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Questions and Answers - A Complete List

Coinsurance, Co-payments, Deductibles and other Patient Cost Sharing Issues
Medicare
Self-Pay Patients
Other Surcharge Questions
Out of State Payors
Covered Lives
Insurance Premiums
State and Local Governmental Payments
Worker´s Compensation/No-Fault Payments
Federal Governmental Payments
Election Process
Interplan Telecommunications System (ITS)
Clinical Laboratories

I. Coinsurance, Co-payments, Deductibles and other Patient Cost Sharing Issues

Question Number	Question	Answer
1	Clarify whether and how surcharges apply to fixed dollar patient cost sharing amounts such as copayments or deductibles?	Where fixed dollar patient obligations such as copayments and deductibles exist for persons covered by private payors, the payor´s aggregate payment is: (a) the bill for patient services prior to the addition of any surcharges or reductions for patient liabilities multiplied by (b) one plus the appropriate percentage surcharge(s) less (c) the fixed dollar patient obligation. Any such payor not electing to pay the Department´s pool administrator directly will remit the aggregate payment as calculated above to the provider. The provider would then remit an amount to the Department´s pool administrator calculated by using formula A, where P = the aggregate payment received, from either a payor or the patient, R = the applicable surcharge rate and O = pool payment obligation: O = P - [P/(1+R)]. A payor that has elected to pay the Department´s pool administrator directly would remit to the Department´s pool administrator and the provider using formula B, where P = the aggregate payment, R = the applicable surcharge rate, O = the payors pool payment obligation and L = liability to provider: O = P - [P/(1+R)], L = P - O. The provider would, then, remit to the Department´s pool administrator an amount of the revenue received from the patient by using formula A.
2	Clarify whether and how surcharges apply to percentage co-insurance patient liabilities?	Where percentage coinsurance patient obligations exist for persons covered by private payors, the payor´s aggregate payment is: (a) the bill for patient services prior to the addition of any surcharges or reductions for patient liabilities multiplied by (b) one plus the appropriate percentage surcharge(s) with the result multiplied by (c) the payor´s percentage responsibility. A payor not electing to pay the Department´s pool administrator directly will remit the aggregate payment as calculated above to the provider. The provider would then remit to the Department´s pool administrator by using formula A. A payor that has elected to pay the Department´s pool administrator directly would remit to the Department´s pool administrator and the provider amounts calculated by using formula B. The provider would, then, remit to the Department´s pool administrator an amount of the revenue received from the patient using formula A. Please refer to the billing examples on the Department´s Web site. The Web site address for the HCRA Home Page is www.health.state.ny.us/nysdoh/hcra/hcrahome.htm
3	Can a payor voluntarily choose to directly remit surcharge amounts attributable to patient co-payment and deductible payments?	Yes. Payors choosing to voluntarily directly remit surcharge amounts attributable to patient co-payment and deductible payments must have procedures in place to adequately notify the billing provider of such action in a timely manner.
4	Are there alternative approaches payors can use to calculate and segregate HCRA surcharge obligations between multiple payors?	There may be other viable options for calculating the segregation of HCRA surcharge obligations between multiple payors. Payors using other approaches must ensure that the total value of surcharges due is fully reflected in any shared billing arrangement. Further, any approach which would shift normally recognized (as described in the responses to the previous two questions) surcharge obligations between multiple payors must have the concurrence of the payor which will be incurring a larger surcharge obligation from that which would be attributable under the approaches previously recognized by the Department. In all instances, payors must ensure appropriate (as described in the responses to the two previous questions) aggregate pool funding levels and notify providers of such approaches and arrangements when remitting payments.
5	Is the total percentage allowance for secondary payors under coordination of benefits principles the same percentage allowance applicable to payments by the primary payor?	Yes. Public Health Law Section 2807-j(2)(g) provides that the total percentage allowance for secondary payors under coordination of benefits principles shall be the same percentage allowance applicable to payments by the primary payor. Coordination of benefits principles generally apply to group policies or plans when an individual is covered by two or more plans providing benefits or services for the same treatment. States typically have laws or regulations that are designed to establish uniformity in the rules used to determine the order in which each payor´s liability is established in these situations. For example, the New York State Insurance Department has promulgated coordination of benefits regulations, which may be found in 11 NYCRR 52.23. If coordination of benefits does not apply to a particular claims situation, each payor is responsible for its individual percentage allowance, calculated based on the payor´s election status. An example of such a situation would be when an individual has coverage that is designed to supplement part of a basic package of benefits.
6	Are there situations where multiple payors are responsible for claims that do not fall under coordination of benefits principles?	Yes. As discussed in the response to the previous question, coordination of benefits principles apply in situations where multiple policies or plans exist which duplicate benefits provided to an individual. However, coordination of benefits principles do NOT apply when an individual is covered by two policies/plans, one of which provides coverage over and above that of the other. In this situation -- when one policy/plan serves to supplement the other -- coordination of benefits principles do not apply, and each policy/plan is treated individually for purposes of determining its applicable percentage allowance.
7	HMOs and other managed care-type plans have subscriber contracts which indicate that services rendered by network providers are paid in full subject to a copayment, which is stated as a specified dollar amount. Does HCRA mandate that such plans collect surcharges on such copayments? If so, would the plan be in violation of its subscriber contract? HMO or other managed care-type plan contracts with providers often include clauses which preclude the provider from charging an enrollee anything beyond the stated copayment amount. If HCRA requires that surcharges be collected on copayment amounts, would providers be in violation of such contracts? If the providers are precluded by contract from collecting surcharges, would the provider or the plan be responsible for payment of the surcharges?	HMOs and other managed care-type plans should follow the instructions provided in the response to Question uestions 1 and 2 of this section. The Department does not have authority over, and will not become involved in, the contractual relationships between payors, providers and covered persons. The underlying tenet of HCRA is deregulation. Furthermore, HCRA does not invalidate provisions of insurance contracts or health benefits plans which limit a covered person´s financial obligation for patient care services costs. Accordingly, contractually stated fixed dollar copayments and deductibles cannot be increased by the HCRA surcharges. Where contractual relationships between beneficiaries and payors require a fixed dollar patient copayment or deductible only, the beneficiary´s fixed dollar liability will not increase as a result of the application of the HCRA surcharges.
8	How do surcharges apply to sliding scale fees typical of hospital outpatient and clinic services Are the surcharges in addition to the fee? How do surcharges apply to fixed dollar payor liabilities such as when a payor has a contractual agreement to pay a laboratory or other provider a specified amount for a service? Are surcharges in addition to the specified payment amount? If so, would patients be responsible for paying the surcharge cost since the payor´s liability is contractually limited?	The aggregate payment obligation of a third party payor is a combination of the patient services payment which would be made in the absence of State imposed surcharges plus the surcharge(s), as described previously. The extent to which a patient is required to share in the cost of this aggregate payment obligation is dictated by contractual agreements reached between payors, beneficiaries and providers which the Department does not regulate.

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Question Number	Question	Answer
1	Are Medicare co-insurance and deductible payments under a Medigap policy subject to the surcharge provisions? Many carriers provide Medicare supplemental policies to many beneficiaries in New York, including coverage for the Medicare Part A deductible. Are they subject to the 8.18 percent, 24 percent and professional education pool surcharges on services rendered by designated providers?	Where a payor is making payments to a designated provider of service as a result of providing coverage for Medicare coinsurance and/or deductibles, surcharges do not apply because the payor is not considered to be acting as a "non-Medicare" payor. Where a payor is making payments to a designated provider of service as a result of a person´s exhaustion of Medicare benefits, or lack of Medicare benefits for a particular service, such payor shall be subject to all applicable surcharges because the payor is considered to be acting as a "non-Medicare" payor. Which specific surcharges apply is dictated by whether the payor has voluntarily elected to pay the Department´s pool administrator directly and whether the payor is subject to professional education pool surcharges.
2	Clarify whether the surcharges apply to revenue a designated provider of services receives for services provided to a patient who is eligible for Medicare.	It is important to distinguish surcharge treatment between Medicare Part A and Part B eligibility. Generally, Medicare Part A benefits are automatically available to all persons over age 65. For patients eligible for payments as a beneficiary under Medicare Part A, the applicability of the surcharges follows the same rules delineated in the response to the previous question. Medicare Part B coverage, on the other hand, is optional on the part of the individual. The individual must apply and pay premiums in order to be eligible for payments as a beneficiary under Medicare Part B. For individuals who enroll, the applicability of the surcharges follows the same rules delineated in the response to the previous question. For individuals not enrolled in Medicare Part B, the surcharges apply in full to any related charges and are based on the election decision of the payor.
3	Some Medicare beneficiaries receive coverage for inpatient and outpatient services through a group policy which specifically excludes all those services for which Medicare pays: the so-called Medicare carve out. This situation usually arises when an employee retires and retains coverage through the employer group. Would the insured be the subject of the covered lives assessment, and if so, would this be the case only in situations where the underlying group policy covers inpatient services?	Countable persons for purposes of covered lives assessment calculations never include persons who are eligible for payments as beneficiaries under Medicare. Further, countable persons only include persons with inpatient coverage.
4	If all members of the family, regardless of family size, are eligible for payments as beneficiaries under Medicare, is there a professional education pool charge? Regardless of family size, if all but one of the members of a family are eligible for payments as beneficiaries under Medicare, is the charge for the professional education pool the individual rate?	Regardless of family size: (1) in any family where all persons are eligible for payments as beneficiaries under Medicare, there is no covered lives assessment liability and (2) in any family where all but one person is eligible for payments as beneficiaries under Medicare, the individual assessment applies.
5	Clarify how the surcharges apply to employer provided health benefits plans for working individuals who are eligible for Medicare payments.	Pursuant to the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) and the Deficit Reduction Act of 1984 (DEFRA), federal mandates, some privately insured employee health benefits plans for working Medicare eligible individuals are required to make patient service payments before Medicare. However, in such instances, the private insurer does not have a surcharge liability, unless the service is an otherwise uncovered Medicare service or where there is an exhaustion of Medicare benefits.

Question Number	Question	Answer
1	Clarify whether and how surcharges apply to self-pay patients. Clarify how surcharges apply to an insurer or self funded plan that issues a third-party check to a beneficiary to pay for health care services. Is this person self-pay for purposes of HCRA? In situations where payment is made by a two-party check and no election is taken, at what level are surcharges applied?	Self- pay patients are those that lack third party coverage in whole or in part, including coverage from a self-funded plan and, as uninsured persons, must make surcharge payments directly to providers. These persons may not elect to pay the Department´s pool administrator directly. Their surcharge obligations are limited to the 8.18 percent surcharge. These patients are not required to pay the 24 percent surcharge, the professional education pool surcharges or a covered life assessment. When an insurer or self-funded plan issues a third-party check to a beneficiary to pay for health care services and has not elected to make payments directly to the Department´s pool administrator, it is subject to the 24 percent differential and, where appropriate, the professional education pool surcharges. If such a payor elects to pay the Department´s pool administrator directly, it is free from the 24 percent surcharge and professional education pool surcharges but must pay the 8.18 percent surcharge and make covered lives assessment payments. A two-party check or a third-party check to a beneficiary does not in effect convert a patient covered by an insurer or self-funded plan to self-pay status. This would undermine the entire structure of HCRA.
2	Does the 2 percent administrative fee apply to self-pay patients?	As explained in the response to the previous question, since self-pay patients are not subject to the 24 percent surcharge, providers are not allowed to keep 2 percent of the surcharge revenue received from them.

Question Number	Question	Answer
1	How will the hospital bill surcharges for patients in-house on December 31, 1996? Will there be a straddle bill, or will HCRA govern all discharges on or after January 1, 1997?	When a discharge is made on or after January 1, 1997 for a patient whose inpatient stay began prior to January 1, 1997, the following rates and surcharges apply: --for payors paying per diem rates under NYPHRM and HCRA, the 1996 per diem rates and NYPHRM surcharges apply to days occurring prior to January 1, 1997 and the 1997 per diem rates and HCRA surcharges apply to days occurring on and after January 1, 1997. --for payors paying DRG case-based payment rates under NYPHRM and negotiated rates under HCRA, the 1997 negotiated rates and HCRA surcharges apply to the entire stay. Please note that if a payor has not elected to make surcharge payments directly to the Department´s pool administrator, the 24 percent surcharge also applies to the entire stay.
2	Where payments to providers are based on capitation and other bundled arrangements, how do payors and providers determine how much of the payment is subject to the surcharge? If a hospital is receiving a bundled payment for inpatient and physician components and the payor is not a direct payor, clarify how the hospital calculates the amount to be submitted to the Department´s pool administrator.	HCRA does not provide an explicit methodology as to how payors and providers should determine the appropriate allocation. The Department can only suggest the methodology reflect historical utilization and cost experience of the beneficiaries or groups covered. The portion of capitation payments associated with physician practice or faculty practice plan discrete billings for private practicing physician services would not be subject to a surcharge.
3	Whose responsibility is it to pay the add-ons when an Independent Practice Association (IPA) is capitated, the payor´s or the IPA´s?	IPAs are not third party payors and therefore are not subject to the surcharge requirements in HCRA. The HMO rather than the IPA is responsible for making the add-on payments.
4	Are physician billings to be surcharged or assessed in situations where the physician practice is owned by a hospital provider? Are physician billings to be surcharged or assessed in situations where the physicians are not operating as an extension clinic?	Physician practice or faculty practice plan discrete billings for private practicing physician services are not subject to surcharges. For additional information regarding private practicing physician billings, refer to the response to the following question.
5	Clarify the definition of private physician billings from surchargeable providers (e.g., hospitals, clinics) which are statutorily exempted from the surcharge requirements. Who determines whether surcharges apply to hospital and/or clinic based physician claims?	The physician services must be discretely billed (thus excluded from the billing provider´s institutional rates for services rendered) and the physician or faculty practice plan must be organized as a private practice. However, there are no formal standards used by the Department to validate whether a physician or faculty practice plan meets the qualifying exemption criteria as a private practice. Only the provider subject to the HCRA surcharge (e.g., hospital) is in a position to know whether its physician billings are made on behalf of private practicing physicians or on behalf of the hospital as part of its outpatient service. Therefore, the affected provider is required to make this determination based on the specific circumstances which govern the relationship between such billing entity and the associated physician or faculty practice plan. The billing provider must relay such information to the payor through the claiming process.
6	Will providers be required to submit any surcharge or assessment amounts on cases where either the payor or patient refuses to pay the surcharges or assessments, but does pay the patient service charges?	Providers make payments to the Department´s pool administrator against all net patient service revenues (defined in Public Health Law 2807-j (3)) received from payors unless a payor is paying the surcharge amounts to the Department´s pool administrator directly. Further, all revenue received from patients (excluding Medicaid copayments) is subject to provider remittance unless a specific exclusion exists in HCRA.
7	Is a clinical lab bill subject to the 8.18 percent surcharge if the lab is licensed in New York but physically located in another state?	Yes. All clinical laboratories issued a permit pursuant to Title V of Article 5 of the Public Health Law are subject to the 8.18 percent surcharge. However revenue derived from tests performed on specimens collected outside New York State will not be subject to the surcharge obligation. Pursuant to Section 571 of the Public Health Law, "Clinical laboratory" means a facility for the microbiological, immunological, chemical, hematological, biophysical, cytological, pathological, genetic, or other examination of materials derived from the human body, for the purpose of obtaining information for the diagnosis, prevention, or treatment of disease or the assessment of a health condition or for identification purposes. Such examinations shall include procedures to determine, measure or otherwise describe the presence or absence of various substances, components or organisms in the human body. For additional information regarding laboratories, refer to the section entitled "Question uestions Relating to Clinical Laboratories".
8	Are payors responsible for paying patient service surcharges 30 days after the date services are provided or the date the payor pays?	For payors electing to pay the pool directly, surcharge payments are due 30 days after the calendar month in which the payor remits payment to the designated provider for patient services. This is usually when the payor adjudicates and pays a claim, but may also include those situations where a payor has made a partial payment for patients services prior to the time a claim is formally adjudicated. For other payors, surcharge amounts are submitted to providers when the payor remits payment to the designated provider for patient services.
9	Is revenue received by one provider from another provider, where both are required to pay the surcharges, considered net patient service revenue for purposes of making surcharge payments to the Department´s pool administrator?	Revenue received by one designated provider of service from another designated provider of service for subcontracted services would not be assessable revenue.
10	Clarify how, and at what percentage rate, the surcharges apply to revenue a designated provider of services receives for services provided to another provider that is not a designated provider pursuant to HCRA. For example, where an Article 5 freestanding clinical laboratory has a contractual agreement with a nursing facility (non-designated provider) to perform certain laboratory services on New York State drawn specimens provided by the nursing facility.	Under such arrangements, the non-designated provider is considered a unspecified payor and is not required to elect to remit surcharge payments directly to the Public Goods Pool. The designated provider´s financial obligation to the Public Goods Pool on revenue received from a unspecified payor is a 5.98 percent surcharge for Medicaid patients (patients eligible for medical assistance payments pursuant to Title 11 of Article 5 of the Social Service Law) and an 8.18 percent surcharge for all other affected non-Medicare patients. Whether any additional cost is actually incurred by the non-designated provider is entirely a matter of the contractual agreement between the affected parties.
11	Clarify whether the surcharges apply to revenue a D&TC receives for services provided to subscribers of an HMO that owns and operates the D&TC.	Revenue a D&TC receives for services provided to subscribers of an HMO operating in accordance with Article 44 of the PHL or Article 43 of the Insurance Law, which owns and operates the D&TC is exempt from the surcharges pursuant to PHL Section 2807-j(3)(b)(ii). This exemption includes uncovered services as well as covered services and applies whether the HMO is the primary or secondary payor.
12	Clarify whether the surcharges apply to revenue received for accounts receivable recovered by a collection agency, and whether such assessable revenue includes the collection agency´s fee.	The surcharge is based on funds actually collected. Whether or not (collection) fees may be netted against collections before application of the surcharge, depends on how the collected funds and fees are booked. If the gross amount collected is booked as revenue and the collection fee expensed, the surcharges would be applicable to the gross amount collected. If the collection fee is offset and only the net amount booked as revenue, the surcharge would be applicable to the net amount. Oftentimes, these accounts are written off as uncollectible accounts receivable when sent to the collection agency. Collections after write off are normally recorded as "recoveries". Recoveries are then netted against current year Bad Debt expense, thereby increasing current year net profits. The same rules would apply, i.e. if the gross collections were recorded as a recovery and the collection fee expensed, the surcharge would be on the gross amount -- if netted, and the net amount recorded as a recovery, the surcharge would be on the net amount.
13	Clarify whether the surcharges apply to swing beds in a general hospital or extended care beds in a primary care hospital?	Patient revenue received for swing beds and extended care beds is only exempt from surcharges when the payment is based on a nursing home payment (bed is used as a nursing home bed and the patient meets the required nursing home medical eligibility criteria for admission).
14	Do the surcharges apply to Alternate Level of Care (ALC) services provided in a general or primary care hospital?	Yes, the surcharges apply to ALC services.
15	Clarify how the surcharges apply in billing situations where a patient either voluntarily or is required by their payor to pay the total bill, including the surcharges, prior to submitting the claim to their payor for reimbursement.	Providers should undertake reasonable efforts to identify whether a patient is insured and determine whether the third-party payor is on the Department´s elector list in order to apply the appropriate surcharge. Where a provider determines that the patient is insured and the third-party payor is on the Department´s elector list, the provider would apply the 8.18 percent surcharge to the bill. If for any reason, the patient pays the total bill (including the surcharge) to a designated provider prior to submitting the claim to their electing payor, the provider would be responsible for remitting the surcharge to the Public Goods Pool. The patient would remit the bill to the electing payor for reimbursement at which point, provided the bill displays the surcharge, the payor would provide appropriate reimbursement for service expenses paid directly by the patient. The payor would provide reimbursement to the patient consistent with established subscriber contract terms. The payor would not have any duplicate obligation for paying the pool. If the bill does not display the surcharge, the payor does have the right to request either a new bill be issued showing the surcharge or a statement from the provider saying the surcharge was included in payments received from the subscriber. If the applicable surcharge was not included in the payment made by the subscriber, an electing payor reimburses the subscriber for amounts paid directly (in accordance with contracted coverage arrangements) and pays the surcharge amount directly to the pool. Where a provider determines that the payor is not on the elector list, the provider would apply the 32.18 percent rate, plus for inpatient hospital services, the alternative regionally differentiated graduate medical education surcharge to the bill, if applicable. If the patient pays the total bill (including the surcharge) to a designated provider at point-of-service and then seeks reimbursement from the non-electing payor, the provider would be responsible for remitting the surcharge to the Public Goods Pool. The patient would remit the bill to the non-electing third-party payor for reimbursement. The payor would provide appropriate reimbursement for service expenses paid directly by the patient, including the surcharge, consistent with established subscriber contract terms.
16	There are instances where a patient may appear to be a self-pay (uninsured) patient or a provider may not know whether a patient has health insurance. Clarify whether a designated provider is responsible for determining whether a patient has health insurance.	Although there may be situations where a provider may not know whether a patient has health insurance, providers should not simply bill the 8.18 percent surcharge in those instances. Providers should undertake reasonable efforts to identify whether a patient is insured and determine whether the third-party payor is on the Department´s elector list in order to apply the appropriate surcharge. Providers that do not pay appropriate surcharge amounts to the Public Goods Pool due to their failure to request insurance information from patients and properly check the Department´s list of electing payors in order to apply the appropriate surcharge may be incurring a liability by following such practice. When a provider files a monthly report, its surcharge liability is based on receipts for the report month. While the provider has no liability related to receipts from electing payors, it has a full liability to the pool on any receipts from non-electing payors of 32.18 percent plus, for inpatient hospital services, an alternative regionally differentiated graduate medical education surcharge, if applicable. Thus, where a provider fails to bill a non-electing payor the surcharge or only bills at the 8.18 percent rate applicable to an electing payor, they are still liable to make payments to the Public Goods Pool at the higher rates (in most cases 32.18 percent). The additional liability may be disclosed where a patient turns over a provider bill to its insurer or self-funded plan which in turn makes payment to the provider. The third party payor would thus be known at the time the provider makes payment to the pools and such payment liability would be based on the election status of the third party payor. The Department will, at some future date, be conducting audits of both payors and providers to determine compliance with the provisions of New York State Health Care Reform Act of 1996 (HCRA). Any additional provider liabilities (including penalties and interest) as a result of such audits would be payable immediately and also subject to recoupment from such provider´s Medicaid, Article 43 and Article 44 payments.
17	Clarify whether the surcharges apply to payments made to designated providers for services rendered to Native Americans.	Payments made to designated providers for services rendered to Native Americans are not in themselves exempt from the surcharge obligations. However, there is a State administered program that provides comprehensive dental services for the Tuscarora and Tonawanda Indian Reservations but does not provide reimbursement for inpatient services. Payments made directly by the State of New York under a program that does not have as a program component direct reimbursement to hospitals for rendered inpatient services are exempt from the surcharge obligations.
18	Clarify whether the prompt payment discount provisions under NYPHRM continue under HCRA?	No, any such provisions would have to be built into negotiated agreements.
19	Clarify whether an insurer that offers its commercial health benefits product to its own employees is considered to be self-insured for employee health benefits.	The insurer would not be considered a self-insured entity in applying the provisions of HCRA provided the benefit package is the same as that offered and marketed commercially and the insurer accounts to their state insurance department or other state oversight agency for such benefit package and otherwise complies with any state reporting requirements.

Question Number	Question	Answer
1	Clarify the application of the surcharges to out-of-state insurers with respect to election for direct payments. What level of surcharge applies, and how is the professional education pool paid for? If the out-of-state payor´s insured receives services from a New York provider, does the 24 percent surcharge apply? What should providers include in contracts negotiated with national carriers?	Self-funded plans, whether domiciled in New York or out-of-state, are required to pay an 8.18 percent surcharge, 24 percent surcharge and regionally varying professional education pool surcharges on certain health care services provided to their beneficiaries, including any out-of-state residents utilizing the services of any designated New York providers. In the alternative, self-funded plans may voluntarily elect to make 8.18 percent surcharge payments on such services and covered lives assessment payments on New York State resident beneficiaries to the Department´s pool administrator directly. Such election frees the self-funded plan from the 24 percent and regionally varying professional education pool surcharge obligations. The provisions of PHL Section 2807-s(1-a)(b) provide that corporations organized and operating in accordance with Article 43 of the Insurance Law; organizations operating in accordance with the provisions of Article 44 of the Public Health Law; self-insured funds; and commercial insurers licensed to do business in New York State and authorized to write accident and health insurance and whose policy provides coverage on an expense incurred basis are required to pay the professional education pool surcharges or covered lives assessment, depending on the payor´s election decision. Other insurers not licensed or authorized under New York State statutes, including commercial insurers, Blue Cross Plans and HMOs, are never required to pay the professional education pool surcharges or covered lives assessments <∗ For information concerning the application of the surcharges/assessments on payments made to designated providers of services by governmental programs funded by other states and through self-funded arrangements for worker´s compensation, no-fault and similar types of coverage which are not organized or operating under NYS statutes, please refer to the responses of the 5th & 6th Questions of this section, respectively. <∗IMPORTANT UPDATE
2	Clarify whether self-funded groups represented by a third-party administrator which is not located in New York, are subject to either the covered lives assessment and/or the 8.18 percent surcharge if: (a) the groups are located in New York; (b) the groups are not located in New York; (c) services are provided by designated providers in New York, whether or not the groups are located in New York; or (d) some members of the groups reside in New York, although the groups themselves may or may not be located in New York?	A TPA is required to follow the same rules as are enumerated in the preceding response for all self-funded groups it represents even when the TPA is not located in New York. The applicability of the surcharge provisions to self-funded groups as defined in the response to the previous question is not affected by or dependent upon the physical location of a TPA.
3	Does the 24 percent surcharge apply to an out-of-state payor that has an agreement to pay New York State providers at the negotiated rates of an in-state payor that has made an election to pay the Department´s pool administrator directly?	Unless the out-of-state payor has made an election to make direct payments to the Department´s pool administrator, the 24 percent surcharge applies. For further information concerning BCBS Plan related payments, refer to the 1st and 2nd Question uestions of the Interplan Telecommunications Plan (ITS) section.
4	Will insurers and HMOs that are not licensed or organized under New York State statutes appear on the list of payors that have elected to pay the pools directly? If not, how will providers know whether they are subject to the 24 percent surcharge? How will providers know whether an insurer or HMO is licensed or organized under New York State statutes so it can determine whether the professional education pool surcharges apply?	These payors will be allowed to make an election to directly pay the Department´s pool administrator. All electing payors will be included on the Department´s Web site electing payor list. All payors on the list are free from the 24 percent and professional education pool surcharges. It is true that payors not on the Department´s list may include insurers both subject and not subject to the professional education pool surcharges depending on whether or not they are licensed and organized under New York State statutes. Therefore, providers and payors must make every effort in their billing and remittance processes to identify each payor´s specific status.
5	Clarify how the surcharges apply to out-of-state governmental programs.	Payments to designated providers of services made by governmental agencies from other states remain fully subject to surcharges, at rates based on their pool participation election decision (i.e., 8.18 percent or 32.18 percent plus, where inpatient hospital coverage is provided, and the out-of-state governmental agency is making payments in its role as an employer (i.e., self-insured employee benefit fund), it would have an additional liability for either the GME regional per-unit of service surcharge or covered lives assessment). The Professional Education Pool surcharges and assessments do not apply to out-of-state Medicaid programs since such programs are not considered specified payors for purposes of the Professional Education Pool surcharge obligations under PHL Sections 2807-s and 2807-t. However, out-of-state Medicaid programs must elect to remit surcharges directly in order to avoid the additional 24 percent surcharge.
6	Clarify how the surcharges apply to worker´s compensation and/or no-fault coverage.	There is a distinction between coverage provided under NYS law and coverage that is not. Payments to designated providers of services made by payors providing coverage pursuant to the NYS Worker´s Compensation, NYS Comprehensive Motor Vehicle Insurance Reparations Act, NYS Volunteer Firefighters´ Benefit Law, and/or the NYS Volunteer Ambulance Workers´ Benefit Law are subject to the surcharges, at rates based on the payor´s pool participation election decision (i.e., 8.18 percent or 32.18 percent, but no GME regional per-unit of service or covered lives assessment obligation). However, payments through self-funded arrangements for similar types of coverage, which are NOT organized or operating under such NYS statutes, would also have a GME regional per-unit of service surcharge or covered lives assessment obligation where inpatient coverage is provided.
7	Clarify whether the surcharges apply to revenue that designated providers of services receive for services provided to foreign nationals.	The provisions of Article 34 of the Vienna Convention, 23 U.S.T. 3242, provide that a diplomatic agent shall be exempt from all taxes, whether national, regional, or municipal. The Supremacy Clause of the US CONST., Article VI, Clause 2, provides that treaties entered into by the United States are the "Law of Land" to which state law must yield. Consequently, the Department has elected not to contest assertions of exemption from HCRA surcharges made by foreign diplomatic missions covered by the Vienna Convention which are self-insured for purposes of providing health insurance coverage to their employees. As self-insured entities such foreign diplomatic missions would have been directly responsible for paying HCRA surcharges and it was determined that such direct surcharge payments were arguable within the ambit of Article 34 of the Vienna Convention, which exempts "diplomatic agents" from payment of "all dues and taxes, personal or real, national, regional or municipal." This exemption should not be construed as one which exempts the payor of health care benefits for all foreign national or foreign governmental employees from paying the surcharges. Further, this exemption would not extend to those situations where a foreign government has elected to provide health insurance coverage to its diplomatic agents through a health plan purchased from a private insurance carrier. In these situations, responsibility for the payment of HCRA surcharge rests primarily with the private insurance carrier and the extent to which the cost of such surcharges is reflected in the premiums paid by the foreign government is a matter of private commercial negotiation between the foreign governmental entity and the private insurance carrier. An exemption from the HCRA surcharges based on the Vienna Convention is thus not appropriate with regard to payments made by private insurance. However, to the extent that foreign diplomatic agents covered by private insurance are responsible for payments to designated providers of services for a percentage coinsurance amount, a deductible or for uncovered services, the Department will not contest an assertion that such payments are exempt from HCRA surcharges under the terms of the Vienna Convention. The Health Department will continue to review any claims by entities for exemption from the surcharges.
8	Clarify how the surcharges apply to foreign governmental agencies.	Payments to designated providers of services made directly by foreign governmental agencies are limited to an 8.18 percent surcharge obligation since such foreign governmental agencies are considered "unspecified payors" under HCRA.

Question Number	Question	Answer
1	Confirm that when a New Yorker uses a New Jersey hospital, the covered lives assessment still applies even though the 8.18 percent surcharge does not.	The imposition of covered lives assessments is completely unrelated to claims and is applicable without regard to whether or not services are rendered at all. Covered lives assessments are based on the number of individual/family units, that are New York State residents, on a payor´s membership roles. Covered lives assessments on New York State residents apply regardless of whether they receive services in-state or out-of-state. Percentage surcharges apply only to services provided by designated providers of service in New York State.
2	Where multiple payors provide coverage for non-duplicated, inpatient hospital services, covered lives assessment costs are to be apportioned between the carriers. Will the Department be issuing any guidelines on how this apportionment is to be done or will it be up to the carriers involved to directly negotiate what the respective responsibilities for this assessment will be? In the event the two carriers are not able to agree on their apportioned shares, will there be a default process available at the State level for making the determination? If not, would both carriers be required to pay the entire assessment?	Apportionment is entirely the responsibility of payors. The Department requires each payor to pay 100 percent of the covered lives assessment unless two or more electing specified third-party payors covering separate components of inpatient care benefits for a single contract holder have entered into a written agreement to apportion the covered lives assessment. The aggregate of the apportioned covered lives assessment payments must result in the payment of 100 percent of the required assessment. Further, apportioning may occur only between payors that have elected; apportioning payors must maintain a copy of their written apportionment agreement(s) on file while the apportionment is in effect and for a period of not less than six years after termination thereof; and apportioning payors may be required to provide certified reports to the Department regarding their apportionment agreements and arrangements.
3	Will Integrated Delivery Systems be treated as payors, providers or both for purposes of the patient services surcharge and the covered lives assessment?	IDSs will operate under Article 44 of the Public Health Law and, as such, will be payors that have the option of electing to make payments directly to the Department´s pool administrator. IDSs must meet all HCRA requirements applicable to payors. General hospitals, laboratories, and clinics providing IDS services are providers for purposes of the net patient service revenue assessment provisions of HCRA. As such, they must make payments against net patient service revenue received from any non-electing payor, including the IDS.
4	Some insurers play a dual role in dealing with certain self-funded benefit plans: acting as third party administrators handling claims processing and payment for the Plan´s self-insured component of coverage, such as the major medical piece, and at the same time selling the self funded plan conventional health insurance for the hospital portion of the overall benefit. If such an insurer elects direct payment for its insured business, may a self-funded plan, as described above, preclude direct payment for the portion of its benefit that is provided through the purchase of insurance? May a self-funded plan, as is described above, decline the direct pay election for the self-insured portion of its coverage? Must the partially self-insured group adopt the insurer´s election?	The insurer makes an election for its insured business separate from the election made by the self-funded plan for its non-insured coverage. However, for covered lives costs to be apportioned between the two, both would need to elect to make direct payment to the Department´s pool administrator. No entity purchasing insurance -- not even a self-funded plan -- may preclude an insurer from electing to make direct payments to the Department´s pool administrator for its insured business. Note: If an electing insurer acts as a TPA and has among its represented organizations a payor, including a self-funded plan, that does not elect, the TPA must specify (on pages 3 & 4 of DOH-4400 TPA/ASO Election Application) which of the acceptable identification systems they will use to identify beneficiaries covered by direct pay entities and beneficiaries covered by nondirect pay entities when representing themselves to providers for patient care services or laboratory sampling. The two acceptable identification systems are: 1) the TPA has provided both the represented payor name and the TPA name on all insurance/plan participant identification cards which are issued by such organizations or 2) the TPA has agreed to place on the non-electing insurance/plan participant identification cards only an identifier (i.e., a sticker with NY Non-electing) or have NY Non-electing imprinted on the non-electing insurance/plan participant identification cards. Designated providers require this information at point of service in order to identify patients covered by direct pay entities and patients covered by nondirect pay entities. TPAs must provide (on pages 3 & 4 of DOH-4400 TPA/ASO Election Application) the above mentioned identification information to the Pool Administrator whenever they represent both electing and non-election payors, not just at the time they submit their original election application. For example, if a TPA which represented only electing entities at the time they submitted their election application subsequently represents non-electing entities as well, the TPA must provide the above mentioned identification information to the Pool Administrator.
5	In instances where a single card-holder has insurance from a carrier providing hospital inpatient medical and surgical coverage and a second carrier providing in-patient mental health and substance abuse coverage, may the full covered lives assessment liability be loaded onto a single carrier?	Yes, as long as the two carriers have timely reached mutual agreement to such apportionment, provide unduplicated coverage for different components of inpatient coverage, and have met the prerequisites mentioned above.
6	Are insurance carriers that contract for laboratory services included under the professional education pool surcharge and/or covered lives assessment obligations. If yes, must apportionment include the third carrier?	Professional education pool surcharges apply solely to general hospital inpatient services. Covered lives assessments apply solely to payors that cover inpatient hospital services. A tri-party apportionment agreement would be required only where the inpatient benefit is split between three carriers and there is no duplication of coverage between any of the parties.
7	Clarify whether the Professional Education Pool payment obligations established by HCRA apply to foreign students attending school in New York State and students studying abroad.	Foreign students attending school in New York State on student visas and students studying abroad who are insured through International Student insurance policies are not considered New York State residents for the purpose of establishing a payor´s covered lives obligation for these policies only. This exemption applies only to covered lives GME payments, it does not apply to per-unit of service GME payments. Therefore, non-electing payors that have a statutory obligation to the Professional Education Pool are responsible to fund the pool through per-unit of service payments to general hospitals for inpatient services, since the per-unit of surcharge GME assessment for such non-electing payors is not based on New York State residency.
8	Clarify whether the Professional Education Pool payment obligations established by HCRA apply to accident-only policies (e.g., some little league, student, travel and homeowners policies).	Accident-only policies which provide inpatient health insurance coverage on an expense incurred basis are NOT required to participate in the Professional Education Pool established by HCRA. This exemption status applies to both the covered-lives and the per-unit of service GME payments which fund the Professional Education Pool, it does NOT apply to the Indigent Care and Health Care Initiatives Pool surcharge which is based upon the election decision of the organization providing such coverage (e.g., 8.18 percent or 32.18 percent). Further, this exemption applies to accident-only policies, it does not apply to policies that provide health services coverage for sickness, illness, and disease related medical claims. Effective April 1, 2005, inpatient payments made by non-electing blanket student accident policies are subject to the per-unit of service GME payment while such policies are exempt from a covered lives obligation under 2807-t for electing payors.
9	Clarify whether a specified third party payor has a covered lives obligation when the annual maximum benefits of a plan have been provided for an individual prior to the termination of the plan year.	Section 2807-t(5)(a) of the PHL requires remittance of the appropriate monthly assessment amount for each individual and for each family unit appearing on the membership roles of a specified third party during any part of a given month.

Question Number	Question	Answer
1	How will "stop loss" insurance be defined for purposes of determining the impact of HCRA on such policies?	Accident and health "stop loss" insurance is generally considered to be a product sold to a self-insured employee benefit plan which limits the financial risks to which the self-insured plan is exposed. It is typically written with individual and/or aggregate deductibles. If the covered expenses paid by a self-funded plan exceed such deductibles, the self-funded plan is indemnified by the insurer. It is important to note that the stop loss policy is between the self-funded plan and the insurer. From the point of view of an insured or a provider, the stop loss arrangement would be invisible, since the self-funded plan or its administrator would continue to pay claims even if the individual and/or aggregate deductibles are reached. Theself-funded plan is simply reimbursed by the stop-loss insurer for amounts in excess of the individual and/or aggregate deductible limits.
2	How do the surcharge and assessment provisions of HCRA apply to the self-funded/stop loss arrangement described in the preceding Question /A?	In the situation described in the preceding Question /A, HCRA considers the self-insured plan as the payor responsible for remitting the appropriate surcharges and (if the plan has elected to pay pools directly) covered lives assessments. HCRA does not consider the stop loss insurer as a third party payor responsible for paying the surcharges and covered lives assessments.
3	What are "minimum premium plans"? How do "minimum premium plans" differ from the stop loss arrangements described above?	A minimum premium plan is a fully insured plan. That is, the insurer, not the employer, has the liability to pay plan benefits. In these types of arrangements the employer reduces its premium by making a special arrangement with the insurer so that the normal reserve components of premium are not included. Rather, a special account is established by the policyholder and funded by it. However, the insurer pays all claims using its checks and in accordance with its policy with the employer. For purposes of claims payments and processing, the insurer acts in a manner identical to that with respect to employers and policyholders from which premium is collected in the traditional manner.
4	How do the surcharge and assessment provisions of HCRA apply to "minimum premium" arrangements?	Since a minimum premium arrangement is a fully insured plan, the insurer is a specified third party payor liable for remitting the appropriate surcharges and (if the insurer has elected to pay the pools directly) the covered lives assessments.
5	Section 71 of HCRA requires payors to reflect the various surcharges and assessments in all policies and contracts. Does Section 71 mean that premiums must be adjusted to account for the increased or decreased costs of the coverage caused by the surcharges/assessments? Do payors have to get the Insurance Department´s prior approval to modify the premiums for community rated products to reflect the new funding methodologies? If yes, will there be an expedited review and approval process?	Section 71 of HCRA, which adds a new Section 3236 to the New York Insurance Law, generally requires insurers and HMOs to reflect the new public goods funding methodologies in premium rates. The new funding methodologies may result in an increase, a decrease, or no change in a premium rate, depending upon the nature of the specific plan or policy. HCRA does not change the procedures by which premium rates are modified under the New York Insurance Law. As such, insurers and HMOs must use existing procedures to effectuate changes in premium rates. Though HCRA does not provide for an expedited review and approval process, it should be noted that insurers and HMOs may continue to take advantage of the "file and use" procedures described in the New York Insurance Law, under circumstances permitted by the Law. (Please see Section 3231 and 4308 of the New York Insurance Law).
6	Some HMOs have guaranteed premium rate agreements with certain group contract holders. Some of these guaranteed premium rates extend into 1997. The covered lives assessments and surcharges required by HCRA were not a factor or consideration at the time these premium rate guarantees were made. Can these guarantees be modified to account for the impact of HCRA?	An HMO which has guaranteed a premium rate must abide its commitment to maintain the premium for the duration of the contract period. However, Section 52.42 of Insurance Department Regulation 62 (11 NYCRR 52.42) contemplates a prospective or retrospective adjustment be made at the end of the contract year. That is, the "guarantee" contemplated by the Regulation is to maintain the premium at a level rate for a year, and defer any changes in premium until the next contract anniversary date.
7	Will the stop loss carriers consider the surcharges a covered expense? If paid to the designated service provider it will look like a claim payment, but if paid directly to the Commissioner of Health it is not a payment to a service provider. The assessment, if the Plan elects to pay directly to the Commissioner of Health, is based on covered lives and appears not to be in the nature of a claim expense. Also, if the Plan uses an entity to negotiate a discount and pays that entity a percentage of the savings, will that fee be a stop loss covered expense? It will be important to have the aggregate and specific stop loss carriers clarify whether, and which, payments in addition to the designated service provider´s charges will be considered claim expenses.	These issues appear to be a matter of contract between the self-funded plan and its stop loss carrier.
8	Clarify whether the surcharges apply to flexible spending accounts.	Flexible spending accounts, high deductible plans, wrap around major medical plans, and other plans providing minimal or incidental levels of inpatient hospital coverage on an expense incurred basis are fully subject to the surcharges and/or assessments, at rates based upon the pool participation election decision of the payor making such payments (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment).
9	Clarify whether the surcharges apply to dental plans.	Dental plan coverage is subject to certain guidelines of HCRA. Specifically, the surcharge applies to dental services provided by general hospitals, comprehensive primary health care clinics and ambulatory surgery centers issued an operating certificate pursuant to Article 28 of the PHL, and freestanding clinical laboratories issued a permit pursuant to Title V of Article 5 of the PHL. Further, a dental plan would have a professional education pool obligation if the plan provides inpatient dental coverage.
10	Clarify whether the surcharges apply to payments made by church benefit plans, since such plans are typically exempt from taxation under Internal Revenue Code (IRC) Section 501(c)(3) and New York State licensure requirements under Insurance Law Section 1108(e).	Church benefit plans which provide disability and/or health benefits to church employees are not exempt from the surcharge requirements. There is no provision in PHL which exempts payors from the surcharge requirements based on the payors´ tax exempt status under IRC Section 501(c)(3) or exemption from licensure requirements under Insurance Law Section 1108(e). Benefits plans taking risk for the provision of health benefits for covered employees are self-insured for purposes of the surcharge requirements and fully subject to the surcharges based upon the pool participation election decision of the organization providing such coverage (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment, if applicable).
11	In situations where a trust fund exists, is the trust fund or the entity represented (employer) by the trust fund responsible for making an election decision?	The entity bearing the risk for the provision of health benefits for covered employees is self-insured for purposes of the surcharge requirements and fully subject to the surcharges based upon the entity´s pool participation election decision.
12	Clarify how the surcharges apply to life annuity and/or liability policies (e.g., some life insurance and homeowners policies).	For HCRA surcharge purposes, a distinction must be made between such policies, where the contractual liability of the payor for rendered services is solely triggered by a negligent act (or some other event), and traditional health insurance policies. For example, "liability type" policies such as homeowners´ policies by design are typically written to reimburse the homeowner/policyowner for a loss occasioned by a negligent act or some other event occurring on the property of the homeowner/policyowner. Conversely, traditional health insurance policies provide accident and health, worker´s compensation, no-fault and similar types of coverage. Payors making payments to designated providers of services under "liability policies", are not specified third-party payors pursuant to the provisions of PHL Section 2807-j(1-a)(b) for purposes of such claims. Payors in these instances are considered "unspecified payors" under HCRA. In these instances, the payor´s surcharge liability is limited to 8.18 percent for payments made on such claims.

VIII. State and Local Governmental Payments

Question Number	Question	Answer
1	Clarify whether and how the surcharges apply to state and county governmental agencies?	Payments made directly by New York State and its local governmental subdivisions are only subject to the surcharge payment obligations specifically assigned to such governmental agencies in accordance with PHL Section 2807-j(2)(d). These surcharge obligations are set at 5.98 percent. These assigned obligations are limited to: 1) local governmental agencies (in New York State) for services provided to local correctional facility inmates only and 2) New York State governmental programs (i.e., Medicaid and other State administered payments) which have as a program component direct reimbursement to hospitals for rendered inpatient services. Note that New York State governmental programs (i.e., Early Intervention Program, AIDS Drug Assistance Program, and other State administered payments) which do NOT have as a program component direct reimbursement to hospitals for rendered inpatient services are exempt from the surcharge obligations. This limit on surcharge obligations is only applicable to New York State and its political subdivisions. For information concerning the application of the surcharges/assessments on payments made to designated providers of services by governmental programs funded by other states and through self-funded arrangements for worker´s compensation, no-fault and similar types of coverage which are not organized or operating under NYS statutes, please refer to the responses of the 5th & 6th Questions of the Out of State Payors section, respectively. Further, payments made to designated providers of services pursuant to private insurance coverage purchased through government programs and payments by self-insured governmental agencies in connection with health benefits for their employees (including self-insurance for worker´s compensation and no-fault) remain fully subject to the surcharges, based upon the pool participation election decision of the organization providing such coverage. It should be noted, that local governments may also function as designated providers of services affected by surcharge obligations under HCRA. In such instances, surcharges continue to be due for all revenues received from payors not otherwise exempted by law.
2	Clarify whether the surcharges apply to payments made to designated providers of services by county probation departments.	As stated in the response to the previous question, payments made directly by New York State and its local political governmental subdivisions are only subject to the surcharge payment obligations specifically assigned to such governmental agencies in accordance with PHL Section 2807-j(2)(d). These surcharges are set at 5.98 percent and are limited to: 1) New York State governmental programs which have as a program component direct reimbursement to hospitals for rendered inpatient services and 2) local governmental agencies (in New York State) for services provided to local correctional facility inmates only. The surcharges do not apply to payments made by county probation departments for services provided to persons on probation, since such persons are not local correctional facility inmates.
3	What entities are defined as local correctional facilities for purposes of the surcharge and negotiated rate provisions of the HCRA?	Only county-sponsored correctional agencies, including those sponsored by the City of New York, which is actually comprised of five boroughs, are subject to surcharges and reimburse providers in accordance with the Medicaid fee schedule. Correctional agencies sponsored by other cities and municipalities are not subject to the surcharges and must negotiate rates.
4	Clarify whether payments made to designated providers for services rendered to persons enrolled in the Child Health Plus Program and the Regional Pilot Projects are subject to the surcharges.	Payments made to designated providers of services pursuant to private insurance coverage purchased through government programs, such as the Child Health Plus Program and the Regional Pilot Projects, remain fully subject to the surcharges based upon the pool participation election decision of the organization providing such coverage (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment, if applicable).
5	Clarify how the surcharges apply to the New York State Medicaid Prenatal Care.	The answer depends on the provider´s circumstances. If the provider is a designated provider of services under HCRA (i.e., an Article 28 general hospital; D&TC providing a comprehensive range of primary health care services; ambulatory surgical center D&TC; or Article 5 clinical laboratory), then the surcharges apply to its services, including Prenatal Care. Medicaid would add the surcharge to existing rates/fees and, if the provider so authorized, would make payment directly to the Public Goods Pool on behalf of the provider. If the provider had not authorized the State to withhold the surcharge amount and remit it to the Public Goods Pool on its behalf, Medicaid would submit a separate check for the surcharge to the provider. The provider is then statutorily obligated to remit the surcharge to the Public Goods Pool within 5 days of receipt. This scenario applies to some comprehensive D&TCs operated by counties of the State. If the provider is not a designated provider of services under HCRA, its services are not subject to the HCRA surcharges. However, if the provider subcontracts with another provider (i.e., Article 5 clinical laboratory) which is a designated provider under HCRA, the subcontractee (Article 5 clinical laboratory) has a financial obligation to the Public Goods Pool and may or may not seek additional reimbursement from the subcontractor (non-designated provider). Whether any additional cost is actually incurred by the subcontractor (non-designated provider) is entirely a matter of its contractual agreement with the subcontractee (Article 5 laboratory).
6	Clarify how the surcharges apply to payments made to designated providers of services by the New York State Insurance Department from funds collected and maintained in the "Security Fund" pursuant to New York State Insurance Law Article 76 and the New York State Worker´s Compensation Law Article 6-A.	Payments made by the New York State Insurance Department from the Security Fund are payments made by a "New York State governmental agency" as defined in PHL Section 2801(7). Accordingly, as a New York State governmental agency, the Security Fund is obligated to pay a surcharge of 5.98 percent.
7	Clarify how the surcharges apply to payments made to designated providers of services by managed care organizations coordinating the provision of care for New York State prison inmates under a contract with the NYS Department of Corrections or a county correctional agency.	Solely for the purposes of the HCRA surcharges, managed care organizations in such situations are considered to be acting as the agent for the State or municipality and the applicable surcharge is therefore 5.98 percent, which would be paid to designated providers.
8	Clarify how the surcharges apply to payments made to designated providers of services by public benefit corporations.	Payments made by public benefit corporations which qualify for designation as a "state government agency" pursuant to Public Authorities Law Section 1299-a(13) and Public Health Law Section 2801(7) are subject to the 5.98 percent surcharge where the entity is making payments to designated providers of services in its role as a state government agency. For example, the 5.98 percent surcharge applies to payments made to a designated provider of services by a public transportation authority for injuries sustained by passengers using the authority´s public transportation system since such payments are made as part of the entity´s role as a state government agency. However, payments made by public benefit corporations in connection with employee health, worker´s compensation and no-fault benefits are fully subject to the surcharges at rates based upon the pool participation election decision of the organization providing such coverage (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment, if where the entity is self-insured for employee benefits) since, under the HCRA provisions, public benefit corporations in this situation are acting in their role as employers rather than as governmental agencies.
9	Clarify whether the surcharges apply to revenue a designated provider receives from the New York State Department of Social Services for medical services provided in connection with disability determinations.	Payments made by the New York State Department of Social Services for medical services provided in connection with disability determinations are exempt from the HCRA surcharges since such medical services are performed for the primary purpose of determining eligibility for payments under the Social Security Act, not for the primary purpose of treatment or prevention of human illness, disease, injury or disability.
10	Clarify whether the surcharges apply to revenue a designated provider receives from the New York State Child Support Enforcement Agency for medical services provided in connection with paternity testing to establish child support obligations.	Payments made by the New York State Department Child Support Enforcement Agency for medical services provided to establish child support obligations are exempt from the HCRA surcharges since such medical services are performed for the primary purpose of establishing child support obligations, not the treatment or prevention of human illness, disease, injury or disability.
11	Clarify whether the surcharges apply to revenue a designated provider receives from a municipality for durable medical equipment.	When a designated provider of services receives revenue from a municipality for durable medical equipment purchased for a specific patient, the revenue is patient services revenue subject to the surcharges. When a designated provider of services receives revenue from a municipality for a bulk purchase of durable medical equipment for the county´s clinic the surcharges do not apply since such revenue is not considered to be patient services revenue.

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IX. Worker´s Compensation/No-Fault Payments

Question Number	Question	Answer
1	Clarify how the surcharges apply to payors making payments to designated providers of services pursuant to the NYS Worker´s Compensation Law, Motor Vehicles Reparations Act, Volunteer Ambulance Workers Benefit Law, or Firefighters Benefit Law.	Payments to designated providers of services by payors making payments pursuant to the NYS Worker´s Compensation Law, Motor Vehicles Reparations Act, Volunteer Ambulance Workers Benefit Law, or Firefighters Benefit Law are subject to surcharges at rates based on the payor´s pool participation election decision (i.e., 8.18 percent or 32.18 percent, but no GME regional per-unit of service or covered lives assessment obligation). For information concerning the application of the surcharges/assessments on payments made to designated providers of services through self-funded arrangements for worker´s compensation, no-fault and similar types of coverage which are not organized or operating under NYS statutes, please refer to the 6th Question of the Out of State Payors section.
2	Clarify whether the surcharges are included in the fee schedule issued by the New York State Worker´s Compensation Board and No-Fault.	The NYS Worker´s Compensation Board and New York State Insurance Department are not amending the Worker´s Compensation or Motor Vehicles Reparations Act outpatient fee schedules to include the surcharge obligations; the surcharge should be added to the worker´s compensation fee schedules for outpatient services where there is a designated provider providing a surchargeable service.
3	Clarify what payment rates and surcharges apply when employers make payments to designated providers for services rendered to employees with minor work-related injuries, rather than submitting the claim to their worker´s compensation carrier.	Employers making such payments, within the limited circumstances provided under Section 110 of the New York State Worker´s Compensation Law, should reimburse providers using the worker´s compensation rates under PHL Section2807-c(1)(b-1). Employers making payments in these instances are considered "unspecified payors" under HCRA. In these instances, the employer´s surcharge liability is limited to 8.18 percent for payments made on such claims. Since unspecified payors may not elect to remit the surcharges directly to the Public Goods Pool, the additional 24 percent surcharge does not apply.

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X. Federal Governmental Payments

Question Number	Question	Answer
1	Clarify whether the surcharges apply to revenues designated providers of services receive from federal governmental agencies.	In general, payments made directly by federal governmental agencies are exempt from the surcharges. This exclusion does not automatically apply to payments made by federal governmental agencies in connection with employee health, worker´s compensation and no-fault benefits (unless such payments are exempt pursuant to federal law as provided in the response to the following question) since, under the HCRA provisions, governmental agencies in this situation are acting in their role as employers rather than as governmental agencies. Consequently, payments to designated providers of services made by employee health benefits plans remain fully subject to surcharges at rates based upon the pool participation election decision of the organization providing such coverage (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment, if where the entity is self-insured).
2	Clarify which federal government programs are exempt from the surcharges.	Payments under the auspices of the following are exempt from the surcharges since they are considered to be payments made directly by federal governmental agencies: CHAMPUS Veterans Administration (VA) provider payments Job Corps Federal Correctional Facilities The following are instances under which the federal government, in its role as employer, is exempt from the surcharges since the specific federal statute governing the following benefit plans preempts HCRA: Uniformed Services Family Health Plan Amtrack (pursuant to the Rail Passenger Service Act) Benefit plans covered by the Federal Employees Health Benefits Act (FEHBA), including: Governmental Employees Hospital Association (GEHA) Mail Handlers´ Health Benefits Plan Postmasters Benefit Plan Special Agents Mutual Benefit Association (SAMBA) United States Air Force Group Health Plan The above lists are not meant to serve as a comprehensive listing of federal governmental programs/plans that are exempt from the surcharges. The Health Department will continue to review any claims for exemption from the surcharges.
3	Are patient coinsurance and deductible payments under benefit plans covered by the FEHBA, and the other federal government programs mentioned in the response to the previous question, subject to the surcharge provisions?	PHL Section 2807j(2)(f) provides that the total percentage allowance for patient deductibles and coinsurance amounts shall be the same percentage allowance applicable to payments by the primary payor covering the patient. Therefore, where a patient is making coinsurance and/or deductible payments to a designated provider for services covered under a benefit plan covered by one of the federal government programs mentioned in the response to the previous question, the surcharges do not apply. However, where an individual is making payments to a designated provider of service as a result of an exhaustion of benefits, or lack of benefits for a particular service, the individual shall be subject to an 8.18 percent surcharge.

Question Number

Question

Answer

Clarify whether the surcharges apply to revenues designated providers of services receive from federal governmental agencies.

In general, payments made directly by federal governmental agencies are exempt from the surcharges. This exclusion does not automatically apply to payments made by federal governmental agencies in connection with employee health, worker´s compensation and no-fault benefits (unless such payments are exempt pursuant to federal law as provided in the response to the following question) since, under the HCRA provisions, governmental agencies in this situation are acting in their role as employers rather than as governmental agencies. Consequently, payments to designated providers of services made by employee health benefits plans remain fully subject to surcharges at rates based upon the pool participation election decision of the organization providing such coverage (i.e., 8.18 percent or 32.18 percent and, where inpatient hospital coverage is provided, the GME regional per-unit of service surcharge or covered lives assessment, if where the entity is self-insured).

Clarify which federal government programs are exempt from the surcharges.

Payments under the auspices of the following are exempt from the surcharges since they are considered to be payments made directly by federal governmental agencies:

CHAMPUS
Veterans Administration (VA) provider payments
Job Corps
Federal Correctional Facilities

The following are instances under which the federal government, in its role as employer, is exempt from the surcharges since the specific federal statute governing the following benefit plans preempts HCRA:

Uniformed Services Family Health Plan
Amtrack (pursuant to the Rail Passenger Service Act)
Benefit plans covered by the Federal Employees Health Benefits Act (FEHBA), including:

Governmental Employees Hospital Association (GEHA)
Mail Handlers´ Health Benefits Plan
Postmasters Benefit Plan
Special Agents Mutual Benefit Association (SAMBA)
United States Air Force Group Health Plan

The above lists are not meant to serve as a comprehensive listing of federal governmental programs/plans that are exempt from the surcharges. The Health Department will continue to review any claims for exemption from the surcharges.

Are patient coinsurance and deductible payments under benefit plans covered by the FEHBA, and the other federal government programs mentioned in the response to the previous question, subject to the surcharge provisions?

PHL Section 2807j(2)(f) provides that the total percentage allowance for patient deductibles and coinsurance amounts shall be the same percentage allowance applicable to payments by the primary payor covering the patient. Therefore, where a patient is making coinsurance and/or deductible payments to a designated provider for services covered under a benefit plan covered by one of the federal government programs mentioned in the response to the previous question, the surcharges do not apply. However, where an individual is making payments to a designated provider of service as a result of an exhaustion of benefits, or lack of benefits for a particular service, the individual shall be subject to an 8.18 percent surcharge.

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XI. Election Process

Question Number	Question	Answer
1	Clarify whether TPAs may use a Power of Attorney to consent to the direct payment election provisions under HCRA on behalf of the organizations which they represent.	A TPA may provide the consent of a represented organization pursuant to a Power of Attorney provided the Power of Attorney specifically authorizes the TPA to make the election to pay the HCRA Public Goods Pools directly. A general Power of Attorney which does not specifically reference the HCRA election would not be legally acceptable. For example, the Department suggests that the following powers be included in the Power of Attorney given by an organization to a TPA making the HCRA election on its behalf: Execution and delivery of any and all documents or instruments necessary or appropriate in connection with compliance with the provisions of the "New York Health Care Reform Act of 1996". The power hereby granted to the attorney-in-fact includes, but is not limited to, the execution and delivery of any and all documents or instruments necessary or appropriate in connection with the election regarding direct payment of surcharges and the covered lives assessment provided for in Sections 2807-j and 2807-t of New York´s Public Health Law ("PHL"). By executing this Power of Attorney, the undersigned hereby specifically ratifies any action undertaken by the attorney-in-fact prior to the date hereof in connection with the election provided for in Sections 2807-j and 2807-t of the PHL and hereby expressly consents to such election and the conditions enumerated in Sections 2807-j(5)(a)(iii) and 2807-t(3)(a) of the PHL.
2	Do the quarterly election provisions provided under HCRA for calendar year 1997 also apply to calendar years 1998 and 1999?	The provisions of HCRA allow payors to file election applications on an annual basis only, rather than quarterly, for calendar years 1998 and 1999 provided an election application is submitted (postmarked) to the pool administrator on or before December 1st of the preceding year. However, a payor that becomes newly licensed pursuant to the New York State Insurance Law or certified pursuant to Article 44 of the PHL or a self-insured plan that had not previously provided third-party coverage, may elect direct payments to begin April 1st, July 1st, or October 1st of any year provided the completed election form is received by the Department postmarked no later than thirty days prior to these dates. This provision will allow a benefit plan, which was fully insured on an annual election deadline date, to elect to become a direct payor effective with the quarterly dates specified during the ensuing assessment year provided an election application is received (postmarked) at least thirty (30) days prior to such effective dates. Conversely, if a health benefits plan was self-insured at the time of an annual election deadline date and did not elect to become a direct payor by filing an election application for the ensuing assessment year, such fund would be precluded from the quarterly election option during the assessment year.
3	Clarify how an electing payor whose status has changed from the original election submission would report the change to the Department´s pool administrator.	The answer depends on the type of change the payor is reporting. A completed DOH-4402 (Payor Status Change) should be submitted by electing payors that have become fully insured, closed/out-of business or have filed for bankruptcy. A completed DOH-4403 (TPA/ASO Status Change) should be submitted by an electing payor that is adding or changing their TPA or ASO. A completed DOH-4406 (Merger-Acquisition) should be submitted if an electing payor has been acquired.
4	Clarify how an electing TPA/ASO would notify the Department´s pool administrator of any changes in the list of represented entities provided in the TPA/ASO´s original election submission.	The TPA/ASO would submit a completed DOH-4401 (TPA/ASO Client List Addendum - Additions) for electing clients, which are being added to the original election submission filed. The TPA/ASO would submit a completed DOH-4411 (TPA/ASO Client List Addendum - Deletions) for electing clients, which are being deleted from the original election submission filed.

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XII. Interplan Telecommunications System (ITS)

Question Number	Question	Answer
1	Clarify how the surcharge obligations and election provisions of HCRA apply to a self-funded plan that uses an out-of-state BCBS Plan as their TPA.	When a New York (NY) State based BCBS Plan has agreed to act as a conduit for the payment of claims in NY through an interplan payment system (such as the Interplan Telecommunications System (ITS) or National Account Service Corporation (NASCO) claims processing systems) for an out-of-state BCBS Plan, the NY State based BCBS Plan is the "payor" for purposes of HCRA. Therefore, when services are provided by designated providers of service to a beneficiary of an out-of-state BCBS Plan, the NY State based BCBS Plan, a direct payor, is obligated to remit the required surcharge payments along with any applicable covered lives assessment payments to the Department´s pool administrator and submit the required monthly Public Goods payor reports. Entities adjudicating the claims are responsible for maintaining an audit trail since the Department of Health or its representative will seek this information upon audit. The above referenced agreement also applies to self-funded plans that have an out-of-state BCBS Plan as their TPA. In this instance, the self-funded plan would have an 8.18 percent surcharge liability for all surchargeable claims processed through the NYS based BCBS Plan´s interplan payment system as well as a covered lives obligation which would be paid to the pools by the NYS based BCBS Plan. However, these assessments only apply to those surchargeable claims processed though the NY State based BCBS Plan´s interplan payment system. Therefore, in the absence of a valid election application by the self-funded plan, surchargeable claims processed outside the interplan payment system will include assessments totaling 8.18 percent plus the additional 24 percent surcharge plus the GME regional per-unit of service surcharge, for inpatient hospital services only, which for 1997 ranges from 2.36 percent to 25.09 percent.
2	Clarify whether a negotiated rate agreement between a provider and a NY State based BCBS Plan applies to out-of-state BCBS Plans?	A negotiated rate agreement between a provider and a NY State based BCBS Plan applies to out-of-state BCBS Plans provided the out-of-state plans are participating in the NY State based BCBS Plan´s interplan payment system and the contractual agreement between the provider and the NY State based BCBS Plan contains provisions which specifically provide that NY negotiated rates apply to such out-of-state BCBS plans.

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XIII. Clinical Laboratories

Question Number	Question	Answer
1	Define situations where the surcharges do not apply to revenue received for clinical laboratory services rendered by a designated provider of services.	The surcharge obligations established under PHL Section 2807-j are only applicable to revenue received for affected services primarily or directly linked to the treatment or prevention of human illness, disease, injury or disability. Examples of revenues which fall outside this definition include: revenue received for clinical laboratory tests performed in connection with the screening of employees for drug use; revenue received for clinical laboratory tests and/or physical examinations performed in connection with applications for life insurance, health insurance, disability insurance or employment; revenue received for clinical laboratory tests performed for the purpose of establishing paternity; revenue received for forensic laboratory testing; revenue received from sponsoring agencies for clinical laboratory tests performed in accordance with approved research protocols for the primary purpose of medical research; revenue received for clinical laboratory tests performed in accordance with OHSA requirements. In each of these instances, exemption status is allowed since related diagnostic procedures are not primarily or directly linked to the potential for treatment or prevention of illness, disease, injuries, or disabilities. Additionally, revenue received for veterinary laboratory testing fall outside the definition of net patient services revenue since such procedures are not primarily or directly linked to the potential for treatment or prevention of human illness, disease, injury or disability.
2	Clarify whether blood banks are "designated providers of services" within the meaning of PHL Section 2807-j and, if they are, specify what revenue is subject to the surcharges.	Whether a blood bank is a designated provider of services depends on whether it is a clinical laboratory within the meaning of Article 5 of the PHL. While all blood banks in New York State are required to have an Article 5 permit pursuant to PHL Section 574, whether a blood bank is also a clinical laboratory depends on whether its Article 5 permit contains authorization to perform any clinical laboratory testing (including testing the blood it receives). Therefore, to the extent a blood bank´s Article 5 permit contains authorization to do any clinical laboratory testing (see PHL Section 571(1)), it is deemed to be a clinical laboratory and is thus also a designated provider of services under HCRA. Therefore, any revenue derived from testing patient samples that were collected or drawn in New York State is surchargeable. Revenue derived from testing donor samples is exempt from the surcharges since such samples have been deemed to fall outside the definition of "net patient service revenue" which are monies received for or on account of hospital or medical services primarily or directly linked to the treatment or prevention of human illness, disease, injury or disability. A blood bank/clinical laboratory´s revenue which is potentially subject to the surcharge would include all payments, including "special handling fees", which may be fairly described as reflecting the clinical laboratory testing services performed. To the extent such payments only partially reflect clinical laboratory services, the blood bank/clinical laboratory must apportion such payments. Only that portion of the revenue received which reflects payment for the clinical laboratory services performed is potentially subject to the surcharge. However, otherwise surchargeable revenue which is received from entities which are themselves designated providers of services (e.g., hospitals) is exempt from the surcharges.
3	Clarify whether the surcharges apply to revenue generated by a clinical laboratory that is a component of a private practicing physicians office.	There is no blanket exclusion for clinical laboratories operated by private practicing physicians. All revenue generated by a clinical laboratory, licensed under Article 5 of Title V of the PHL, for services that are primarily or directly linked to the treatment or prevention of illness, disease, injury or disability, unless specifically exempted pursuant to PHL Section 2807-j(3)(c), is subject to the surcharge obligations. However, the professional component of the laboratory service (i.e., the physician´s charge for interpreting a laboratory test such as a pap smear) is excluded from surcharge obligations. Affected laboratories that wish to discuss their licensing options and their affect on their laboratory´s operations with respect to HCRA should contact the New York State Department of Health, Division of Clinical Laboratory Evaluation Program at (518) 485-5378.
4	Clarify whether the surcharges apply to revenue a residential health care facility (RHCF) based clinical laboratory receives for clinical laboratory services provided to its own patients.	The application of the surcharges to revenue received for clinical laboratory services rendered by a RHCF based clinical laboratory depends on whether the payment is bundled in a rate or charge received for an undesignated service. Consequently, when laboratory services are reimbursed through an RHCF resident per diem rate or bundled charge, we assume that such revenues are not being segregated and a portion is not booked as a direct receipt to the licensed laboratory. It should be noted, however, that when laboratory services are separately billed through a fee or itemized charge, surcharges would be due for payments received from affected payors of services. In either event, since the laboratory has an Article 5 license, a monthly report must be submitted. This exemption applies to all provider groups.
5	Clarify whether the surcharges apply to payments clinical laboratories receive from methadone maintenance treatment program providers (MMTPs).	The answer would depend on whether the MMTP provider is a designated provider under HCRA. MMTPs which are designated providers of services under HCRA have no surcharge liability to clinical laboratories with which they contract. In this instance, Medicaid´s weekly fee to the MMTP, which includes a component to pay for laboratory services, will be increased by 5.98 percent to reflect the required surcharge amount (or, if the MMTP clinic so elects, the 5.98 percent surcharge will be withheld and paid by the State to the Department´s Pool Administrator directly). In order to avoid duplicative pool payments for the same service, bills from the clinical laboratory to the MMTP and payments by the MMTP to the clinical laboratory should not include a surcharge amount since the payment from Medicaid will include the surcharge. MMTPs which are not designated providers of services may owe surcharges on payments made to clinical laboratories with which they contract, however, such amounts may be limited by contractually set payment caps. In this case, the MMTP is obligated to pay only the amount set by contract and the clinical laboratory, as a designated provider of services, has the statutory obligation to pay the surcharges on its net patient services revenues. If there is no payment cap set by contract between an MMTP which is not a designated provider of services and a clinical laboratory, the laboratory may bill the surcharge amount to the MMTP and pursue its normative collection activities. However, if an MMTP identifies to the clinical laboratory that testing is being done for a Medicaid patient, the clinical laboratory may bill the 5.98 percent surcharge only.
6	Clarify whether lifeline services and blood products provided by a general hospital are subject to the HCRA surcharges.	The answer depends on whether the services are provided as part of the hospital´s outpatient structure or as a home health service. Where the service is provided as part of the hospital´s outpatient structure, the services are surchargeable. Where the services is provided as part of the hospital´s home health care structure, the surcharges would NOT apply.
7	Clarify whether the surcharges apply to fees charged by blood banks for processing blood samples from a patient donating blood on their own behalf.	Only revenue received which reflects payment for clinical laboratory services performed is potentially subject to the surcharges. Administrative fees charged by blood banks for "handling" blood samples from patients donating blood on their own behalf are NOT assessable provided the fee reflects payment for only the administrative function of "handling" the samples. However, the fee would be subject to the surcharge to the extent it reflects payment for clinical laboratory tests performed.

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Department of Health

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Questions and Answers - A Complete List

Table of Contents

I. Coinsurance, Co-payments, Deductibles and other Patient Cost Sharing Issues

II. Medicare

III. Self-Pay Patients

IV. Other Surcharge Questions

V. Out of State Payors

VI. Covered Lives

VII. Insurance Premiums

VIII. State and Local Governmental Payments

IX. Worker´s Compensation/No-Fault Payments

X. Federal Governmental Payments

XI. Election Process

XII. Interplan Telecommunications System (ITS)

XIII. Clinical Laboratories