New York State Health Care Reform Act Affects You

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April 1st, 2012

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 (   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 (  Note that this list is not 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 ... CONTINUED HERE

[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 much more expensive to payers than registering is.


  • Dianne Grimes says:

    Does Blue Cross/Blue Shield participate in paying the NYS surcharge?

    I'm on a fixed income and am already responsible for paying $200. Now the hospital wants $19.26 from me for a NYS surcharge.

    Please clarify this for me.

  • Marty Oesterreich says:

    My insurance claims some diagnostic tests are eligible for payment by them to the medical preovider. The Medical provider is now insisting on direct payment by me and is including an additional New York State surcharge of $449.12 on top of the original bill of $1185.00. As I am now directly paying my bill why am I being charged a "third-party payor" fee?