BILL NUMBER: S5323
SPONSOR: BAILEY
 
TITLE OF BILL:
An act to amend the insurance law, in relation to penalties imposed on
subcontractors for failure to adhere to the standards for prompt, fair
and equitable settlement of claims for health care and payments for
health care services
 
PURPOSE OR GENERAL IDEA OF BILL:
To increase penalties on health insurance plans for failing to pay
health care claims within statutorily defined time frames, and expand
the entities that could be subject to these penalties.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends subsection (c) of Section 3224-a of the Insurance Law
to grant the Financial Services Superintendent the authority to double
the penalties imposed on a health insurer when it is found that the
insurer has engaged in patterns of violating New York's Prompt Payment
law. It also would grant authority to the Superintendent to impose
prompt payment penalties on the subcontractors of a health insurance
plan that are responsible for paying claims.
 
JUSTIFICATION:
The New York Department of Financial Services recently announced in its
2023 Annual Report that it had produced over $117 million in Prompt
Payment law recoveries. These recoveries, based upon an investigation of
over 26,000 health care provider complaints in 2023, were nearly 50
percent more than in 2022.
While at first glance this appears to be a positive development, it
highlights that the existing Prompt Payment law sanctions are not acting
as a sufficient deterrent to ensure health insurers pay claims in a
timely manner. Practice transactional costs are often immense as a
result of aberrant health insurer practices. Physicians, hospitals, and
other care providers often must spend hours or days on unnecessary phone
calls and emails to ensure they are reimbursed for the patient care
delivery these insurers are legally obligated to cover. This can take
months or even years, well past the 30-day time frame within which
claims are required to be paid.
In addition, we have heard from numerous health care providers who are
experiencing long delays in the payment of claims by health insurers as
a result of pretextual medical record requests using vague or unsup-
ported concerns. While health insurers have an important responsibility
to investigate claims to ensure they are properly billed, the frequency
of which these medical records requests occur, based upon the sheer
volume of complaints regarding delayed claims, suggests a potentially
more pernicious purpose for these requests.
New York's Prompt Payment law, enacted over 25 years ago, needs to be
updated to increase the penalties that can be imposed on health insurers
when there is evidence that the health insurer has engaged in a pattern
of inappropriately delaying the payment of claims past the statutory-de-
fined time periods for reviewing and paying claims. This legislation
would also permit the imposition on penalties on subcontractors that the
health plan has designated to review and pay claims where the subcon-
tractor is also responsible for the inappropriate delay in claims
payment.
 
PRIOR LEGISLATIVE HISTORY:
2023-24: S9020 - Referred to Insurance
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on the ninetieth day after it shall have
become a law and apply to all health care claims submitted after such
date. Effective immediately, the addition, amendment and/or repeal of
any rule or regulation necessary for the implementation of this act on
its effective date are authorized to be made and completed on or before
such date.

Statutes affected:
S5323: 3224-a insurance law, 3224-a(c) insurance law