IV. Other Surcharge Questions


Question 1: How do surcharges apply to bills for inpatients when their stay covers periods during which the surcharge percentage changes due to legislation? (e.g. 8.95% surcharge rate on 3/31/09, 9.63% surcharge rate on 4/1/09) (Example rates apply to electing payors to the Public Goods Pool and self-pay patients).

Question 2: Where payments to providers are based on capitation and other bundled arrangements, how do providers and payors determine how much of the payment is subject to the surcharge?

Question 3: Do Independent Practice Associations (IPAs), who commonly receive capitated rates for their services, have an obligation to the HCRA?

Question 4: Is revenue received by a HCRA provider for discrete physician billings subject to a HCRA surcharge?

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?

Question 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?

Question 7: When are electing payors responsible for paying patient service surcharges?

Question 8: Is patient service revenue that a HCRA designated provider receives from another HCRA designated provider subject to the HCRA surcharge?

Question 9: Do the HCRA surcharges apply to revenue received by a HMO-owned D&TC for health care services provided to the subscribers of that HMO?

Question 10: Do the HCRA surcharges apply to patient services revenue recovered by a collection agency and the collection agency's fees?

Question 11: Clarify whether the surcharges apply to swing beds in a general hospital or extended care beds in a primary care hospital?

Question 12: Do the surcharges apply to Alternate Level of Care (ALC) services provided in a general or primary care hospital?

Question 13: How do surcharges apply in billing situations where an insured patient pays the total bill, including the surcharges, prior to submitting the claim to their payor for reimbursement?

Question 14: 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.

Question 15: Are payments made to HCRA designated providers for medical services rendered to Native Americans subject to the surcharge?

Question 16: 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.

Question 17: Are payments made to HCRA providers by the Indian Health Service subject to the HCRA surcharges?

Question 18: What is the 2 percent administrative fee and when does it apply?



Question 1: How do surcharges apply to bills for inpatients when their stay covers periods during which the surcharge percentage changes due to legislation? (e.g. 8.95% surcharge rate on 3/31/09, 9.63% surcharge rate on 4/1/09) (Example rates apply to electing payors to the Public Goods Pool and self-pay patients).

Answer 1: When a discharge is made on or after the surcharge percentage rate changes (e.g. 4/1/09) for a patient whose inpatient stay began prior to the rate change, the surcharge percentages apply as follows:

--for those paying on a per diem rate, the applicable surcharges percentage rates apply on the days the patient was an inpatient. As an example, the patient's length of stay was from 3/29/09- 4/3/09. The 8.95% surcharge rate (for electing payors and uninsured) applies for 3/29/09- 3/31/09. The 9.63% surcharge rate applies for 4/1/09-4/3/09.

--for those paying on a per case basis (DRG methodology), the surcharge rate that is in effect at the time of discharge applies to the entire stay. Using the example above, the 9.63% surcharge rate applies from 3/29/09-4/3/09.

And, for those specified non-electing third party payors, as defined in PHL §2807-s(1-a)(b), a regional GME percentage surcharge also applies to payments made for inpatient services.

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Question 2: Where payments to providers are based on capitation and other bundled arrangements, how do providers and payors determine how much of the payment is subject to the surcharge?

Answer 2: PHL §2807-j(3)(a) and (b) defines net patient service revenue "...as all moneys received for or on account of..." hospital services or diagnostic and treatment centers services, "...including capitation payments allocable to..." hospital and diagnostic and treatment center services.

Although the HCRA does not provide an explicit methodology as to how payors and providers should determine the appropriate allocation, surcharges are due to the Public Goods Pool on the portion of the capitated or bundled payment that covers surchargeable services. Any portion of the capitation or bundled payment that covers non-surchargeable services is exempt from the surcharge.

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Question 3: Do Independent Practice Associations (IPAs), who commonly receive capitated rates for their services, have an obligation to the HCRA?

Answer 3: IPAs are not third party payors and therefore are not subject to the HCRA surcharge requirements on their revenue. The HMO, rather than the IPA, is responsible for making payment for the associated surcharges.

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Question 4: Is revenue received by a HCRA provider for discrete physician billings subject to a HCRA surcharge?

Answer 4: Effective with dates of service April 1, 2011, and after, revenue received for all discrete (separately billed) physician services (M.D. or D.O. only) is no longer subject to a HCRA surcharge. Prior to April 1, 2011, only revenue received for discretely billed private practicing physician services (including faculty practice plans) were exempt from HCRA surcharges. As such, prior to April 1, 2011, employed physicians were subject to the HCRA surcharge.

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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?

Answer 5: 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 should relay such information to the payor through the claiming process.

Note: Effective with dates of service April 1, 2011, and after, revenue received for all discretely billed (separately billed) physician services (M.D. and D.O.s only) is no longer subject to a HCRA surcharge. Prior to April 1, 2011, only revenue received for discretely billed private practicing physician services (including faculty practice plans) were exempt from HCRA surcharges. As such, billings prior to April 1, 2011, for employed physicians were subject to the HCRA surcharge.

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Question 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?

Answer 6: Providers make payments to the Department's Office of Pool Administration (OPA) against net patient service revenues as defined in Public Health Law 2807-j (3). Revenue received from patients is subject to provider remittance unless a specific exclusion exists in HCRA. If the patient pays for the service but not the surcharge, the provider reports what has been received and pays a surcharge to the OPA out of what was received. The provider is encouraged to pursue collection for the unpaid balance.

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Question 7: When are electing payors responsible for paying patient service surcharges?

Answer 7: Electing payors are categorized as either monthly filers or annual filers. For electing payors that have been designated by the Department as monthly filers, Public Goods Pool reports and corresponding surcharge payments are due on the 30th day following the report month (adjusted for weekends and holidays). Since payor reports are a summary of the surchargeable claims that were paid that month, 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 electing payors that have been designated by the Department as annual filers, Public Goods Pool reports and corresponding surcharge payments are due on the 30th day following the last day (December 31) of the reporting year, adjusted for weekends and holidays.

Non-electing payors remit surcharge payments to the designated provider for patient services when billed.

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Question 8: Is patient service revenue that a HCRA designated provider receives from another HCRA designated provider subject to the HCRA surcharge?

Answer 8: Patient services revenue received by a HCRA designated provider, from another designated HCRA provider, presumably for sub-contracted patient services, does not have a surcharge obligation and therefore should not bill a surcharge to the provider they provided services for. The provider must still report the patient services revenue on their Public Goods Pool report but will deduct it on line 2c (3c for Ambsurgs) under Non-Assessable Revenue.

The HCRA designated provider paying for the sub-contracted service presumably will be billing for that service and depending on who they bill, may have an obligation for the surcharge on these services. The sub-contracted HCRA provider must report the revenue on their Public Goods Pool report, but will ultimately deduct it under the non-assessable portion of the report.

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Question 9: Do the HCRA surcharges apply to revenue received by a HMO-owned D&TC for health care services provided to the subscribers of that HMO?

Answer 9: Revenue received by a HMO-owned D&TC for services provided to subscribers of that HMO is exempt from the surcharge. This exemption includes covered and uncovered services and applies whether the HMO is the primary or secondary payor.

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Question 10: Do the HCRA surcharges apply to patient services revenue recovered by a collection agency and the collection agency's fees?

Answer 10: 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.

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Question 11: Clarify whether the surcharges apply to swing beds in a general hospital or extended care beds in a primary care hospital?

Answer 11: 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).

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Question 12: Do the surcharges apply to Alternate Level of Care (ALC) services provided in a general or primary care hospital?

Answer 12: Yes, the surcharges apply to ALC services.

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Question 13: How do surcharges apply in billing situations where an insured patient pays the total bill, including the surcharges, prior to submitting the claim to their payor for reimbursement?

Answer 13: Providers must undertake efforts to identify whether the patient's third-party payor is an active electing payor to the Public Goods Pool during the time the service was incurred, in order to apply the appropriate surcharge on the bill:

  1. Patient is insured and insurer is listed as an active electing payor for the applicable payor type category (health, workers compensation, etc) on the Department's Elector List during the service period:
    • The surcharge percentage to be added to the bill is the elector rate percentage
  2. Patient is insured for this service and insurer is not an active electing payor for the applicable payor type category (health, workers compensation, etc) on the Department's Elector List during the service period:
    • The surcharge percentage to be added to the bill is the non-elector rate percentage, plus, if applicable, an additional regional GME percentage.
    • If the patient is not insured for this service, assess the Self-Pay Uninsured rate

The provider is responsible for remitting surcharges to the Pool when payment for the services is paid by the patient. The patient would remit the bill to their payor for reimbursement and the payor would provide appropriate reimbursement for service expenses, including associated surcharges that have been paid directly by the patient. The payor would provide reimbursement to their member (patient) consistent with established subscriber contract terms. An electing payor would not have any duplicate obligation for paying this surcharge amount to the Pool since they have presumably already reimbursed the member for the surcharge.

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Question 14: 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.

Answer 14: Although there may be situations where a provider may not know whether a patient has health insurance, providers should not simply bill the self pay surcharge rate 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 determine the appropriate surcharge percentage.

Providers that do not pay appropriate surcharge amounts to the PGP on patient services revenue that they are responsible for due to their failure to request insurance information from patients may be incurring a liability by following such practice.

When a provider files a monthly report, its surcharge liability is based on patient services revenue received during month reporting for. While the provider has no liability related to revenue from electing payors, it has a full liability to the PGP on any revenue from non-electing payors as well as revenue from most patient payments.

The additional liability may be disclosed where a patient turns over a provider bill to its insurer or self-funded plan who 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.

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Question 15: Are payments made to HCRA designated providers for medical services rendered to Native Americans subject to the surcharge?

Answer 15: Payments made to HCRA designated providers for services rendered to Native Americans are not in themselves exempt from the surcharge. There is a NYS 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 NYS under a program that does not have as a program component, direct reimbursement to hospitals for inpatient services, are exempt from the surcharge.

Self-insured plans or fully insured policies covering medical benefits for Native Americans are fully subject to the HCRA surcharges at a rate based upon the election decision of the payor providing the coverage. In addition, if the payor is a specified third-party payor as described in PHL Section 2807-s(1-a) and provides inpatient coverage to insureds whose primary residence in within NYS, it is also obligated to a covered lives assessment per diem (if an elector). If the payor is not an elector, a regional GME percentage surcharge applies (based on the region of NYS where the hospital resides) on an inpatient claim.

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Question 16: 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.

Answer 16: 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.

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Question 17: Are payments made to HCRA providers by the Indian Health Service subject to the HCRA surcharges?

Answer 17: No. Payments made to HCRA providers by funds of the Indian Health Service (IHS) are exempt from HCRA surcharges since the IHS is a federally funded health program for American Indians and Alaskan natives. Payments from the IHS are also exempt from the regional GME percentage on inpatient claims.

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Question 18: What is the 2 percent administrative fee and when does it apply?

Answer 18: Designated providers receiving surcharge payments from non-electing third party payors, are entitled to retain two percent of the surcharge owed to the PGP. It is intended to be compensation for the additional administrative responsibilities for collecting the HCRA surcharge from these payors.

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