BILL NUMBER: S4833
SPONSOR: SKOUFIS
 
TITLE OF BILL:
An act to amend the insurance law and the public health law, in relation
to downcoding on initial review and audits reversing or altering medical
necessity determinations
 
PURPOSE:
The purpose of this bill is to ensure the decision to downcode is recog-
nized as an adverse determination and prohibit health plans from revers-
ing or altering medical necessity determinations made by a utilization
review agent or external appeals agent as a result of an audit of
claims.
 
SUMMARY OF PROVISIONS:
Section 1: Renumbers paragraphs (4) and (5) of subsection (b) of section
3224-b of the Insurance Law. Paragraph (4) would prohibit reversing or
otherwise altering a medical necessity determination, which includes a
site of service or level of care determination, made by a utilization
review agent or external appeal agent during a review or audit of
claims. Paragraph (5) would prohibit a health care plan from downgrading
the coding of a claim to a lower-level service if it has the effect of
reversing or altering a medical necessity determination, which includes
a site of service or level of care determination made by or on behalf of
the health plan.
Section 2: Amends subsection (i) of section 3224-a of the insurance law
to clarify that the downgrading of a claim to a lower-level service
during the initial or subsequent processing of the claim by an insurer,
organization, or corporation constitutes an adverse determination.
Section 3: Amends subsection (a) of section 4900 of the insurance law to
expand the definition of "adverse determination" to include the decision
to downgrade the coding of a claim to a lower-level service than the one
submitted by the provider for reimbursement.
Section 4: Amends subdivision 1 of section 4900 of the public health law
to expand the definition of "adverse determination" to include the deci-
sion to downgrade the coding of a claim to a lower-level service than
the one submitted by the provider for reimbursement.
Section 5: Sets Effective Date
 
JUSTIFICATION:
Downcoding refers to the practice where health plans unilaterally change
claims to reflect a lower level of service than originally submitted by
the provider. This practice has become increasingly prevalent, with
health plans routinely using proprietary software to automatically down-
code higher-level services without an initial medical record review. As
a result, providers are reimbursed for care that is lower than what was
provided and billed. Currently, providers have limited options for
addressing these unilateral downcoding decisions. Furthermore, even
after claims have been adjudicated and paid, health plans often employ
post-payment audits to reverse or modify medical necessity determi-
nations, ultimately leading to reduced or denied payments for services
rendered.
This proposed legislation seeks to protect providers by granting them
the right to challenge health plans' arbitrary downloading decisions.
Specifically, it would recognize health plans' decision to download as
an "adverse determination," thereby allowing providers to appeal such
determinations internally and externally. Additionally, the bill would
prohibit health plans from reopening medical necessity decisions during
audits or downloading claims that alter or negate the determination of
medical necessity.
 
LEGISLATIVE HISTORY:
New bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.

Statutes affected:
S4833: 3224-a insurance law, 3224-a(i) insurance law, 4900 insurance law, 4900(a) insurance law, 4900 public health law, 4900(1) public health law