS:
Section 1: Amends the public health law by adding a new section 2832
Subdivision 1: Establishes various definitions related to applicable
services, health benefit plans, plan sponsors, health care contracts,
what shall and shall not be considered a health care provider, affil-
iated providers, health insurance carriers, health systems, participat-
ing providers, site-neutral payment policies, superintendent and third-
party administrators.
Subdivision 2: Dictates the maximum rate for health care providers that
enter healthcare contracts for applicable services to be the lessor of
150% of the Medicare rate or the negotiated rate.
Subdivision 3: Requires that certain provisions be included in health
care contracts.
Subdivision 4: Requires that the department collect and compile all
available and relevant hospital, health system, and payer-reported data.
Such information shalt be published on a publicly accessible website
Subdivision 5: Requires that each health insurance carrier submit an
annual report to DFS concerning rates for applicable services. DFS and
DOH shall submit a report to the Governor, and legislative houses summa-
rizing certain information about rates and spending trends.
Subdivision 6: Creates a penalty structure and enforcement and oversight
powers for DFS, DOH, and the Attorney General.
Subdivision 7: Provides that DFS and DOH shall have the ability to
promulgate additional regulations or add to the list of applicable
services if designated by the Federal Government through the Medicare
Payment Advisory Commission. Regulations and additional codes shall
follow the existing procedures for rulemaking.
Section 2: Severability.
Section 3: Immediate effective date.
 
JUSTIFICATION:
Across the nation and in New York State, high hospital prices are driv-
ing unsustainable increases in healthcare costs. These cost increases
threaten affordability for New Yorkers and squeeze worker wages. While
hospital spending increased by 97% from 2007 to 2020, average hourly
wages only increased 15% in that same period.
These steadily increasing amounts New Yorkers are paying for healthcare
are not yielding more care or better health outcomes in return.
Instead, high prices are reflective of hospital market power and consol-
idation.
With almost 60% of doctors' offices now owned by hospitals or corpo-
rations, there has been an outsized growth in healthcare costs ass
ociated with outpatient services that were traditionally performed in a
doctor's office but are now being charged at higher hospital level pric-
es. Essentially, the service and the quality of care are the same, but
patients are paying more, in some cases just because a hospital owns the
building.
Site neutral payment policy aims to reduce unnecessary and inflated
healthcare costs by equalizing the payment rate across "sites" of
service (hospital outpatient departments, doctors' offices, ambulatory
surgical centers, and other outpatient settings). Site neutral payment
policy was initiated as part of the Medicare program, which set site-
neutral payments for routine evaluation and management (E&M) services,
such as a 15-minute wellness visit. Recent federal initiatives have
sought to expand site neutral payment policy.
The Fair Pricing Act is based on applying site neutral payment policy to
a limited number of medical services that are appropriately delivered in
the lower-cost site, which is an outpatient setting, including a
doctor's office or ambulatory surgical center, depending on the service.
Hospital outpatient departments are generally higher-priced. The
services covered under the Fair Pricing Act are the same that Medicare's
Payment Advisory Commission (Med PAC) has determined are safe and effec-
tive to perform in a doctor's office or other outpatient setting, and
which had primarily been performed in doctors' offices prior to recent
consolidation trends. Examples of such services include clinic visits,
gynecological procedures like a pap-smear, certain skin procedures, such
as laser treatments; drug administration procedures such as vaccines or
infusion drug administration; and imaging procedures, such as X-Rays,
ultrasounds, EKGs and MRIs.
The site-neutral payment policy applies to all patients and programs
except those paid for by Medicare, which sets its own rates at t he
federal level. The site-neutral payment policy will not apply to Feder-
ally Qualified Health Centers (FQHCs), public hospitals, federally
designated critical access hospitals, federally designated sole communi-
ty hospitals, rural emergency hospitals, and safety net hospitals, which
are exempt. The Fair Pricing Act offers a unique and much needed remedy
for New Yorkers' continuously rising healthcare costs by capping prices
f or routine services at 150% of Medicare in order to lower health bene-
fit expenses for payers and make healthcare more affordable for
patients. This price cap level is set above the average prices charged
by doctors' offices for the applicable services but below high hospital
price levels for the applicable services, thus aiming to bring payment
levels in other sites of service closer in line with doctors' office
rates.
By placing guardrails on healthcare pricing for routine services,
regardless of where these medical services are provided, New York State
can interrupt consolidation and corporatization incentives in health-
care; protect patients - both insured and uninsured - from excessive and
arbitrary prices; and promote a fair and affordable economy for taxpay-
ers, employers, and workers alike.
Site-based price differences for the applicable services are estimated
to cost New Yorkers $1.07 billion in annual healthcare overpayments.
While specific savings estimates for the bill are to be determined, this
bill will help to reduce health care costs for individuals, employers,
and the state.
 
LEGISLATIVE HISTORY:
2024- S.9952 New Bill
 
FISCAL IMPLICATIONS:
Costs are to be determined
 
EFFECTIVE DATE:
This act shall take effect immediately