DFS regulations to implement the Independent Dispute resolution program

DFS summary

The final Budget negotiated between the Governor and the Legislature contains provisions to provide greater transparency of a health insurer’s out‐of‐network coverage, broader availability of a patient’s right to go OON if the insurer’s existing network is insufficient, provisions to assure that OON benefits are more comprehensive, and provisions to address payments for emergency care and “surprise bills” by OON physicians.

MSSNY’s Division of Governmental Affairs would like to thank all physicians who worked on this proposal including particularly those from State, County, Regional, and Medical Specialty Societies. A special thank you to Michael Brisman, MD (Nassau County) Thomas Lee, MD (Westchester County), MSSNY President Sam Unterricht and MSSNY President‐ Elect Andrew Kleinman for their daily and often hourly “hands on” work on the language of this proposal.


The provisions will do the following to enhance network adequacy and expand out‐of‐network coverage availability for patients, and expand rights of physicians to have flexibility as to which plans they can choose to participate with:

  • Require health insurers to describe its OON coverage in a manner that is based upon the % of the “usual and customary cost” of OON health care services, including examples of anticipated out of pocket costs for frequently billed OON health care services, and an internet site that enables patients to determine what out of pocket costs they can reasonably expect to face based upon the OON coverage provided by the insurer;
  • Define “Usual and customary cost” as the 80th percentile “of all charges for the particular health care service performed by a provider in the same or similar specialty and provided in the same geographical area as reported in a benchmarking database maintained by a nonprofit organization specified by the superintendent.” This would appear to imply FAIR Health. Importantly, efforts by the insurance industry to sunset this definition in 2016 was defeated.
  • Require health insurers issuing a “comprehensive group or group remittance health insurance policy or contract that covers out‐of‐network health care services” to “make available” coverage for at least 80% of the usual and customary cost of each out‐of‐network health care service . Importantly, efforts to exempt these products from state “premium prior approval” requirements were defeated. The coverage baseline was increased from what had originally been proposed (70% UCR) to 80% of UCR.
  • Enables the superintendent to require insurer offering of 80% UCR OON coverage to a group market in a region if no coverage is available
  • Require all health insurance products, not just HMOs, to have adequate networks;
  • Afford patients enrolled in all health insurance products the right, currently available only to those enrolled in HMOs, to receive treatment from a specialist appropriately qualified to treat a patient’s particular condition at no additional cost to the patient, if the network of such insurance product fails to include such appropriately qualified specialist.
  • Establish a new patient external appeal right to go OON if the insurer network is insufficient to meet health care needs of enrollee.


The bill would also make all bills for emergency care and other “surprise bills” for care by non‐participating physicians (taking assignment) subject to an independent dispute resolution (IDR) process after an insurer made an initial “reasonable payment” for such care, and efforts to informally settle the payment dispute were unsuccessful. Either the physician or insurer could bring the claim to the IDR process. To encourage reasonableness on both sides, the IDR entity would be required to choose between the plan’s payment or the non‐participating physician’s fee (“baseball arbitration”). Only in the rare instances where the reviewer believed that a settlement is reasonably likely or both the physician fee and insurer payment represent unreasonable extremes, the reviewer can give the parties ten business days to negotiate a fee without consequence if one or neither party wished to participate in such a re‐negotiation. Claims for certain CPT codes under $600 would be exempted from the IDR altogether. A physician of the same or similar specialty as the physician providing treatment will be required to be involved in the review of the fee. To the extent practicable, the physician shall be licensed to practice in this state. As part of the IDR entity’s review, they would be required to consider:

  • Whether there is a “gross disparity” between the fee charged by the physician as compared to what they usually charge in other non‐par situations;
  • Whether there is a “gross disparity” between the fee charged by the physician as compared to other fees paid to similarly qualified non‐par physicians in the same region;
  • The non‐par physician’s usual charge for comparable services;
  • individual patient characteristics
  • the level of training, education and experience of the physician;
  • the circumstances and complexity of the case, including the time and place of the services; and
  • The usual and customary cost of the service.

All decisions by the IDR entity, including those involving claims which the reviewer requests the parties to renegotiate, would be required within 30 days of the submission of the dispute.


The IDR is a loser pays process unless the alternative negotiation is invoked by the reviewer in which case if an alternative payment is agreed to each party divides the cost of dispute resolution equally.


Given that one of the major goals of the legislation is to reduce the incidence of “surprise” medical bills, to better assure patients are made aware of situations where they may end up receiving treatment by an out‐of‐network physician, the bill would also impose substantial new disclosure requirements on physicians and hospitals,


  • The plans in which the physician participates and the hospitals where the physician is privileged;
  • The anticipated fee a non‐par physician will charge the patient for scheduled services must be provided upon request;
  • The identity and contact information of other health care providers who may be involved in the patient’s care when a non‐emergency service is scheduled, including anesthesiology, laboratory, pathology, radiology or assistant surgeon; With regard to scheduled services that will be provided in a hospital, the identity and contact information of other physicians involved in the patient’s treatment whose services will be arranged by the treating physician.


Similar additional disclosure requirements are also imposed on health insurers and hospitals including:

  • Hospitals are required to post on their website certain standard charges for items and services provided by the hospital and the plans in which the hospital is a participating provider.
  • Hospitals are required to post on their website and provide to a patient in advance on non‐emergent hospital services in registration or admission the names and contact information for physician groups with which the hospital has contracted to provide anesthesia, pathology or radiology; and the name of the physicians employed by the hospital and whose services may be provided at the hospital and the health care plans in which they participate; and a statement which informs patient that a physician who provides service in the hospital may not participate with the same insurer that the hospital participates with and that the patient should check with their physician.
  • Insurers are required to update their websites regarding physician participation status with plans or hospitals within 15 days of a change.


An out‐of‐network workgroup is created comprised of two physicians, two insurer reps and three consumers, co-chaired by superintendent and commissioner of health. The workgroup is required to make recommendations regarding an alternative rate methodology taking into consideration a number of factors including current physician charges, trends in medical care and the actual costs of medical care, regional differences, current methodologies and levels of reimbursement paid by insurers, HMOs, Medicare and Medicaid, in‐network rates, the impact that different rate methodologies would have on customers and premium costs by region. The workgroup must also make recommendations regarding the availability and adequacy of coverage taking into account the extent to which OON coverage is available in each rating region, the extent to which a significant level of OON benefits is available in each rating region including the prevalence of coverage based on UCR cost as well as other set rating methodologies such as Medicare. The report is due 1/1/16.


The new law is effective one year after it is signed into law (April 1, 2015) and shall apply to policies renewed on and after that date. The new disclosure requirements will go into effect one year after enactment(April 1, 2015), and the IDR provisions will apply to health services provided after April 1, 2015 .