BILL NUMBER: S7577
SPONSOR: CLEARE
 
TITLE OF BILL:
An act to amend the insurance law and the public health law, in relation
to prohibiting certain requirements in insurance contracts
 
PURPOSE:
The legislation would ban anti-competitive hospital contracting prac-
tices that create higher health care prices for consumers and employers.
 
SUMMARY OF PROVISIONS:
Section one amends the insurance law to prohibit health plans from
entering into agreements or contracts with health care providers that
require the health plan to include all members of a provider group in
its network, require the health plan to place all members of a provider
group in the same network tier, require the health plan to include all
members of a provider group in all of its-products, forbid health plans
from using benefit design to encourage consumers to seek services from
higher-value health care providers; contain most-favored-nation
provisions in which the provider will not give an equal or more favora-
ble price to any other plan; or limit the ability of the health plans or
provider from disclosing fees for services or the allowed amounts. Such
provisions in existing-contracts would become null and void effective
January 1, 2021.
Section two amends the public health law to prohibit health plans from
entering into agreements or contracts with health care providers that
require the health plan to include all members of a provider group in
its network, require the health plan to place all members of a provider
group in the same network tier, require the health plan to include all
members of a provider group in all of its products, forbid health plans
from using benefit design to encourage consumers to seek services from
higher-value health care providers, contain most-favored-nation
provisions in which the provider will not give an equal or more favora-
ble price to any other plan, or limit the ability of the health plans or
provider from disclosing fees for services or the allowed amounts. Such
provisions in existing contracts would become null and void effective
January 1, 2021.
Section three provides the effective date.
 
JUSTIFICATION:
According to multiple studies, the cost of health care in New York
continues to exceed the national average, with increases in prices
charged by provides as one of the major driver of rising health insur-
ance premiums. According to the NY State Health Foundation's December
2016 report, Why are Hospital Prices Different? An Examination of New
York Hospital Reimbursement, "a hospital's market leverage.- its bargain
power when negotiation with insurers - is a key factor in the prices a
hospital can command," and "contract provisions between hospitals and
insurers can hinder competition, product innovation, transparency, and
cost containment strategies." To maintain access to health care for New
Yorkers and support a competitive market for the industry, the report
recommended barring certain contractual language from hospital/insurer
contracts, and that policies could include the barring of confidentiali-
ty language, anti-steering language, and language that hinders the abil-
ity of the. tiered network product to work efficiently.
This legislation builds upon the Foundation's recommendations and seeks
to improve affordability for employers and consumers by prohibiting
restrictive contracting language that create artificial barriers to
promoting greater competition in the marketplace, increasing transparen-
cy of health care costs, and providing more affordable options for
employers and consumers.
As an example, "all-or-nothing" contracts require that if a health plan
wants a contract with any provider or affiliate in a particular provider
organization, it must contract with all providers in the system. Provid-
er organizations use this type of provision to leverage the status of
their must-have providers to demand high payment rates for the entire
provider organization, including those providers in more competitive
areas and specialties. Similarly, restrictive contract provisions some-
times require that a health plan place all physicians, hospitals, and
other facilities associated with the dominant provider system in the
most favorable tier of providers. This legislation provides an equita-
ble balance for hospitals contracting with health plans and employer
groups, by allowing for competition, fair negotiations, and ensure
consumers benefits. The legislation would help address the issue of
pricing fairness and access to affordable health care in the state as
well as help ensure that New Yorkers are not subjected to unfair busi-
ness practices that increase health insurance premiums.
 
LEGISLATIVE HISTORY:
2020: A.9781
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect January 1, 2026.

Statutes affected:
S7577: 3217-b insurance law, 4406 public health law