Amd §4235, Ins L; amd §4406-c, Pub Health L; amd §2, Chap of 2022 (as proposed in S.7199-A & A.8169-A)
Provides that no insurance contract or agreement between a health insurance plan and a health care provider, other than a residential health care facility, shall include a provision that: contains a most-favored-nation provision; or restricts the ability of a corporation, an entity that contracts with a corporation for a provider network, or a health care provider to disclose certain costs, prices or information; extends the effective date from January 1, 2023 until July 1, 2023.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A2205
SPONSOR: Cruz TITLE OF BILL:
An act to amend the insurance law and the public health law, in relation
to certain health care contracts or agreements; and to amend a chapter
of the laws of 2022 amending the insurance law relating to certain
prohibited contract provisions, as proposed in legislative bills numbers
S. 7199-A and A. 8169-A, in relation to the effectiveness thereof
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is to make amendments to Chapter 665 of the
Laws of 2022 relating to exceptions to certain health care contracts or
agreements.
SUMMARY OF PROVISIONS:
Sections 1-2 provides conforming amendments to the sections of the
Insurance and Public Health Law providing that no contact or agreement
between a health plan and a health care provider, other than a residen-
tial health care facility, shall include a most-favored-nation provision
or restrict the ability of a health plan, an entity that contracts with
a health plan for a provider network, or a health care provider to
disclose (i) actual claims costs or (ii) price or quality information
required to be disclosed under federal law.
Section 3-4 provide the effective date. The effective date has also been
modified from January 1, 2023, to June 1, 2023.
JUSTIFICATION:
In recent years, hospital consolidation has resulted in dominant systems
exercising anticompetitive market power. There have been a number of
hospital mergers and acquisitions, with big hospitals acquiring smaller
ones, along with physician practices. These hospital systems reduce
competition and have the market power to dictate price. While these
systems assert that the mergers will improve quality and reduce costs,
the data does not support that. Instead they leverage their market
power to increase prices when they negotiate rates and contracts with
payers. And often these contracts include clauses that prohibit the
disclosure of prices.
The landscape, however, is changing. In California, a group of payers
sued Sutter Health in a case that was joined by the State Attorney
General. They argued that Sutter engaged in anticompetitive practices
that drove up healthcare prices in Northern California. In March 2021, a
Superior Court of California judge granted preliminary approval for a
$575 million settlement, which also includes an agreement by Sutter
Health to end "all or nothing" contract provisions requiring payers to
contract with all Sutter hospitals if they wanted access to any Sutter
facility.
In New York, there are similar highly concentrated hospital markets.
The recent public disputes - between payers and the large systems have
highlighted the need for increased transparency and visibility to the
terms and conditions of such multi-year agreements and how such agree-
ments are contributing to rising health care costs. Large hospital
systems that maintain robust provider networks are leveraging that
market share during negotiations to restrict health insurance networks
designs and access. The result of these anti-competitive negotiation
tactics is increased costs charged to insurance companies and self-in-
sured entities, which ultimately are passed on to consumers, through
premiums and cost sharing.
Importantly, theSe agreements-affect the networks for commercial lines
of business including HMO, PPO, individual, small group; large group,
self-insured benefit funds, the State of New York, the City of New York,
other municipalities, Medicaid, and Medicare Advantage. This legislation
aims to increase fairness and visibility by outlawing most favored
nation clauses, which guarantee that a buyer of good or services (i.e. a
payer) receives terms from a seller (i.e. a hospital or provider) that
are at least as favorable as those provided to any other buyer. It would
also bar anti-disclosure clauses, which are contractual provisions that
prevent a party to the contract from revealing actual claims costs,
negotiated rates or discounts, or patient cost-sharing data (protected
health information would remain privileged and could not be disclosed).
This bill would apply to all health plans negotiated by insurers, health
maintenance organizations (HMOs), or third parties who administer a
health plan on behalf of another entity such as a self-insured fund. In
barring these two contract practices which are widely recognized to
serve no purpose beyond the consolidation of market power and inflation
of healthcare prices, this bill will increase transparency and ensure a
fairer and more diverse healthcare marketplace for all.
Chapter 665 of the Laws of 2022 provided that no contact or agreement
between a health plan and a health care provider, other than a residen-
tial health care facility, shall include a mostfavored-nation provision
or restrict the ability of a health plan, an entity that contracts with
a health plan for a provider network, or a health care provider to
disclose (i) actual claims costs or (ii) price or quality information
required to be disclosed under federal law. This Chapter amendment makes
conforming amendments by including this prohibition in other sections of
the Insurance and Public Health Law.
PRIOR LEGISLATIVE HISTORY:
This is a new bill.
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None noted.
EFFECTIVE DATE:
This act shall take effect immediately; provided, however, that sections
one and two of this act shall take effect on the same date and in the
same manner as a chapter of the laws of 2022 amending the insurance law
relating to certain prohibited contract provisions, as proposed in
legislative bills numbers S.7199-A and A.8169-A, takes effect.
STATE OF NEW YORK
________________________________________________________________________
2205
2023-2024 Regular Sessions
IN ASSEMBLY
January 24, 2023
___________
Introduced by M. of A. CRUZ -- read once and referred to the Committee
on Insurance
AN ACT to amend the insurance law and the public health law, in relation
to certain health care contracts or agreements; and to amend a chapter
of the laws of 2022 amending the insurance law relating to certain
prohibited contract provisions, as proposed in legislative bills
numbers S. 7199-A and A. 8169-A, in relation to the effectiveness
thereof
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 4235 of the insurance law is amended by adding a
2 new subsection (o) to read as follows:
3 (o) (1) No contract or agreement between a health plan subject to this
4 article and a health care provider, other than a residential health care
5 facility as defined by section twenty-eight hundred one of the public
6 health law, shall include a provision that:
7 (A) contains a most-favored-nation provision; or
8 (B) restricts the ability of a corporation, an entity that contracts
9 with a corporation for a provider network, or a health care provider to
10 disclose: (i) actual claims costs; or (ii) price or quality information
11 required to be disclosed under federal law, including the allowed
12 amount, negotiated rates or discounts, or any other claim-related finan-
13 cial obligations, including, but not limited to, patient cost-sharing
14 covered by the provider contract to any subscriber, enrollee, group, or
15 other entity receiving health care services pursuant to the contract, or
16 to any public compilation of reimbursement data such as the New York all
17 payer database required by law or regulation, provided that no disclo-
18 sure shall include protected health information or other information
19 covered by statutory or other privilege.
20 (2) For purposes of this subsection, the term "health plan" shall
21 include: (A) an insurer licensed pursuant to this chapter or a health
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD04298-01-3
A. 2205 2
1 maintenance organization certified pursuant to article forty-four of the
2 public health law; and
3 (B) a third-party administrator, affiliated with an insurer or health
4 maintenance organization, who administers a health benefit plan.
5 § 2. Section 4406-c of the public health law is amended by adding a
6 new subdivision 13 to read as follows:
7 13. (a) No contract or agreement between a health plan subject to this
8 article and a health care provider, other than a residential health care
9 facility as defined by section twenty-eight hundred one of this chapter,
10 shall include a provision that:
11 (i) contains a most-favored-nation provision; or
12 (ii) restricts the ability of a health plan, an entity that contracts
13 with a health care plan for a provider network, or a health care provid-
14 er to disclose: (A) actual claims costs; or (B) price or quality infor-
15 mation required to be disclosed under federal law, including the allowed
16 amount, negotiated rates or discounts, or any other claim-related finan-
17 cial obligations, including, but not limited to, patient cost-sharing
18 covered by the provider contract to any subscriber, enrollee, group, or
19 other entity receiving health care services pursuant to the contract, or
20 to any public compilation of reimbursement data such as the New York all
21 payer database required by law or regulation, provided that no disclo-
22 sure shall include protected health information or other information
23 covered by statutory or other privilege.
24 (b) For purposes of this subdivision, the term "health plan" shall
25 include:
26 (i) an insurer licensed pursuant to the insurance law or a health
27 maintenance organization certified pursuant to this article; and
28 (ii) a third-party administrator, affiliated with an insurer or health
29 maintenance organization, who administers a health benefit plan.
30 § 3. Section 2 of a chapter of the laws of 2022 amending the insurance
31 law relating to certain prohibited contract provisions, as proposed in
32 legislative bills numbers S. 7199-A and A. 8169-A, is amended to read as
33 follows:
34 § 2. This act shall take effect [January] July 1, 2023.
35 § 4. This act shall take effect immediately, provided, however, that
36 sections one and two of this act shall take effect on the same date and
37 in the same manner as a chapter of the laws of 2022 amending the insur-
38 ance law relating to certain prohibited contract provisions, as proposed
39 in legislative bills numbers S. 7199-A and A. 8169-A, takes effect.
