The Health Care Reform Act (HCRA) of New York includes new enforcement initiatives and imposes requirements for all insurance companies and their third party administrators.
Since 1996, New York State's Health Care Reform Act (HCRA) imposes a surcharge on charges for patient care provided by state licensed health care providers. The surcharge applies to any third-party payer that is responsible for paying for any medical expenses incurred within the state of New York.
HCRA was first initiated in 1996. Today, the Health Care Reform Act of 2000 governs and has been modified eight times since its enactment in 1999. While HCRA surcharges have been in effect for almost 15 years, new enforcement initiatives and New York State audits have made this law top of mind for all payers, including many of you, our readers.
To help you successfully navigate the requirements of NY HCRA, to ensure your compliance now that they are being more stringently enforced, and to limit your financial exposure, we have posed a series of questions directly to representatives of the New York State Healthcare Department. Read below for answers to your Frequently Asked Questions.
Q. What is the surcharge? How is it billed?
A. Third-party payers have two options for paying the HCRA surcharges. They can opt-in, or “register”, or they can choose not to register.
- Registration Option: If the insurer opts into the surcharge program by registering as a third party payer, at the time of service, the payer must indicate to the provider that they are a registered participant in the pool. The provider must confirm the payer’s registration via the state website (www.health.state.ny.us/nysdoh/hcra/provider.htm). Once the payer is confirmed as registered, the provider will NOT add any surcharge to the bill. The payer should know of their obligation to pay the surcharge amount directly to the state of New York within 30 days after issuing payment to the provider. For the year 2011, the surcharge for such registered entities is 9.6%of the claims paid.
- Non-Registration Option: If the insurer does not opt into the surcharge program by registering as a payer, the medical facility is required to bill the insurer directly for the surcharge, which is 37.9%(i) of the total claim paid to the facility. This amount is then forwarded by the hospital to the state.
- The hospital is responsible for checking the state’s provider list to determine whether the insurer has opted into the surcharge program.
Q. What type of provider is subject to the HCRA surcharge?
A. The New York State Department of Health’s website indicates that the types of providers subject to the surcharge are general hospitals, hospital-based extension clinics, comprehensive diagnostic and treatment centers, diagnostic and treatment center extension clinics, diagnostic and treatment centers that provide ambulatory surgical services, and clinical laboratories. NY State provides a courtesy listing of the providers subject to this surcharge on its website (http://www.health.state.ny.us/nysdoh/hcra/provider.htm). Note that this list isnot all inclusive. The state encourages entities that utilize their list to contact providers directly if they have questions.
Q. What happens if a hospital does not check the participants in the program and a bill does not contain any surcharge?
A: If the medical provider does not verify whether the patient’s insurer is a participant in the program and fails to charge a non-participating insurer the 37.9% surcharge on the medical bill, the state will hold the hospital liable for the amount, including interest and penalties.
Q. What are the reporting and payment requirements for third party payers? Does my TPA have to list my company to the state of New York?
A: The New York State Health Department requires insurance companies to register. When registering, they will receive an account ID and a password. If they use a third party administrator (TPA), the TPA must also register itself and provide the state with a list of its clients. The TPA then makes payments on its clients’ behalf under each client’s name. The state of New York will check to see that both registrations match.
The TPA application form is already designed to identify electing and non-electing clients and to enable changes. The Health Department must be notified of any changes of TPA’s clients or their elective status. If an insurance company’s previous TPA did not update its client lists by submitting the appropriate forms when an insurance company left them, then that insurance company can potentially be listed under more than one TPA.
Reports and payments for registered payers must be submitted to the Office of Pool Administration on the 30th day following the report month. For instance, payments for January 2011 must be submitted no later than March 2, 2011. Reports are made only when surcharge payments are made. If you owe no HCRA surcharge for a given month, there is no need to file a report.
Q. How does a TPA function within the program?
A: A TPA represents insurers within the program and will file a HCRA report and make the corresponding payment for a given month on behalf of the insurer. The TPA will only make payments for registered entities who have opted into the program. Both the TPA and the insurer must register with the program and the insurer is liable for any underpayments made by the TPA. A TPA may include all of the insurers that it represents on one monthly report.
NOTE: If the entity is not registered and has opted out, then the hospital will add the 37.9% opt-out surcharge to its bill and the payer will pay the hospital directly for both the provider bill and the HCRA surcharge. It is the hospital in this case that will file the report and make payment to the NY Department of Health.
Q. Are international insurers exempt from the higher surcharge if the foreign insurer chooses not to register with the State of NY?
A: International insurers are subject to the higher surcharge of 37.9% if they fail to register with the state. The only exemption for this is foreign insurers that are state sponsored/socialized payers and not subject to foreign surcharges. When a visitor or expatriate comes into the US with private travel insurance or medical insurance, this insurance is subject to the surcharge because it is issued by “insurance entities.”
Q. How are foreign diplomats treated under the surcharge?
A: Registered foreign diplomats and their families with diplomatic credentials are exempt from the HCRA regulation.
Q. After filing for the registration, when do the TPA and/or insurer begin functioning under the program?
A: If the TPA and/or the insurer file the paper work and it is postmarked prior to the end of the preceding month, it will be able to be considered a participant in the following month.
Q. If the insurer is registered for the period that a claim is paid but the TPA is not registered in that period, how can a TPA file a report on behalf of the insurer?
A: The TPA may file on behalf of the insurer. It must do so under the insurer’s name and cannot do so under the TPA’s form. If the TPA is not registered when a claim is paid, it may not file for that claim.
Q. How can a foreign insurer without a US tax ID number register with the state of New York?
A: The state of New York has adopted the US tax ID number as the number it uses for registration purposes. The state of NY is aware that foreign companies do not have US tax ID numbers and so will assign an identifying number to access its system and enable those foreign entities to register and make any applicable surcharge payments. This does not create any tax implications for these companies. The state issues a “dummy” number that in no way can result in any reporting to any other entity. The number contains letters that internally indicate to the state of New York that it is a dummy number.
Q. Is there an amnesty program for companies that did not register for the surcharge program?
A: There was an amnesty program that has expired, but it did not apply to companies that failed to register with the surcharge program. It applied to companies that failed to deliver reports for dates of service prior to January 1, 2010. If an insurer submitted a report and payment between April 1, 2010 and December 31, 2010, all fees and penalties for late payment would be waived.
Penalties for late reporting are 12% per annum for all amounts not paid. Interest for late reporting is 5% for each month that surcharge is not paid, capped at 25%.
Q. What is a TPA and/or insurer’s responsibility to report in the event that an insurer has no liability as a result of a deductable or co-pay that exceeds the total amount of the claim?
A: An insurer would have no responsibility to report or pay any amount if the insurer has no liability to pay the claim. (The state of NY website provides samples on computations of claims. See http://www.health.state.ny.us/nysdoh/hcra/examples.htm
Q. Are insurance companies and TPAs required to disclose an insurance entity’s HCRA status on insurance ID cards?
A: Insurance companies are required to disclose their HCRA status on their insurance ID cards. If the insurance company is using a TPA to issue its cards, then the TPA must design a card that will state the status of the insurance company within the surcharge pool (i.e. opted-in or opted-out). A logo, per se, is not required. The NY State Health Department recognizes that some international insurers do not use logos. However, each card must have the insurer’s name and contact information on the card so that the medical provider can easily determine which insurance company is covering the patient and can quickly look up the information within the state’s computer system to determine whether the insurer has opted into the program.
The state of New York recognizes that some foreign insurance companies do not use insurance ID cards for their insured patients to access healthcare services in the U.S. When patients from such insurers access services in the state of New York from providers subject to the HCRA surcharge, the insurance company or its TPA should inform the provider if they’re sending the provider guarantee of payment on the insurance company’s behalf. That guarantee of payment should indicate whether the insurance entity has opted in or opted out for the HCRA surcharge. As with the case of an insurance company using an insurance ID card, the healthcare provider will verify the insurance company’s HCRA status.
(i) The NY State Health Dep’t representative gave us this rate for non-registered payers. However, we have seen charges assessed in the amount of 39.3%. The NY State Health website indicates 28.27% for 2011. Penalties also apply when charges are not paid in a timely manner. The bottom line is that not registering is muchmore expensive to payers than registering is.