United States: IREG Update - August 21, 2015

Hot Topic: New York Emergency Medical Services and Surprise Bills Law

Earlier this year, New York's Emergency Medical Services and Surprise Bills Law went into effect (the full text of the bill is available on the State Assembly's website). The Surprise Bills Law offers new protections for patients in connection with bills for out-of-network services, and in doing so imposes new obligations on providers and health insurers. In addition, it contains new requirements applicable to insurers related to disclosures and network adequacy. Below is a summary of some of the key provisions of the law of which insurers should be aware.

Surprise bills and the independent dispute resolution (IDR) process

Under the Surprise Bills Law, an insurer must ensure that an insured is only responsible for in-network costs if a claim involves a "surprise bill"—defined under the law as an unexpected bill for health care services provided by a non-participating providing, other than emergency services. For example, imagine the fairly common situation in which a patient undergoes surgery using an in-network physician, and weeks later receives a bill from an out-of-network anesthesiologist who assisted in the patient's surgery. This type of bill would be considered a "surprise bill" implicated by the new law.

Insurers receiving claims for surprise bills from providers must either pay the non-participating provider the billed amount or attempt to negotiate reimbursement. If negotiation does not work, the plan can pay an amount it determines is reasonable for the services rendered (minus the insured's copayment, coinsurance or deductible). If the plan takes this course of action, however, it must also provide notice to the non-participating provider regarding the new IDR process established by the law. If the provider disputes the amount determined reasonable by the insurer, the dispute is settled through the IDR process. This process takes place during a 30-day timeframe, at the end of which the IDR entity notifies the parties of the fee it has determined is reasonable for the services that generated the surprise bill.

Emergency services and the IDR process

Under the new law, a plan must also ensure that the insured incurs no greater out-of-pocket costs for the out-of-network emergency services than the insured would have incurred with a participating physician for emergency services. Upon receipt of a claim for emergency services from a non-participating provider, the health care plan must pay an amount that it determines is reasonable for the emergency services (minus the insured's co-payment, coinsurance or deductible, if any) and provide notice to the non-participating physician describing how to initiate the same IDR process described above.

Disclosure requirements for insurers

The Surprise Bills Law also imposes new disclosure requirements on insurers in order to promote greater transparency. In connection with out-of-network coverage, insurers must now provide to insureds a clear written description of the methodology used by the insurer to determine reimbursement for out-of-network health care services, as well as the amount that the insurer will reimburse under such methodology set forth as a percentage of the usual and customary cost. Insurers must also provide examples of anticipated out-of-pocket costs for frequently billed out-of-network health care services.

Insurers must provide information in writing and online that reasonably permits an insured to estimate the anticipated out-of-pocket cost for out-of-network health care services in a geographical area or zip code based upon the difference between what the insurer will reimburse for out-of-network health care services and the usual and customary cost for out-of-network health care services.

Network adequacy

The Surprise Bills Law also extends certain existing network adequacy requirements to insurers that issue comprehensive policies that utilize a network of providers. Specifically, if an insurer determines that it does not have an in-network health care provider with appropriate training and experience to meet the particular health care needs of an insured, the insurer shall make a referral to an appropriate provider at no additional cost to the insured. Additionally, insurers issuing policies that cover out-of-network health care services must make available at least one option for coverage and cover at least 80 percent of the usual and customary cost of each out-of-network health care service.


Insurers providing health coverage should take time to review the substance of the new Surprise Bills Law in order to ensure they are acting in compliance with the payment, disclosure and network adequacy requirements. In particular, insurers should review their policies and practices with regard to out-of-network claims in order to confirm that they are protecting consumers from surprise bills and bills for emergency services, consistent with the new regulations.


Noteworthy links from the past two weeks


  • JD Supra profiled Richard Badolato, who was named interim insurance and banking commissioner in New Jersey. [ JD Supra]
  • Bank consultant Promontory threatened to sue the New York Department of Financial Services over findings of improper conduct... then settled for US$10 million. [ Wall Street Journal, New York Times]
  • The NAIC and the Bermuda Monetary Authority agreed to coordinate their regulatory efforts. [ AM Best]
  • The NAIC continued to wrestle with the issue of insurance company collection of big data and use of "price optimization." [ AM Best]

Life & Health

  • A committee of Alaska lawmakers voted to sue the governor over Affordable Care Act Medicaid expansion [ Newsminer.com]
  • Delaware decided not to set up its own independent health insurance exchange. [ Washington Times]
  • The American Hospital Association urged regulators to scrutinize the proposed Anthem-CIGNA merger. [ Law360]
  • The Centers for Medicare and Medicaid Services decided to delay its announcement of its Affordable Care Act "risk corridor" payments and charges for health plans. [ Modern Healthcare]
  • House Republicans criticized new Health and Human Services "out-of-pocket" rules. [ Business Insurance]
  • The Obama administration reported that the number of people in the US without health insurance has dropped by 15 million since 2013. [ New York Times]
  • The New Orleans Times-Picayune reported on the demise of Louisiana's health insurance co-op. [New Orleans Times-Picayune: here and here]
  • The Health and Human Services Office of the Inspector General issued a report finding that most health insurance co-ops are losing money. [ New York Times]
  • The IRS sought public comment for its plan to implement the Affordable Care Act "Cadillac tax" beginning in 2018. [ Business Insurance]

Property & Casualty

  • Consumers bemoaned horrific red tape in the Hurricane Sandy flood insurance claims process [ New York Times]
  • Florida's new rules on Sinkhole Neutral Evaluations went into effect. [ Insurance Journal]
  • The federal government began making new Hurricane Sandy payments based on a review of the performance of the National Flood Insurance Program. [ Wall Street Journal]
  • The Consumer Federation of America said that new widows and widowers often see their auto insurance rates rise, and regulators responded. [ Pittsburgh Post-Gazette]
  • The Maine insurance commissioner touted a new law regulating "transportation network companies" like Uber and Lyft. [ Maine Office of the Insurance Commissioner]
  • The Louisiana Insurance Department issued a new report on the state of insurance markets 10 years after hurricanes Katrina and Rita. [ Louisiana Insurance Department]


  • British regulators extended the reach of their new accountability rules for financial executives to include insurers and foreign branches operating in the UK. [Law360]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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