New York - Volume II, Number 3 - December, 1997

DEPARTMENT OF INSURANCE FINES OXFORD FOR LATE PAYMENTS

The New York State Department of Insurance has imposed a $3 million fine against Oxford Health Plans for violations related to late payment of claims and failure to comply with other state insurance regulations, including issuing contracts not approved by the agency. Oxford was also ordered to pay $500,000 in restitution to its members and providers. The action comes on the heels of the new prompt payment law which, effective January 24, 1998, requires HMOs and other carriers to pay "clean claims" from physicians and providers within 45 days of receipt.

DOH RELEASES GUIDELINES FOR INTEGRATED DELIVERY SYSTEMS

The Departments of Health and Insurance have issued final guidelines for integrated delivery systems ("IDS"). The New York Health Care Reform Act of 1996 authorized the development of IDS or provider-sponsored networks (PSNs) (known, at the federal level, as provider sponsored organizations or PSOs). Previously, a few prepaid health service plans could provide services to Medicaid recipients, but there was no broad authority for PSNs. The new networks will be able to provide a broader array of services on a capitated basis. IDS would be covered by most of the same regulations as HMOs but the state insurance superintendent can establish less stringent financial solvency requirements for the new systems. The Medical Society of the State of New York (MSSNY) was able to obtain provisions in the new guidelines that allow the insurance department, when approving an IDS, to make case-case-by modifications to existing HMO financial solvency requirements for initial funding and net worth. At the federal level, a rule-making committee has agreed upon some financial solvency requirements for PSOs, such as continuation of benefits clauses, reserves, and hold harmless clauses for beneficiary protection, but remains divided on whether a PSO’s assets should include "sweat equity," the ability of physicians to continue care while diverting 50% of reimbursement to cover PSO operating expenses.

HCFA’S 3-TIER AUDIT SYSTEM RESTRICTS PHYSICIANS’ RIGHTS

GHI, the Medicare contractor for the downstate Queens area, has initiated a new post-payment audit program that offers a Three-Option Consent Settlement Plan to physicians who come under audit (physicians who bill certain codes more often than same-specialty peers have been targeted). Two of the options--agreeing to the requested refund and negotiating a reduced refund--require waiver of a formal hearing. The third option constitutes a challenge to the refund demand and, although it provides appeal rights, can result in substantial documentation requirements and, ultimately, an even larger refund demand. MSSNY has called the plan "unfair and punitive." HCFA plans to extend the new audit system to physicians in areas covered by Empire Medicare Services and the Upstate Medicare Division. KACS can assist physicians notified of an audit.