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


Question 1: How does the HCRA surcharge apply in fixed dollar copay arrangements?

Question 2: How does the HCRA surcharge apply in coinsurance arrangements?

Question 3: How does the HCRA surcharge apply for the payment of claims in meeting a fixed dollar deductible in a plan year?

Question 4: Can payors use alternative approaches to calculate and segregate HCRA surcharge obligations between multiple payors?

Question 5: Under coordination of benefits principles, is the total percentage allowance for the secondary payor the same percentage allowance as that of the primary payor?

Question 6: What percentage allowance should be used in situations where multiple payors that are responsible for claims but coordination of benefits principles do not apply?

Question 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?

Question 8: How do surcharges apply to sliding fee scale and 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?

Question 9: Where does a provider report patient services revenue received from a non-electing secondary payor when the primary payor is an electing payor and the coordination of benefits principles apply?



Question 1: How does the HCRA surcharge apply in fixed dollar copay arrangements?

Answer 1: An electing payor can pay the HCRA surcharge on their insured´s copayment in one of two ways:

  1. Utilize billing example #2; this method calculates the surcharge before any payments are made, then subtracts out the fixed dollar copayment which reimburses the provider for the amount they have paid to the Public Goods Pool (PGP) for surcharge obligations owed from the amount they received from the patient.

    Hospitals will report the copayment received from the patient on Line 10 of their PGP report for payors that choose this option.

  2. Submit the associated surcharge amount on the patient´s copayment directly to the PGP via the payor´s PGP report on Line 2e. If the payor chooses this option, they must notify the billing provider in writing of such action in a timely manner.

    Designated HCRA providers receiving notification from payors of this option will report the copayment amount received from the patient on their PGP report as follows:
    • Hospital Inpatient: Line 17
    • Hospital Outpatient: Line 19
    • Comprehensive Diagnostic & Treatment Center (D&TC): Line 17
    • D&TC-Ambulatory Surgery Services: Line 18
    Please note that in the absence of the electing payor notifying the provider that they have chosen option #2 above

Please note that in the absence of the electing payor notifying the provider that they have chosen option #2 above, the provider´s "default" is always to report the fixed dollar patient payment on line 10 (Line 11 for Diagnostic & Treatment Center-Ambulatory Surgery Services ) of their PGP report and pay the surcharge out of the fixed dollar payment. It is the provider´s obligation to affirmatively clarify what choice has been made. This becomes an auditable portion of a HCRA audit.

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Question 2: How does the HCRA surcharge apply in coinsurance arrangements?

Answer 2: Where a percentage coinsurance patient obligation exists, both the payor and the patient are responsible for paying a percentage of the claim, and a percentage of the surcharge, in accordance with the terms of the subscriber contract or plan agreement. The HCRA surcharge is paid as follows:

  • Electing payor: Submits payment on the claim amount to the provider for the payor´s share of the total due; submits associated surcharges directly to the PGP on the amount they paid to the provider. The provider would report the revenue received from the electing payor on Line 5c (Line 6c for Ambulatory Surgery Centers) of their PGP report (see Billing Example #3). Additionally, if the electing payor is paying their subscriber´s surcharge portion, they must properly notify the provider, in writing, of their intent. The provider would then bill the subscriber for the balance of the claim, but not the surcharge. Upon receipt of the subscriber´s payment of the claim amount, the provider will report such payment on line 17(Co-Pay or Deductible Patient Payments) (Line 18 for Ambulatory Surgery Centers) where a surcharge is not calculated to be owed.
  • If the electing payor is not paying their subscriber´s surcharge portion, the provider will bill the patient the balance of the claim, and the elector/self pay surcharge percentage rate. The provider will report the revenue received from the patient on line 10 (line 11 for Ambulatory Surgical Centers) of their PGP report.
  • Non-electing payor: Provider assesses non-elector surcharge percentage rate on bill to non-electing payor (plus, if applicable, an additional GME percentage on inpatient services) . Non-electors submit their percentage of the total due, including their share of the billed surcharge, to the provider. The provider will then report the revenue received on Line 12 (a or b) (Line 13 for Ambulatory Surgery Centers) of their PGP report and pay the surcharge from the revenue received and reported.
  • Patient: Submits their percentage of the total due, including the billed surcharge, to the provider. The provider will then report the revenue received on Line 10 (Line 11 for Ambulatory Surgery Centers) of their PGP report and pay the surcharge from the revenue received and reported.
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Question 3: How does the HCRA surcharge apply for the payment of claims in meeting a fixed dollar deductible in a plan year?

Answer 3: Each payor´s respective share of the total bill, of which the HCRA surcharge is part of, is determined in accordance with the terms of the respective subscriber contract or plan agreement. Where a patient´s liability is limited to a fixed dollar deductible maximum in a plan year, the patient´s liability for the deductible is limited to that fixed dollar amount. Since surcharges are considered part of the total bill, any surcharges payments made for covered services, made by the patient, are applicable in meeting the patient´s maximum deductible amount for the plan year. However, the application of the surcharge on claims that are paid by the patient cannot increase the patient´s total due to an amount that exceeds the maximum fixed dollar deductible amount.

Further, since the provider does not know where the patient is in meeting his/her deductible for the plan year, it is important that the payor, when adjudicating the claim, indicate the amount for which the provider must bill the patient. This calculation should clearly show both the amount to bill for the services performed, plus the surcharge amount to be billed.

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Question 4: Can payors use alternative approaches to calculate and segregate HCRA surcharge obligations between multiple payors?

Answer 4: Yes. Other approaches are acceptable provided that payors using other approaches must ensure that the total value of surcharge due is fully reflected in any shared billing arrangement. All payors must concur with the payment arrangement. Further, payors must inform providers of any such approaches and payment arrangements.

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Question 5: Under coordination of benefits principles, is the total percentage allowance for the secondary payor the same percentage allowance as that of the primary payor?

Answer 5: Yes. PHL Section 2807-j (2)(g), provides that the total percentage allowance for the secondary payor, under coordination of benefits principles, shall be the same percentage allowance applicable to payments made 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 rules or regulations designed to determine the order in establishing each payor´s liability. 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.

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Question 6: What percentage allowance should be used in situations where multiple payors that are responsible for claims but coordination of benefits principles do not apply?

Answer 6: As indicated in the previous answer, coordination of benefits principles applies when multiple policies provide duplicative benefits. However, when one policy/plan serves to supplement the other (one provides coverage over and above that of the other), coordination of benefits does not apply and each policy/plan is treated individually for purposes of determining its applicable percentage obligation.

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Question 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?

Answer 7: HMOs and other managed care-type plans should follow the instructions provided in the response to Question 1 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.

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Question 8: How do surcharges apply to sliding fee scale and 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?

Answer 8: The aggregate payment obligation of a third party payor is a combination of the patient services payment plus the surcharge(s). 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 9: Where does a provider report patient services revenue received from a non-electing secondary payor when the primary payor is an electing payor and the coordination of benefits principles apply?

Answer 9: Although non-electing secondary payors will receive the benefit of the lower surcharge rate based on the election of the primary payor under coordination of benefits principles, they cannot pay the PGP directly; they must pay their surcharge obligations to the provider. Hospitals and Comprehensive Diagnostic and Treatment Centers will report their patient services revenue and surcharges received on line 1 and line 10 of their PGP reports. Diagnostic and Treatment Centers providing Ambulatory Surgical Services will report patient services revenue received on line 1, 2 and 11, and report received surcharges on line 2 and 11.

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