New York State Health Care Reform Act (HCRA)

June 17, 2003

Dear Payor/Provider:

Re: New York State Health Care Reform Act (HCRA) of 2000

The purpose of this letter is to provide a summary of some of the major statutory changes recently made to the New York State Health Care Reform Act (HCRA) of 2000 as part of the enacted 2003-2004 State Fiscal Year Budget (i.e., Budget Bill).

In general, the Budget Bill extends HCRA from July 1, 2003, through June 30, 2005. In doing so, the deregulated hospital ratesetting system which allows most payors to negotiate rates for inpatient hospital services, is continued. The Budget Bill also continues the existing statutorily based ratesetting methodology for inpatient hospital services paid by New York State Medicaid, other New York State governmental agencies, New York State's local county governments for services provided to inmates of local correctional facilities, and payments made for such services under the New York State Workers' Compensation Law, Comprehensive Motor Vehicle Insurance Reparations Act, Volunteer Firefighters' Benefit Law and Ambulance Workers' Benefit Law.

A pooling of funds for indigent care subsidies and health care initiatives, which is largely supported by assessments on patient service revenues and payor surcharges on payments made for hospital and certain freestanding clinic services, is also continued. You were previously notified of increases in the surcharge percentages for services provided on and after July 1, 2003, in our letter dated May 30, 2003.

The Budget Bill also continues the requirement for certain payors to contribute to a Professional Education Pool (PEP) through additional surcharges on inpatient hospital services, or through covered lives assessments paid directly to the Department's pool administrator. Our letter dated May 30, 2003, provided the revised regionally varying PEP surcharges for inpatient hospital payments made by affected non-electing payors for services rendered on and after July 1, 2003. In addition, regional collection targets from the covered lives assessments will be increased effective January 1, 2004.

The enclosed overview sets forth the specific statutory revisions which are important to payors and providers of health services in regard to HCRA pool funding obligations. For additional information, please refer to the Department's website at:

http://www.health.state.ny.us/nysdoh/hcra/hcrahome.htm

Questions may also be directed to:

Mr. Richard Pellegrini, Director
Bureau of Financial Management and Information Support
Room 984, Corning Tower
Albany, New York 12237-0719
(518) 473-4653

Sincerely,

Mark H. Van Guysling
Assistant Director
Division of Health Care Financing

Enclosures


Overview of Recently Enacted HCRA Revisions Impacting Payor and Provider Pool Payment Obligations/Responsibilities

  • HCRA Surcharges

    Recently enacted amendments to HCRA revise the surcharge percentages imposed on payments made to New York State general hospitals and diagnostic and treatment centers providing comprehensive primary care or ambulatory surgery services for rendered services on and after July 1, 2003. The enclosed, entitled Attachment #4, Indigent Care and Health Care Initiatives Surcharges by Payor, outlines the existing surcharge percentages for services rendered on and after January 1, 1997, through June 30, 2003, and the revised surcharge percentages applicable to services provided on and after July 1, 2003. This same attachment was sent to you previously by letter dated May 30, 2003. Revised Public Goods Pool reporting forms for the July 2003 and subsequent reporting periods will be mailed under separate cover and posted on our website in the near future.

  • Professional Education Pool (PEP) Covered Lives Assessments

    Recent amendments to HCRA maintain the statewide aggregate mandated PEP funding for 2003 at the 2002 funding level of $690 million. In 2004, this mandated PEP funding level is increased to $725 million. For the six-month period of January 1, 2005, through June 30, 2005, the mandated statewide aggregate PEP funding level will be $362.5 million. Allocation of this funding requirement by region will continue to be based on methods prescribed under prior statutory provisions which have been extended.

    Effective in 2004, annual regional covered lives assessments will be calculated to reflect these increases in funding requirements. This will be in addition to existing adjustments which occur each year to reflect corrections to previous year over or under collections of each region's funding target.

  • Alternative Per Unit of Service PEP Surcharges

    PEP surcharges applicable to inpatient hospital payments made by affected non-electing payors have been increased for services provided on and after July 1, 2003. To ensure proper billing, all New York State general hospitals were previously notified of this requirement. The enclosed, entitled Attachment #5, 2003 GME Surcharges/Assessments (Page 6 of 6), provide the regionally varying percentages for services on January 1, 2003, through June 30, 2003, and on and after July 1, 2003.

  • Interest and Penalty Amnesty for Resolution of Delinquent Pool Obligations

    Recently enacted amendments to HCRA include a new amnesty provision which waives statutorily required interest and penalty if delinquent obligations due to pools established under the New York Prospective Hospital Reimbursement Methodology or HCRA for periods prior to January 1, 2003, are paid in full, and accompanied by the appropriate reports, on or before December 31, 2003. This amnesty provision does not apply to any interest and penalty amount which has been collected previously by the Department or for delinquencies which are discovered during the course of an audit conducted by the Department or it's designee.

    Although we encourage that all delinquent payments be submitted with appropriately completed reports, the new statutory provisions also allows payors to file these delinquent payments with partially completed reports as long as there is sufficient information available to the Department to identify the submitting payor, the electing organization, and nature of payments. Payors who file partial reports pursuant to this provision will however, be required to file properly completed reports for applicable delinquency periods within thirty days of the Department's receipt of such delinquent payments.

  • Annual Pool Reporting and Payment Option

    Pre-existing HCRA provisions gave the Commissioner the authority to permit payors to submit Pool reports and payments on an annual basis if it was determined, based on a prior year's reported data, that such payors' aggregate surcharge payments and covered lives assessments were not expected to exceed $10,000 annually. Recently enacted amendments to HCRA raise this threshold to $25,000 annually. As in prior years, there will not be an application process for establishing who will be allowed to annually file. The Department will determine which payors are eligible and send them written notification prior to the applicable annual filing period.

  • Electronic Pool Reporting

    Recently enacted revisions to HCRA require all electing payors who file Pool reports and associated payments on a monthly basis and all electing third party administrators to file reports electronically for reporting periods on and after July 1, 2004. Payors and third party administrators whose elections are effective on or after January 1, 2004, will be required to electronically file pool reports after one full year of pool reporting experience. Designated providers of services subject to HCRA surcharges will be required to electronically file Pool reports for reporting periods on and after January 1, 2005. This also applies to reports accompanying payment of the 1% Hospital Inpatient Assessment.

    We note that you are not precluded from submitting reports electronically for periods prior to the dates mandated by law. To facilitate this process, a website has been established at www.hcrapools.org. To file electronically, you must establish an electronic filing account with the Office of Pool Administration and be assigned a secure password.

    To learn more about our available electronic filing options, click on Frequently Asked Questions from the Homepage of the web site or call the electronic filing help desk at (315) 671-3800 or contact them through e-mail at webpools@hcrapools.org.

  • Payor Election Process for Making Direct Pool Payments

    Unless otherwise officially revoked or rescinded, all elections in effect on June 1, 2003, are considered extended for periods on and after July 1, 2003. Recent revisions to HCRA however, amend the election process to allow for monthly elections. Beginning June 1, 2003, an election by any payor or organization shall begin on the first day of the month following the date it is received by the Department. Although we will encourage all newly electing payors to submit their election forms in the early part of the month preceding the month in which it becomes effective, this modification in the election process may impact our ability to post these new elections on our HCRA website elector list on a timely basis. Consequently, we continue to remind providers that surcharges applicable to nonelecting payors should be included in bills issued to any affected payor which is not noted as an electing payor on this website listing. If, upon remittance, such payor states that they are an elector, the provider should revisit the website elector list to verify their status.

    Another recent revision to HCRA allows an electing payor acting in an administrative services capacity to submit, on behalf of a client, a photocopy of a portion of an agreement that exists between the payor and its client which includes the client's consent to the conditions of election, in lieu of a separate election form. This photocopy must include the signatures of both parties on the agreement to be accepted as a basis for establishing the effective election date of such client. The Department may request the submission of a fully completed election form from such client within thirty days following a determination of accepted election status pursuant to this newly authorized procedure.