BILL NUMBER: S8590
SPONSOR: FAHY
 
TITLE OF BILL:
An act to amend the insurance law, in relation to establishing time-
frames for the payment of claims to hospitals
 
PURPOSE OR GENERAL IDEA OF BILL:
To streamline the claims payment process by requiring insurers to pay
hospitals promptly for services rendered, while preserving their right
to review medical necessity and recoup funds if appropriate. This
ensures timely payment without removing oversight or accountability.
 
SUMMARY OF SPECIFIC PROVISIONS:
Section 1 amends subsection (a) of section 3224-a of the Insurance Law
by adding seven new paragraphs establishing a "pay and pursue" model:
1. Prompt Payment: Insurers are required to pay hospitals at the
contracted rate within the statutory timeframe, regardless of medical
necessity or administrative policies such as preauthorization, documen-
tation, or timely filing.
2. Post-Payment Review Request: After payment is made, insurers may-
within 90 days-request specific clinical documentation to submit to a
joint committee of medical directors from both the hospital and the
insurer, but only if they have a good faith basis to question the neces-
sity of the care. Requests are limited to 10% of claims unless a thresh-
old of inappropriate billing is met, at which point the cap may increase
to 15%.
3. Hospital Submission of Documentation: Hospitals must submit the
requested documentation within 60 business days to the joint committee,
which must meet at least quarterly to review claims.
4. Failure to Submit Documentation: If the hospital fails to submit
documentation within the required timeframe, the claim is automatically
escalated to an independent third-party reviewer.
5. Joint Committee Review and Independent Review: If the joint committee
cannot reach a decision, the case is sent to a mutually agreed-upon
independent third-party review agent. The determination of this review
is binding. If services are deemed not medically necessary, the hospital
must refund the insurer within 30 days.
6. Alternative Dispute Resolution: Insurers and providers may agree to
other forms of dispute resolution so long as the claim is paid before
review. If the hospital and insurer have a participating provider agree-
ment, the definition of medical necessity in that agreement governs the
review.
7. Preservation of Existing Rights: This section does not limit any
provider's rights under existing insurance law with respect to emergency
services coverage.
Section 2 establishes the effective date as January 1, 2026, and author-
izes the adoption of necessary regulations before that date.
 
JUSTIFICATION:
Hospitals provide care in real time and should be paid accordingly.
Under current practice, insurance carriers often delay payments through
administrative hurdles and retroactive denials, creating severe finan-
cial strain for hospitals. This bill implements a "pay and pursue" model
in which insurers must pay hospitals upfront for services and, if they
believe care was not medically necessary, pursue a structured post-pay-
ment review. This process preserves the insurer's ability to challenge
care while ensuring hospitals are not left waiting for payment or spend-
ing excessive time on claim disputes. It focuses administrative
resources on actual disputes rather than blanket denials and incentiv-
izes collaboration through structured, medically grounded review. Hospi-
tals can continue their vital work uninterrupted while insurers maintain
fiscal responsibility and oversight.
 
LEGISLATIVE HISTORY:
This is a new bill.
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect on January 1, 2026. Rules and regulations
necessary for implementation may be promulgated prior to that date.

Statutes affected:
S8590: 3224-a insurance law, 3224-a(a) insurance law