BILL NUMBER: S705A
SPONSOR: KRUEGER
 
TITLE OF BILL:
An act to amend the public health law, in relation to fair pricing for
low-complexity, routine medical care; and to amend the insurance law, in
relation to billing and reimbursement
 
PURPOSE:
To enact site neutral payment policy for certain ambulatory 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 and other standalone facilities.
 
SUMMARY OF PROVISIONS:
Section 1: Amends the public health law by adding a new section 2834
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,
including those that enter healthcare contracts for applicable services,
to be the lessor of 150% of the Medicare rate or the negotiated rate.
Prohibits the billing of an additional institutional claim, otherwise
known as a facility fee, for the applicable services.
Subdivision 3: Requires that the department publish an annual report on
spending trends and cost drivers for ambulatory services, service-spe-
cific rates for common services, a list of exempt hospitals, a list of
hospitals in violation of the maximum rate provision and related
enforcement actions, and recommendations. Allows additional data
collection if existing data is insufficient.
Subdivision 4: Creates a penalty structure and enforcement and oversight
powers for DFS and DOH, as well as the Attorney General through desig-
nation of violations as unlawful deceptive acts_or_practices.
Section 2,3,4,5,6,7 and 8: Amends various sections of the insurance law
to prevent insurance companies from entering into contracts to make
payments or making payments to health care providers in excess of limits
created in this legislation
Section 9 and 10: Amends various sections of the insurance law to ensure
that savings achieved as a result of the fair pricing law will be
reflected in the approved insurance rates to ensure that savings result-
ing from this law will result in lower health care costs for New Yorkers
Section 11 provides the ability to the Commissioner of Health and Super-
intendent of DFS to promulgate additional regulations as necessary.
Section 12: Severability.
Section 13: Effective on first of January next succeeding enactment.
 
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) identified in its recommendation
to Congress to enact site neutral payments for services 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 the
federal level. The site-neutral payment policy will not apply to Feder-
ally Qualified Health Centers (FQHCs),PPS cancer hospitals, public
hospitals, federally designated critical access hospitals, federally
designated sole community 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 for routine services at 150% of Medi-
care 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.
By limiting site-based price differences for the applicable services,
this bill is estimated to reduce health care costs for individuals,
employers, and the state by $1.14 billion overall, including $213
million in lower out of pocket costs for patients and $72 million in
lower employee health benefit costs for the state.
 
LEGISLATIVE HISTORY:
2024 - S.9952 New Bill
 
FISCAL IMPLICATIONS:
Costs are to be determined
 
EFFECTIVE DATE:
This act shall take effect immediately

Statutes affected:
S705A: 3217-b insurance law, 3221 insurance law, 4325 insurance law, 4413 insurance law, 4406-c public health law