HCRA Health Care Reform Act

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PUBLIC HEALTH LAW SECTION 2807-j
(added by Chapter 639 of the Laws of 1996
and amended by Chapter 640 of the Laws of 1996)

§ 2807-j* Patient services payments.

1. Payments to designated providers of services, as defined in paragraph (a) of subdivision one-a of this section, by all payors, including the state governmental agencies, corporations organized and operating in accordance with article forty-three of the insurance law, organizations operating in accordance with the provisions of article forty-four of this chapter, local governmental agencies, self-insured funds, commercial insurers, payors pursuant to the comprehensive motor vehicle insurance reparations act, the workers' compensation law, the volunteer firefighters' benefit law and the volunteer ambulance workers' benefit law, and any other rate, charge, or negotiated payment payor, for patient services provided to persons who are not eligible for payments as beneficiaries of title XVIII of the federal social security act (medicare) shall include a surcharge for an allowance on net patient service revenues in the percentage amount and for the periods specified in subdivision two of this section. Any such allowance shall be submitted by or on behalf ofdesignated providers of services to the commissioner or the commissioner's designee in accordance with subdivision five of this section.

1-a. Definitions. (a) "Designated providers of services ", for purposes of this section, shall mean providers of services in the following classes:

(i) general hospitals;

(ii) diagnostic and treatment centers that provide:

(A) a comprehensive range of primary health care services; or

(B) ambulatory surgical services; and

(iii) for periods prior to October first, two thousand, subject to the provisions of paragraph (d) of subdivision three of this section, free-standing clinical laboratories issued a permit pursuant to title five of article five of this chapter.

(b) "Third-party coverage ", for purposes of this section, shall include, but not be limited to: payments by a governmental agency, insurer, health maintenance organization, self-insured fund, or other third-party entity making payments on behalf of a patient; whether made directly to a designated provider of services or indirectly as indemnity or similar payments made to the patient (or patient's representative such as parent or family member) for services provided by a designated provider of services, or through the use of payments made payable to both the designated provider of services and the patient or patient's representative, or similar devices.

(c) "Third-party payors ", for purposes of this section, shall include, but not be limited to: governmental agencies; corporations organized and operating in accordance with article forty-three of the insurance law; organizations operating in accordance with the provisions of article forty-four of this chapter; providers of coverage pursuant to the comprehensive motor vehicle insurance reparations act, the workers' compensation law, the volunteer firefighters' benefit law, and the volunteer ambulance workers' benefit law; self-insured funds and administrators acting on behalf of self-insured funds; and commercial insurers licensed to do business in this state and authorized to write accident and health insurance and whose policy provides coverage on an expense incurred basis.

2. (a) The total percentage allowance for any period during the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-nine and on and after January first, two thousand, for a designated provider of services applicable to a payor shall be determined in accordance with this subdivision and applied to net patient service revenues.

(b) The total percentage allowance for each payor, other than governmental agencies, or health maintenance organizations for services provided to subscribers eligible for medical assistance pursuant to title eleven of article five of the social services law, or approved organizations for services provided to subscribers eligible for the family health plus program pursuant to title eleven-D of article five of the social services law, and other than payments for a patient that has no third-party coverage in whole or in part for services provided by a designated provider of services, shall be:

(i) the sum of (A) eight and eighteen-hundredths percent, provided, however, that for services provided on and after July first, two thousand three, the percentage shall be eight and eighty-five hundredths percent, and further provided that for services provided on and after January first, two thousand six, the percentage shall be eight and ninety-five hundredths percent, and further provided that for services provided on and after April first, two thousand nine, the percentage shall be nine and sixty-three hundredths percent, plus (B) twenty-four percent, provided, however, that for services provided on and after July first, two thousand three, the percentage shall be twenty-five and ninety-seven hundredths percent, and further provided that for services provided on and after January first, two thousand six, the percentage shall be twenty-six and twenty-six hundredths percent, and further provided that for services provided on and after April first, two thousand nine, the percentage shall be twenty-eight and twenty-seven hundredths percent, and plus (C) for a specified third-party payor as defined in subdivision one-a of section twenty-eight hundred seven-s of this article the percentage allowance applicable for a general hospital for inpatient hospital services pursuant to subdivision two of section twenty-eight hundred seven-s of this article;

(ii) unless (A) an election in accordance with paragraph (a) of subdivision five of this section to pay the allowance directly to the commissioner or the commissioner's designee is in effect for a third-party payor, and in addition (B) for a specified third-party payor an election to pay the assessment in accordance with section twenty-eight hundred seven-t of this article is in effect.

(c) If an election in accordance with subdivision five of this section is in effect for a third-party payor and in addition in accordance with section twenty-eight hundred seven-t of this article for a specified third-party payor, the total percentage allowance factor shall be reduced to eight and eighteen-hundredths percent, provided, however, that for services provided on and after July first, two thousand three the total percentage allowance factor shall be reduced to eight and eighty-five hundredths percent, and further provided that for services provided on and after January first, two thousand six, the total percentage allowance factor shall be reduced to eight and ninety-five hundredths percent, and further provided that for services provided on and after April first, two thousand nine, the total percentage allowance factor shall be reduced to nine and sixty-three hundredths percent.

(d) The total percentage allowance for payments by governmental agencies, as determined in accordance with paragraphs (a) and (a-1) of subdivision one of section twenty-eight hundred seven-c of this article as in effect on December thirty-first, nineteen hundred ninety-six, or health maintenance organizations for services provided to subscribers eligible for medical assistance pursuant to title eleven of article five of the social services law, or approved organizations for services provided to subscribers eligible for the family health plus program pursuant to title eleven-D of article five of the social services law, shall be five and ninety-eight-hundredths percent, provided, however, that for services provided on and after July first, two thousand three the total percentage allowance shall be six and forty-seven hundredths percent, and further provided that for services provided on and after January first, two thousand six, the total percentage allowance shall be six and fifty-four hundredths percent, and further provided that for services provided on and after April first, two thousand nine, the total percentage allowance shall be seven and four hundredths percent.

(e) The total percentage allowance for payments for services provided by designated providers of services for which there is no third-party coverage in whole or in part shall be eight and eighteen-hundredths percent, provided, however, that for services provided on and after July first, two thousand three the total percentage allowance shall be eight and eighty-five hundredths percent, and further provided that for services provided on and after January first, two thousand six, the total percentage allowance shall be eight and ninety-five hundredths percent, and further provided that for services provided on and after April first, two thousand nine, the total percentage allowance shall be nine and sixty-three hundredths percent. This paragraph shall not apply to patient deductibles and coinsurance amounts.

(f)The total percentage allowance for patient deductibles and coinsurance amounts shall be the same percentage allowance applicable to payments by the primary third-party payor covering the patient in each case determined in accordance with paragraphs (a), (b) and (c) of this subdivision.

(g) The total percentage allowance for secondary third-party payors under coordination of benefits principles shall be the same percentage allowance applicable to payments by the primary third-party payor in the case determined in accordance with paragraphs (a), (b) and (c) of this subdivision.

3. Net patient service revenues, for purposes of this section, shall mean:

(a) for general hospitals all moneys received for or on account of inpatient hospital services, outpatient services (including referred ambulatory services), emergency services, ambulatory surgical services, and other hospital or health-related services, including capitation payments allocable to inpatient hospital services, outpatient services (including referred ambulatory services), emergency services, ambulatory surgical services and other hospital or health-related services excluding services listed below, less refunds, for discharges occurring or for visits made or services performed on or after January first, nineteen hundred ninety-seven, or contracted service obligations for periods on or after January first, nineteen hundred ninety-seven excluding the following subject to the provisions of subdivision eleven of this section:

(i) revenue received for services provided to beneficiaries of title XVIII of the federal social security act (medicare);

(ii) revenue received by a general hospital for residential health care facility services, adult day care services, hospice services, and home care services;

(iii) revenue received from the allowances pursuant to this section and section twenty-eight hundred seven-s of this article;

(iv) revenue received from bad debt and charity care and indigent care rate adjustments and pool distributions pursuant to section twenty-eight hundred seven-c of this article, general hospital indigent care pool distributions pursuant to section twenty-eight hundred seven-k of this article, health care services pool distributions pursuant to section twenty-eight hundred seven-c of this article, health care initiatives pool distributions pursuant to section twenty-eight hundred seven-l of this article, professional education pool distributions pursuant to section twenty-eight hundred seven-m of this article, tobacco control and insurance initiatives pool distributions pursuant to section twenty-eight hundred seven-v of this article, and high need indigent care adjustment pool distributions pursuant to section twenty-eight hundred seven-w of this article, provided, however, that funds received as medical assistance payments which include state share amounts authorized pursuant to section twenty-eight hundred seven-v of this article that are not disproportionate share hospital payments shall be included within the meaning of net patient service revenue for the purposes of this section;

(v) revenue received from physician practice or faculty practice plan discrete billings for private practicing physician services;

(vi) revenue received by a general hospital from a public hospitalpursuant to an affiliation agreement contract for the delivery of health care services to such public hospital;

(vii) revenue received from governmental deficit financing;

(viii) subject to the provisions of paragraph (d) of this subdivision, revenue received for or on account of referred ambulatory clinical laboratory visits made or services performed on and after October first, two thousand.

(b) for diagnostic and treatment centers providing services designated in subparagraph (ii) of paragraph (a) of subdivision one-a of this section all moneys received, including capitation payments allocable to diagnostic and treatment center services otherwise covered by the assessment, less refunds, for or on account of visits made or services performed on or after January first, nineteen hundred ninety-seven or contracted service obligations for periods on or after January first, nineteen hundred ninety-seven:

(i) for the following services:

(A) for diagnostic and treatment centers providing a comprehensive range of primary health care services, for all services;

(B) for diagnostic and treatment centers providing ambulatory surgical services, for all ambulatory surgical services;

(ii) excluding the following subject to the provisions of subdivision eleven of this section:

(A) revenue received for services provided to beneficiaries of title XVIII of the federal social security act (medicare);

(B) revenue received from the allowances pursuant to this section;

(C) revenue received from bad debt and charity care rate adjustments pursuant to paragraph (f) of subdivision two of section twenty-eight hundred seven of this article, health care services pool distributions pursuant to section twenty-eight hundred seven-c of this article, health care initiatives pool distributions pursuant to section twenty-eight hundred seven-l of this article, professional education pool distributions pursuant to section twenty-eight hundred seven-m of this article, tobacco control and insurance initiatives pool distributions pursuant to section twenty-eight hundred seven-v of this article, and high need indigent care adjustment pool distributions pursuant to section twenty-eight hundred seven-w of this article;

(D) revenue received from physician practice or faculty practice plan discrete billings for private practicing physician services;

(E) for a diagnostic and treatment center operated by a health maintenance organization operating in accordance with the provisions of article forty-four of this chapter or article forty-three of the insurance law, revenue received for or on account of services provided to subscribers of such health maintenance organization;

(F) revenue received from governmental deficit financing; and

(G) subject to the provisions of paragraph (d) of this subdivision, revenue received for or on account of referred clinical laboratory visits made or services performed on and after October first, two thousand.

(c) for free-standing clinical laboratories, all moneys received,including capitation payments, less refunds, for or on account of visits made or services performed on or after January first, nineteen hundred ninety-seven and prior to October first, two thousand, subject to the provisions of paragraph (d) of this subdivision, or contracted service obligations for periods on or after January first, nineteen hundred ninety-seven and prior to October first, two thousand, subject to the provisions of paragraph (d) of this subdivision, for clinical laboratory services, excluding, subject to the provisions of subdivision eleven of this section:

(i) revenue received for services provided to beneficiaries of title XVIII of the federal social security act (medicare);

(ii) revenue received from the allowances pursuant to this section;

(iii) for a clinical laboratory operated by a health maintenance organization operating in accordance with the provisions of article forty-four of this chapter or article forty-three of the insurance law, revenue received for or on account of services provided to subscribers of such health maintenance organization; and

(iv) revenue received from governmental deficit financing.

(d) Provided, however, that if either the provisions of clause (G) of subparagraph (ii) of paragraph (b) of this subdivision or subparagraph (viii) of paragraph (a) of this subdivision which exclude certain revenues from the definition of net patient service revenues for the purpose of imposing surcharges pursuant to this section, result in a determination of an impermissible provider tax by the secretary of the U.S. department of health and human services under the provisions of section 1903(w) of the federal social security act, then clause (G) of subparagraph (ii) of paragraph (b) of this subdivision, subparagraph (viii) of paragraph (a) of this subdivision, and sections forty-eight and forty-nine of chapter one of the laws of nineteen hundred ninety-nine are rendered null and void as of October first, two thousand. The commissioner will collect any retroactive amounts due as a result of surcharges imposed on such services on and after October first, two thousand, without interest or penalty.

4. (a) For periods prior to January first, two thousand five, the commissioner is authorized to contract with the article forty-three insurance law plans, or such other contractors as the commissioner shall designate, to receive and distribute funds from the allowances established pursuant to this section, and funds from the assessments established pursuant to subdivision eighteen of section twenty-eight hundred seven-c of this article. In the event contracts with the article forty-three insurance law plans or other commissioner's designees are effectuated, the commissioner shall conduct annual audits of the receipt and distribution of the funds. The reasonable costs and expenses of an administrator as approved by the commissioner, not to exceed for personnel services on an annual basis two million two hundred thousand dollars for collection and distribution of allowances and assessments established pursuant to this section and subdivision eighteen of section twenty-eight hundred seven-c of this article, shall be paid from the allowance and assessment funds.

(b) Notwithstanding any inconsistent provision of section one hundred twelve or one hundred sixty-three of the state finance law or any other law, at the discretion of the commissioner without a competitive bid or request for proposal process, contracts in effect for administration of bad debt and charity care pools for the period January first, nineteen hundred ninety-six through December thirty-first, nineteen hundred ninety-six pursuant to section twenty-eight hundred seven-c of this article may be extended to provide for administration pursuant to this section and distributions of allowance and assessment funds pursuant to this article and may be amended as may be necessary.

(c) The commissioner shall contract with an independent certified public accountant to conduct an annual independent audit, in conformance with generally accepted auditing standards, of the receipts, disbursements, revenues, expenditures and cash flows of funds, for each calendar year beginning with nineteen hundred eighty-three, through the most recent calendar year. As used in this section, "funds " shall mean:

(i) Funds accumulated and pooled pursuant to this section, paragraph (a) of subdivision eighteen of section twenty-eight hundred seven-c of this article, and sections twenty-eight hundred seven-s and twenty-eight hundred seven-t of this article; and

(ii) Funds accumulated and pooled pursuant to chapters five hundred thirty-six, five hundred thirty-seven and five hundred thirty-eight of the laws of nineteen hundred eighty-two, chapters eight hundred seven and nine hundred six of the laws of nineteen hundred eighty-five, chapters two and six hundred five of the laws of nineteen hundred eighty-eight, chapters nine hundred twenty-two and nine hundred twenty-three of the laws of nineteen hundred ninety, chapter seven hundred thirty-one of the laws of nineteen hundred ninety-three and chapter eighty-one of the laws of nineteen hundred ninety-five.

Such annual independent audit shall be submitted to the director of the budget, the temporary president of the senate and the speaker of the assembly no later than April fifteenth of each year.

5. (a) Any third-party payor for services provided by a designated provider of services may make an election to make payments on an aggregated basis of funds due from the allowance determined pursuant to subdivision two of this section directly to the commissioner or the commissioner's designee on behalf of designated providers of services.

(i) The election pursuant to this paragraph to be effective must be in writing, filed with the commissioner or the commissioner's designee on such forms and in such manner as the commissioner shall require. An election must apply to all classes of designated providers of service and to all providers within each class. An election by a payor shall take effect for nineteen hundred ninety-seven, on the next following January first, April first, July first, or October first, and for each calendar year thereafter on the next following January first, not less than thirty days after the election is filed. Beginning December first, nineteen hundred ninety-seven, an election pursuant to this paragraph must be made no later than December first of the year prior to the assessment year. However, any payor licensed pursuant to the insurance law or certified pursuant to article forty-four of this chapter between December first of the year prior to the assessment year and December thirty-first of the assessment year may make an election subsequent to such licensure, and during said time period, to take effect on the next following January first, April first, July first or October first not less than thirty days after such election is filed. Payors other than those licensed pursuant to the insurance law or certified pursuant to this chapter which have not provided third-party coverage prior to December first of the year prior to the assessment year may make an election at any time from December first of the year prior to said assessment year to December thirty-first of the assessment year, to take effect on the next following January first, April first, July first or October first not less than thirty days after the election is filed. Beginning June first, two thousand three an election by any payor or organization shall begin on the first day of the month following the date it was received by the commissioner.

(ii) An election shall remain in effect unless revoked in writing by a specified third-party payor, which revocation shall be effective on the first day of the next calendar year quarter, provided that such payor has provided notice of its intention to so revoke at least thirty days prior to the beginning of such calendar quarter.

(iii) A payor filing an election pursuant to this paragraph must agree:

(A) to provide reports in accordance with the provisions of paragraph (b) of subdivision seven of this section;

(B) to provide such certification of data and access to allowance expenditure data for audit verification purposes as the commissioner shall require for purposes of this section; and

(C) to the jurisdiction of the state to maintain an action in the courts of the state of New York to enforce any provision of this section related to payment of the allowances.

(D) for periods on and after January first, two thousand nine, to provide the commissioner or the commissioner's designee the payor's federal tax identification number and agree to the use of such identification number in connection with identifying the payor's election status to designated providers of services, including the posting of such identification numbers on secure websites maintained by the commissioner or the commissioner's designee in furtherance of the purposes of this section. The commissioner shall include for periods on and after January first, two thousand nine on such secure websites, the date such payor was first posted.

(iv) If a payor is acting in an administrative services capacity on behalf of an organization, such as a self-insured fund, the consent of the organization to the election and the conditions pursuant to subparagraph (iii) of this paragraph must be submitted with the election. Such consent may be set forth in writing in the agreement between the payor and the organization and a photocopy of that portion of the agreement submitted by the payor, together with a photocopy of the signatures of the organization and the payor on the agreement, shall be accepted in lieu of a separate election form from the organization. On and after January first, two thousand four, the commissioner shall have discretion to accept payments made on a timely basis if the reports and information reports are routinely submitted, notwithstanding the fact that the full and complete election form by or on behalf of an organization was not filed on a timely basis. In the event the commissioner accepts payments pursuant to this section where an election form is missing or incomplete but the payments and information reports were routinely submitted as if the election forms had been filed, the election form from the payor and organization shall be deemed to have been filed (and the organization and the payor shall be as legally bound by the terms of the election form as if it had signed and filed the election) and neither the payor nor the organization shall subsequently refuse to abide by the terms of the election form for any year in which payments were submitted and accepted pursuant to this section.

(v) If a payor, including a payor operating in accordance with the insurance law or article forty-four of this chapter, making an election pursuant to this paragraph is acting in an administrative services capacity on behalf of an organization or organizations, such payor must specify whether such election applies to payments on behalf of all such organizations and establish, in accordance with guidelines established by the superintendent of insurance, a system through which designated providers of services and the commissioner can identify the status of a patient as a patient for whom the election does not apply.

(b) The commissioner may deny a payor the opportunity to remit directly to the commissioner or the commissioner's designee based on repeated late payments, failure to remit correct amounts, or failure to provide adequate verification of the accuracy of payments. The percentage allowance for any such payor shall be the percentage determined in accordance with paragraph (b) of subdivision two of this section.

(c) The commissioner or the commissioner's designee shall make available to all designated providers of services a list of the payors which have elected pursuant to this paragraph to remit payments directly.

5-a. (a) Payments by or on behalf of designated providers of services to the commissioner or the commissioner's designee of funds due from the allowances pursuant to subdivision two of this section or pursuant to payment obligations incurred pursuant to section twenty-eight hundred seven-s of this article or section twenty-eight hundred seven-t of this article shall be made on a monthly basis, provided, however, that for reporting periods relating to payments for services provided or dates of inpatient discharge or contracted service obligations occurring on or after January first, two thousand one, the commissioner may permit certain third-party payors which have at least one full year of pool payment experience to submit such payments on an annual basis, based on an annual demonstration by a payor through its prior year's pool payment experience that total pool obligations under this section and sections twenty-eight hundred seven-s and twenty-eight hundred seven-t of this article are not expected to exceed ten thousand dollars for annual periods prior to January first, two thousand four, and twenty-five thousand dollars for annual periods on and after January first, two thousand four. Payments due by designated providers of services on account of payors in accordance with paragraph (b) of subdivision two of this section shall be two percentage points less than the percentage specified in such paragraph. The designated provider of services shall retain for compensation for such provider's administrative responsibilities the amount that represents the difference. Payments due by designated providers of services on account of all other payors shall be calculated on the basis of the percentage allowance applicable to such payor pursuant to paragraphs (d), (e), (f) and (g) of subdivision two of this section. Payments shall be due on or before the thirtieth day following the end of a calendar month to which an allowance applies.

(b) Notwithstanding any inconsistent provision of this section, as shall be necessary to obtain federal financial participation in medical assistance expenditures in accordance with title XIX of the federal social security act, the allowances included in rates of payment pursuant to this section on behalf of patients eligible for medical assistance pursuant to title eleven of article five of the social services law shall be withheld from medical assistance payments to designated providers of services and paid to pools on behalf of the designated provider of services where a designated provider of services elects such withholding in such time and manner as specified by the commissioner, and in the event a designated provider of services does not elect such withholding, payments by such designated provider of services to a pool based on an allowance received for medical assistance patients shall be due within five days of receipt of such funds. Funds withheld by a payor and paid to a pool on behalf of a designated provider of services shall be considered received by such designated provider of services and paid to the pool by such designated provider of services for all purposes.

6. (a) If a payment made by a designated provider of services for a month to which an allowance applies is less than seventy percent of the amount due or which the commissioner estimates is due, based on available financial and statistical data, the commissioner may collect the deficiency pursuant to paragraph (c) of this subdivision.

(b) If a payment made by a designated provider of services for a month to which an allowance applies is less than ninety percent of the amount due or which the commissioner estimates is due, based on available financial and statistical data, and at least two previous payments within the preceding six months were less than ninety percent of the amount due, based on similar evidence, the commissioner may collect the deficiency pursuant to paragraph (c) of this subdivision.

(c) Upon receipt of notification from the commissioner of a designated provider of services' deficiency under this section, the comptroller or a fiscal intermediary designated by the director of the budget, or the commissioner of the office of temporary and disability assistance, or a corporation organized and operating in accordance with article forty-three of the insurance law, or an organization operating in accordance with article forty-four of this chapter shall withhold from the amount of any payment to be made by the state or by such article forty-three corporation or article forty-four organization to the designated provider of services the amount of the deficiency determined under paragraph (a), (b) or (e) of this subdivision or paragraph (d) of subdivision eight-a of this section. Upon withholding such amount, the comptroller or a designated fiscal intermediary, or the commissioner of the office of temporary and disability assistance, or corporation organized and operating in accordance with article forty-three of the insurance law or organization operating in accordance with article forty-four of this chapter shall pay the commissioner, or the commissioner's designee, such amount withheld on behalf of the designated provider of services. Such amount shall represent, in whole or in part, the amounts due from the designated provider of services.

(d) The commissioner shall provide a designated provider of services with notice of any estimate of an amount due for an allowance pursuant to paragraph (a) or (b) of this subdivision or paragraph (d) of subdivision eight-a of this section at least three days prior to collection of such amount by the commissioner. Such notice shall contain the financial basis for the commissioner's estimate.

(e) In the event a designated provider of services objects to an estimate by the commissioner pursuant to paragraph (a) or (b) of this subdivision or paragraph (d) of subdivision eight-a of this section of the amount due for an allowance, the designated provider of services, within sixty days of notice of an amount due, may request a public hearing. If a hearing is requested, the commissioner shall provide the designated provider of services an opportunity to be heard and to present evidence bearing on the amount due for an allowance within thirty days after collection of an amount due or receipt of a request for a hearing, whichever is later. An administrative hearing is not a prerequisite to seeking judicial relief.

(f) The commissioner may direct that a hearing be held without any request by a designated provider of services.

(g) In the event a hearing pursuant to paragraph (e) of this subdivision is not requested and the delinquent amounts in question have been referred for recoupment or offset pursuant to paragraph (c) of this subdivision, or have been referred to the office of the attorney general for collection, the amount of such delinquencies shall be deemed final and not subject to further revision or reconciliation by the commissioner based on any additional reports or other information submitted by the designated provider of services, provided, however, that such delinquencies shall not be referred for such recoupment or for such collection based on estimated amounts unless the hospital has received written notification of such delinquencies and has been given no less than thirty days in which to submit delinquent reports.

7. (a) (i) Every designated provider of services shall submit reports of net patient service revenues received for or on account of patient services for each month which shall be in such form as may be prescribed by the commissioner to accurately disclose information required to implement this section. For periods on and after January first, two thousand five, reports by designated providers of services shall be submitted electronically in a form as may be required by the commissioner; provided, however, any designated provider of services is not prohibited from submitting reports electronically on a voluntary basis prior to such date.

(ii) For periods on and after January first, two thousand nine, every designated provider of services shall provide the commissioner or commissioner's designee with its federal tax identification number and such identification number shall be used in connection with identifying such providers for purposes pursuant to this section, including the posting of such identification numbers on secure websites maintained by the commissioner or the commissioner's designee in furtherance of the purposes of this section. The commissioner shall include for periods on and after January first, two thousand nine on such secure websites, the date such designated provider of services was first posted. In addition, the commissioner shall, as a part of a final resolution of an audit conducted pursuant to subdivision eight-a of this section, waive payment of interest and penalties otherwise applicable pursuant to subdivision eight of this section, when the audit findings conclusively indicate that the liability for such interest and penalties are the result of a delay in the listing of a new designated provider of services on the secure website maintained by the department.

(b) (i) Every third-party payor making an election in accordance with paragraph (a) of subdivision five of this section shall submit reports of patient service expenditures for services provided by designated providers of services for each month which shall be in such form as may be prescribed by the commissioner to accurately disclose information required to implement this section, provided, however, that for reporting periods relating to payments for services provided or dates of inpatient discharge or contracted service obligations occurring on or after January first, two thousand one, the commissioner may permit certain third-party payors which have at least one full year of pool payment experience to submit such reports on an annual basis, based on an annual demonstration by a payor through its prior year's pool payment experience that total pool obligations under this section and sections twenty-eight hundred seven-s and twenty-eight hundred seven-t of this article are not expected to exceed ten thousand dollars for annual periods prior to January first, two thousand four, and twenty-five thousand dollars for annual periods on and after January first, two thousand four.

(ii) For periods on and after July first, two thousand four, reports submitted on a monthly basis by third-party payors in accordance with subparagraph (i) of this paragraph and reports submitted on a monthly or annual basis by payors acting in an administrative services capacity on behalf of electing third-party payors in accordance with subparagraph (i) of this paragraph shall be made electronically in a form as may be required by the commissioner; provided, however, any third-party payor, except payors acting in an administrative services capacity on behalf of electing third-party payors, which, on or after January first, two thousand four, elects to make payments directly to the commissioner or the commissioner's designee pursuant to subdivision five of this section, shall be subject to this subparagraph only after one full year of pool payment experience which results in reports being submitted on a monthly basis. This subparagraph shall not be interpreted to prohibit any third-party payor from submitting reports electronically on a voluntary basis.

(c) If a designated provider of services or a third-party payor fails to file reports required pursuant to paragraph (a) or (b) of this subdivision and which are due on and after January first, two thousand, within sixty days of the date such reports are due and after notification of such reporting delinquency, the commissioner may assess a civil penalty of up to ten thousand dollars for each such failure, provided, however, that such civil penalty shall not be imposed if the payor or provider demonstrates good cause for the failure to timely file such reports. Such penalties shall be subject to the provisions of section twelve-a of this chapter.

8. (a) If a payment made pursuant to this section or to section twenty-eight hundred seven-s or twenty-eight hundred seven-t of this article for a month to which an allowance applies is less than ninety percent of the amount due or which the commissioner estimates, based on available financial and statistical data, is due for such month, interest shall be due and payable to the commissioner by a designated provider of services, or by a third-party payor, other than a state governmental agency, that has elected to pay an allowance directly, on the difference between the amount paid and the amount due or estimated to be due from the day of the month the payment was due until the date of payment. The rate of interest shall be twelve percent per annum or, if greater, at the rate of interest set by the commissioner of taxation and finance with respect to underpayments of tax pursuant to subsection (e) of section one thousand ninety-six of the tax law minus four percentage points. Interest under this paragraph shall not be paid if the amount thereof is less than one dollar. Interest due from a designated provider of services, if not paid by the due date of the following month's payment, may be collected by the commissioner pursuant to paragraph (c) of subdivision six of this section in the same manner as an allowance pursuant to subdivision two of this section.

(b) If a payment made for a month to which an allowance applies is less than seventy percent of the amount due or which the commissioner estimates, based on available financial and statistical data, is due for such month, a penalty shall be due and payable to the commissioner by a designated provider of services, or by a third-party payor, other than a state governmental agency, that has elected to pay an allowance directly, of five percent of the difference between the amount paid and the amount due or estimated to be due for such month when the failure to pay is for a duration of not more than one month after the due date of the payment with an additional five percent for each additional month or fraction thereof during which such failure continues, not exceeding twenty-five percent in the aggregate. A penalty due from a designated provider of services may be collected by the commissioner pursuant to paragraph (c) of subdivision six of this section in the same manner as an allowance pursuant to subdivision two of this section.

(c) Overpayment by or on behalf of a designated provider of services of a payment shall be applied to any other payment due from the designated provider of services pursuant to this section, or, if no payment is due, at the election of the designated provider of services shall be applied to future payments or refunded to the designated provider of services. Interest shall be paid on overpayments from the date of overpayment to the date of crediting or refund at the rate determined in accordance with paragraph (a) of this subdivision only if the overpayment was made at the direction of the commissioner. Interest under this paragraph shall not be paid if the amount thereof is less than one dollar.

8-a. (a) Payments and reports submitted or required to be submitted to the commissioner or to the commissioner's designee pursuant to this section and section twenty-eight hundred seven-s of this article by designated providers of services and by third-party payors which have elected to make payments directly to the commissioner or to the commissioner's designee in accordance with subdivision five-a of this section, shall be subject to audit by the commissioner for a period of six years following the close of the calendar year in which such payments and reports are due, after which such payments shall be deemed final and not subject to further adjustment or reconciliation, provided, however, that nothing herein shall be construed as precluding the commissioner from pursuing collection of any such payments which are identified as delinquent within such six year period, or which are identified as delinquent as a result of an audit commenced within such six year period, or from conducting an audit of any adjustment or reconciliation made by a designated provider of services or by a third party payor which has elected to make such payments directly to the commissioner or the commissioner's designee.

(b) Designated providers of services or third-party payors which, in the course of an audit pursuant to this section or section twenty-eight hundred seven-s of this article, fail to produce data or documentation requested in furtherance of such an audit, within thirty days of such request, may be assessed a civil penalty of up to ten thousand dollars for each such failure, provided, however, that such civil penalty shall not be imposed if the audited entity demonstrates good cause for such failure. The imposition of civil penalties pursuant to this section shall be subject to the provisions of section twelve-a of this chapter.

(c) Records required to be retained for audit verification purposes by designated providers of services and third-party payors in accordance with this section and section twenty-eight hundred seven-s of this article shall include, but not be limited to, on a monthly basis, the source records generated by supporting information systems, detailed claims information, detailed patient revenue information, capitation arrangements, financial accounting records, relevant correspondence and such other records as may be required to prove compliance with, and to support the reports submitted in accordance with, this section and section twenty-eight hundred seven-s of this article.

(d) If a designated provider of services or a third party payor fails to produce data or documentation requested in furtherance of an audit pursuant to this section or pursuant to section twenty-eight hundred seven-s of this article, for a month to which an allowance applies, the commissioner may estimate, based on available financial and statistical data as determined by the commissioner, the amount due for such month.

If the impact of the patient services revenue exemptions specified pursuant to this section, or pursuant to section twenty-eight hundred seven-s of this article, cannot be determined from such available financial and statistical data, the amount due may be calculated on the basis of the aggregate total of patient services revenue derived from such data for the year subject to audit. The commissioner shall take all necessary steps to collect amounts due as determined pursuant to this paragraph, including directing the state comptroller to offset such amounts due from any payments made by the state pursuant to this article to a designated provider of services or a third party payor. Interest and penalties shall be applied to such amounts due in accordance with the provisions of subdivision eight of this section.

(e) The commissioner may, as part of a final resolution of an audit conducted pursuant to this subdivision, waive payment of interest and penalties otherwise applicable pursuant to subdivision eight of this section when amounts due as a result of such audit, other than such waived penalties and interest, are paid in full to the commissioner or the commissioner's designee within sixty days of the issuance of a final audit report that is mutually agreed to by the commissioner and auditee, provided, however, that if such final audit report is not so mutually agreed upon, then neither the commissioner nor the auditee shall have any obligations pursuant to this paragraph.

(f) The commissioner may enter into agreements with designated providers of services, and with third-party payors, in regard to which audit findings have been made pursuant to this section or section twenty-eight hundred seven-s of this article, extending and applying such audit findings or a portion thereof in settlement and satisfaction of potential audit liabilities for subsequent un-audited periods through the two thousand five calendar year. The commissioner may waive payment of interest and penalties otherwise applicable to such subsequent unaudited periods when such amounts due as a result of such agreement, other than waived penalties and interest, are paid in full to the commissioner or the commissioner's designee within sixty days of execution of such agreement by all parties to the agreement.

9. Funds accumulated, including income from invested funds, from the allowances specified in this section, and the assessments pursuant to subdivision eighteen of section twenty-eight hundred seven-c of this article, and the assessments pursuant to paragraph (c) of subdivision nine of section twenty-eight hundred seven-d of this article, plus such funds as may be allocated in accordance with section twenty-eight hundred seven-s of this article, including interest and penalties, shall be deposited by the commissioner or the commissioner's designee as follows:

(a) funds shall be deposited and credited to a special revenue-other fund to be established by the comptroller or to the health care reform act (HCRA) resources fund established pursuant to section ninety-two-dd of the state finance law, whichever is applicable. To the extent of funds appropriated therefore, the commissioner shall make payments to general hospitals related to bad debt and charity care pursuant to section twenty-eight hundred seven-k of this article. Funds shall be deposited in the following amounts:

(i) fifty-seven and thirty-three-hundredths percent of the funds accumulated for the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-seven,

(ii) fifty-seven and one-hundredths percent of the funds accumulated for the period January first, nineteen hundred ninety-eight through December thirty-first, nineteen hundred ninety-eight,

(iii) fifty-five and thirty-two-hundredths percent of the funds accumulated for the period January first, nineteen hundred ninety-nine through December thirty-first, nineteen hundred ninety-nine, and

(iv) seven hundred sixty-five million dollars annually of the funds accumulated for the periods January first, two thousand through December thirty-first, two thousand ten, and

(v) one hundred ninety-one million two hundred fifty thousand dollars of the funds accumulated for the period January first, two thousand eleven through March thirty-first, two thousand eleven.

(b) funds shall be accumulated in a health care initiatives pool established by the commissioner, for distribution in accordance with section twenty-eight hundred seven-l of this article, in the following amounts:

(i) forty-two and sixty-seven-hundredths percent of the funds accumulated for the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-seven,

(ii) forty-two and ninety-nine-hundredths percent of the funds accumulated for the period January first, nineteen hundred ninety-eight through December thirty-first, nineteen hundred ninety-eight,

(iii) forty-four and sixty-eight-hundredths percent of the funds accumulated for the period January first, nineteen hundred ninety-nine through December thirty-first, nineteen hundred ninety-nine, and

(iv) the remaining balance of the funds accumulated for each period on and after January first, two thousand.

10. Notwithstanding any inconsistent provision of law or regulation to the contrary, the allowances applicable to payments by state governmental agencies pursuant to subdivision two of this section shall be reflected in the determination of reimbursement rates pursuant to sections twenty-eight hundred seven and twenty-eight hundred seven-c of this article and fees for clinical laboratory services under the medical assistance program.

11. Each exclusion from the allowances effective on or after January first, nineteen hundred ninety-seven established pursuant to this section shall be contingent upon either: (a) qualification of the allowances for waiver pursuant to federal law and regulation; or (b)consistent with federal law and regulation, not requiring a waiver by the secretary of the department of health and human services related to such exclusion; in order for the allowances under this section to be qualified as a broad-based health care related tax for purposes of the revenues received by the state pursuant to the allowances not reducing the amount expended by the state as medical assistance for purposes of federal financial participation. The commissioner shall collect the allowances relying on such exclusions, pending any contrary action by the secretary of the department of health and human services. In the event the secretary of the department of health and human services determines that the allowances do not so qualify based on any such exclusion, then the exclusion shall be deemed to have been null and void as of January first, nineteen hundred ninety-seven, and the commissioner shall collect any retroactive amount due as a result, without interest or penalty provided the designated provider of services or third-party payor that has elected to pay directly pays the retroactive amount due within ninety days of notice from the commissioner to the designated provider of services or third-party payor that has elected to pay directly that an exclusion is null and void. Interest and penalties shall be measured from the due date of ninety days following notice from the commissioner or the commissioner's designee to the designated provider of services or third-party payor that has elected to pay directly.

12. Revenue from the allowances pursuant to this section shall not be included in gross revenue received for purposes of the assessments pursuant to subdivision eighteen of section twenty-eight hundred seven-c of this article, subject to the provisions of paragraph (e) of subdivision eighteen of section twenty-eight hundred seven-c of this article, and shall not be included in gross revenue received for purposes of the assessments pursuant to section twenty-eight hundred seven-d of this article, subject to the provisions of subdivision twelve of section twenty-eight hundred seven-d of this article.

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PUBLIC HEALTH LAW SECTION 2807-s
(added by Chapter 639 of the Laws of 1996
and amended by Chapter 640 of the Laws of 1996)

§ 2807-s* Professional education pool funding.

1. (a) Payments to general hospitals by all specified third-party payors, as defined in paragraph (b) of subdivision one-a of this section, making payments on a rate, charge, negotiated payment, or other basis for inpatient hospital services provided to persons who are not eligible for payments as beneficiaries of title XVIII of the federal social security act (medicare) or eligible for medical assistance pursuant to title eleven of article five of the social services law (including enrollees in medicaid managed care programs) or eligible for the family health plus program pursuant to title eleven-D of article five of the social services law, and related payments of patient deductible and coinsurance amounts and of secondary third-party payors, shall include a surcharge for a regional allowance on inpatient hospital net patient service revenues in the percentage amount and for the periods specified in subdivision two of this section. Any such allowance shall be submitted by general hospitals to the commissioner or the commissioner's designee in accordance with subdivision five of this section.

(b) The allowance established pursuant to this section shall not be applicable to specified third-party payors filing an election and making payments to the commissioner or the commissioner's designee in accordance with section twenty-eight hundred-seven-t of this article and pursuant to paragraph (a) of subdivision five of section twenty-eight hundred seven-j of this article, nor to related payments of patient deductible and coinsurance amounts and of secondary third-party payors.

1-a. Definitions. (a) "Third-party coverage ", for purposes of this section and section twenty-eight hundred seven-t of this article, shall include payments by a specified third-party payor making payments on behalf of a patient; whether made directly to a general hospital or indirectly as indemnity or similar payments made to the patient (or patient's representative such as parent or family member) for inpatient hospital services provided by a general hospital, or through the use of payments made payable to both the general hospital and the patient or patient's representative, or similar devices.

(b) "Specified third-party payors", for purposes of this section and sections twenty-eight hundred seven-j and twenty-eight hundred seven-t of this article, shall include corporations organized and operating in accordance with article forty-three of the insurance law, organizations operating in accordance with the provisions of article forty-four of this chapter, self-insured funds and administrators acting on behalf of self-insured funds, and commercial insurers authorized to write accident and health insurance and whose policy provides coverage on an expense incurred basis. Specified third-party payors, for purposes of this section, shall not include governmental agencies or providers of coverage pursuant to the comprehensive motor vehicle insurance reparations act, the workers' compensation law, the volunteer firefighters' benefit law, or the volunteer ambulance workers' benefit law.

(c) "Regions ", for purposes of this section and section twenty-eight hundred seven-t of this article shall mean the regions as defined in paragraph (b) of subdivision sixteen of section twenty-eight hundred seven-c of this article as in effect on June thirtieth, nineteen hundred ninety-six.

2. (a) The regional percentage allowance for any period during the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-nine for all general hospitals in the region applicable to a specified third-party payor, and applicable to related patient coinsurance and deductible amounts and to secondary third-party payors under coordination of benefits principles, shall be the following, and shall be applied to inpatient hospital net patient service revenues:

(b) the result expressed as a percentage of:

(i) for each region, the amount allocated to the region in accordance with subdivision six of this section, divided by

(ii) the total estimated nineteen hundred ninety-six general hospital inpatient revenue of all general hospitals in the region, excluding (A) an estimate of revenue from services provided to beneficiaries of title XVIII of the federal social security act (medicare), (B) an estimate of revenue from services provided to patients eligible for payments by governmental agencies, patients eligible for payments pursuant to the comprehensive motor vehicle insurance reparations act, the workers' compensation law, the volunteer firefighters' benefit law, and the volunteer ambulance workers' benefit law, and self-pay patients, (C) from general hospitals providing graduate medical education in the aggregate an amount equal to the amount specified in subparagraph (i) of this subdivision, other than the components of such amount allocable to payors specified in clause (B) of this subparagraph, and (D) an estimate of revenue reductions related to negotiated reimbursement in nineteen hundred ninety-seven with specified third-party payors which shall be a uniform statewide percentage estimated reduction.

(c) (i) The regional percentage allowance for the periods January first, two thousand through June thirtieth, two thousand three, for all general hospitals in the region applicable to specified third-party payors, and applicable to related patient coinsurance and deductible amounts, shall be the same regional percentage allowance calculated pursuant to paragraph (b) of this subdivision for the period January first, nineteen hundred ninety-nine through December thirty-first, nineteen hundred ninety-nine.

(ii) The regional percentage allowance for the periods July first, two thousand three through December thirty-first, two thousand five, for all general hospitals in the region applicable to specified third-party payors, and applicable to related patient coinsurance and deductible amounts, shall be the same regional percentage allowance calculated pursuant to paragraph (b) of this subdivision for the period January first, nineteen hundred ninety-nine through December thirty-first, nineteen hundred ninety-nine multiplied by one hundred eight and nineteen hundredths percent.

(iii) The regional percentage allowance for the periods January first, two thousand six through June thirtieth, two thousand seven, for all general hospitals in the region applicable to specified third-party payors, and applicable to related patient coinsurance and deductible amounts, shall be the same regional percentage allowance calculated pursuant to subparagraph (ii) of this paragraph for the period January first, two thousand five through December thirty-first, two thousand five multiplied by one hundred one and thirteen hundredths percent.

(iv) The regional percentage allowance for periods on and after July first, two thousand seven, for all general hospitals in the region applicable to specified third-party payors, and applicable to related patient coinsurance and deductible amounts, shall be the same regional percentage allowance calculated pursuant to subparagraph (iii) of this paragraph for the period January first, two thousand six through June thirtieth, two thousand seven.

3. Inpatient hospital net patient service revenues, for purposes of this section, shall mean for general hospitals all moneys received for or on account of inpatient hospital services provided to persons with third-party coverage from a specified third-party payor, including capitation payments allocable to inpatient hospital services, less refunds, for patients discharged or contracted hospital inpatient service obligations for periods on or after January first, nineteen hundred ninety-seven excluding the following subject to the provisions of subdivision eight of this section:

(a) revenue received from the allowances pursuant to section twenty-eight hundred seven-j of this article and this section; and

(b) revenue received from physician practice or faculty practice plan discrete billings for private practicing physician services.

4. (a) For periods prior to January first, two thousand five, the commissioner is authorized to contract with the article forty-three insurance law plans, or such other contractors as the commissioner shall designate, to receive and distribute funds from the allowances established pursuant to this section and funds from the assessments established pursuant to section twenty-eight hundred seven-t of this article. In the event contracts with the article forty-three insurance law plans or other commissioner's designees are effectuated, the commissioner shall conduct annual audits of the receipt and distribution of the funds. The reasonable costs and expenses of an administrator as approved by the commissioner, not to exceed for personnel services on an annual basis eight hundred fifty thousand dollars for collection and distribution of allowances established pursuant to this section and assessments established pursuant to this section and assessments established pursuant to section twenty-eight hundred seven-t of this article shall be paid from the allowance and assessment funds.

(b) Notwithstanding any inconsistent provision of section one hundred twelve or one hundred sixty-three of the state finance law or any other law, at the discretion of the commissioner without a competitive bid or request for proposal process, contracts in effect for administration of bad debt and charity care pools for the period January first, nineteen hundred ninety-six through June thirtieth, nineteen hundred ninety-six pursuant to section twenty-eight hundred seven-c of this article may be extended to provide for administration pursuant to this section, and section twenty-eight hundred seven-t of this article and may be amended as may be necessary.

5. Funds due by a general hospital to the commissioner or the commissioner's designee from the allowance pursuant to this section shall be due and shall be collected under the terms and conditions provided for payment and collection of allowances pursuant to section twenty-eight hundred seven-j of this article.

6. The amount allocated to each region for purposes of calculating the regional allowance percentage pursuant to this section for each year during the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-nine and the regional assessments pursuant to section twenty-eight hundred seven-t of this article for each year during the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-nine and for each year on and after January first, two thousand, shall be the sum of the factors computed in paragraphs (b), (d) and (f) of this subdivision as follows:

(a) (i) A gross annual statewide amount for nineteen hundred ninety-seven shall be five hundred eighty-nine million dollars.

(ii) A gross annual statewide amount for nineteen hundred ninety-eight shall be five hundred eighty-nine million dollars.

(iii) A gross annual statewide amount for nineteen hundred ninety-nine shall be five hundred eighty-nine million dollars.

(iv) A gross annual statewide amount for two thousand shall be five hundred eighty-nine million dollars.

(v) A gross annual statewide amount for two thousand one shall be five hundred sixty-nine million dollars.

(vi) A gross annual statewide amount for two thousand two shall be five hundred eighty-nine million dollars.

(vii) A gross annual statewide amount for two thousand three shall be five hundred eighty-nine million dollars.

(viii) A gross annual statewide amount for two thousand four and two thousand five shall be six hundred twenty-four million dollars.

(ix) A gross annual statewide amount for two thousand six shall be six hundred seventy-four million dollars.

(x) A gross statewide amount for the period January first, two thousand seven through March thirty-first, two thousand seven shall be one hundred sixty-eight million five hundred thousand dollars, and for the period April first, two thousand seven through December thirty-first, two thousand seven shall be five hundred sixty-one million seven hundred fifty thousand dollars.

(xi) A gross statewide amount for the period January first, two thousand eight through March thirty-first, two thousand eight, shall be one hundred eighty-seven million two hundred fifty thousand dollars.

(xii) A gross statewide amount for the period April first, two thousand eight through December thirty-first, two thousand eight, shall be five hundred sixty-one million seven hundred fifty thousand dollars.

(xiii) A gross statewide amount for the period October first, two thousand eight through March thirty-first, two thousand nine, shall be one hundred seventy-four million two hundred thousand dollars. Such amount shall be separately reported and paid in six monthly installments by the tenth day of each month from October two thousand eight to March two thousand nine. Such reports and payments must initially be based on each payers' monthly enrollment count for the preceding month and shall be reconciled on a month to month basis to reflect the actual monthly enrollment counts for the applicable month.

(xiv) A gross annual statewide amount for the period January first, two thousand nine through December thirty-first, two thousand ten, shall be nine hundred thirty-nine million dollars.

(xv) A gross statewide amount for the period January first, two thousand eleven through March thirty-first, two thousand eleven, shall be two hundred thirty-four million seven hundred fifty thousand dollars.

(b) The amount specified in paragraph (a) of this subdivision shall be allocated among the regions based on each region's proportional share of the sum of the estimated revenue of all general hospitals in the region, excluding revenue related to services provided to beneficiaries of title XVIII of the federal social security act (medicare), related to one hundred percent of the direct medical education expenses and fifty-nine and five-tenths percent of indirect medical education expenses reflected in general hospital inpatient revenue compared to the sum of such amounts for all regions, based on estimated nineteen hundred ninety-six data and statistics, excluding an estimate of revenue from services provided to patients eligible for payments by governmental agencies, patients eligible for payments pursuant to the comprehensive motor vehicle insurance reparations act, the workers' compensation law, the volunteer firefighters' benefit law, and the volunteer ambulance workers' benefit law, and self-pay patients.

(c) (i) A further gross annual statewide amount for nineteen hundred ninety-seven shall be sixty-four million dollars.

(ii) A further gross annual statewide amount for nineteen hundred ninety-eight shall be sixty-four million dollars.

(iii) A further gross annual statewide amount for nineteen hundred ninety-nine shall be eighty-nine million dollars.

(iv) A further gross annual statewide amount for two thousand, two thousand one, two thousand two, two thousand three, two thousand four, two thousand five, two thousand six, two thousand seven, two thousand eight, two thousand nine and two thousand ten shall be eighty-nine million dollars.

(v) A further gross statewide amount for the period January first, two thousand eleven through March thirty-first, two thousand eleven, shall be twenty-two million two hundred fifty thousand dollars.

(d) For each year, the amount specified in paragraph (c) of this subdivision shall be allocated among the regions based on the same regional percentage allocations as determined in accordance with paragraph (b) of this subdivision.

(e) (i) A further gross annual statewide amount shall be twelve million dollars for each period prior to January first, two thousand eleven.

(ii) A further gross statewide amount for the period January first, two thousand eleven through March thirty-first, two thousand eleven shall be three million dollars.

(f) For each year, the amount specified in paragraph (e) of this subdivision shall be allocated among the regions based on each region's allocated share of the AIDS drug assistance program expenditures for the latest annual period for which such data are available.

7. Funds accumulated, including income from invested funds, from the allowances specified in this section and the assessments pursuant to section twenty-eight hundred seven-t of this article, including interest and penalties, shall be deposited by the commissioner or the commissioner's designee as follows:

(a) funds shall be accumulated in regional professional education pools established by the commissioner or the healthcare reform act (HCRA) resources fund established pursuant to section ninety-two-dd of the state finance law, whichever is applicable, for distribution in accordance with section twenty-eight hundred seven-m of this article, in the following amounts:

(i) ninety-two and forty-five-hundredths percent of the funds accumulated less seventy-six million dollars for the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-seven,

(ii) ninety-two and forty-five-hundredths percent of the funds accumulated less seventy-six million dollars for the period January first, nineteen hundred ninety-eight through December thirty-first, nineteen hundred ninety-eight,

(iii) ninety-two and forty-five-hundredths percent of the funds accumulated less one hundred one million dollars for the period January first, nineteen hundred ninety-nine through December thirty-first, nineteen hundred ninety-nine,

(iv) four hundred ninety-four million dollars on an annual basis for the periods January first, two thousand through December thirty-first, two thousand three,

(v) four hundred sixty-three million dollars for the period January first, two thousand four through December thirty-first, two thousand four,

(vi) four hundred eighty-eight million dollars for the period January first, two thousand five through December thirty-first, two thousand five,

(vii) four hundred ninety-four million dollars for the period January first, two thousand six through December thirty-first, two thousand six,

(viii) four hundred seventy million dollars for the period January first, two thousand seven through December thirty-first, two thousand seven,

(ix) four hundred forty-six million six hundred thousand dollars for the period January first, two thousand eight through December thirty-first, two thousand eight,

(x) forty-seven million two hundred ten thousand dollars on an annual basis for the periods January first, two thousand nine through December thirty-first, two thousand ten; and

(xi) eleven million eight hundred thousand dollars for the period January first, two thousand eleven through March thirty-first, two thousand eleven;

(xii) provided, however, for periods prior to January first, two thousand nine, amounts set forth in this paragraph may be reduced by the commissioner in an amount to be approved by the director of the budget to reflect the amount received from the federal government under the state's 1115 waiver which is directed under its terms and conditions to the graduate medical education program established pursuant to section twenty-eight hundred seven-m of this article;

(xiii) provided further, however, for periods prior to July first, two thousand nine, amounts set forth in this paragraph shall be reduced by an amount equal to the total actual distribution reductions for all facilities pursuant to paragraph (e) of subdivision three of section twenty-eight hundred seven-m of this article; and

(xiv) provided further, however, for periods prior to July first, two thousand nine, amounts set forth in this paragraph shall be reduced by an amount equal to the actual distribution reductions for all facilities pursuant to paragraph (s) of subdivision one of section twenty-eight hundred seven-m of this article.

(b) funds shall be added to the funds collected by the commissioner for distribution in accordance with section twenty-eight hundred seven-j of this article, in the following amounts:

(i) seven and fifty-five-hundredths percent of the funds accumulated less seventy-six million dollars for the period January first, nineteen hundred ninety-seven through December thirty-first, nineteen hundred ninety-seven,

(ii) seven and fifty-five-hundredths percent of the funds accumulated less seventy-six million dollars for the period January first, nineteen hundred ninety-eight through December thirty-first, nineteen hundred ninety-eight,

(iii) seven and fifty-five-hundredths percent of the funds accumulated less one hundred one million dollars for the period January first, nineteen hundred ninety-nine through December thirty-first, nineteen hundred ninety-nine,

(iv) the remaining balance of the funds accumulated for each period on and after January first, two thousand; and

(c) further funds shall be added to the funds collected by the commissioner for distribution in accordance with section twenty-eight hundred seven-j of this article:

(i) for the nineteen hundred ninety-seven period, seventy-six million dollars;

(ii) for the nineteen hundred ninety-eight period, seventy-six million dollars; and

(iii) for the nineteen hundred ninety-nine period, one hundred one million dollars.

8. Each exclusion from the allowances effective on or after January first, nineteen hundred ninety-seven established pursuant to this section shall be contingent upon either: (a) qualification of the allowances for waiver pursuant to federal law and regulation; or (b) consistent with federal law and regulation, not requiring a waiver by the secretary of the department of health and human services related to such exclusion; in order for the allowances under this section to be qualified as a broad-based health care related tax for purposes of the revenues received by the state pursuant to the allowances not reducing the amount expended by the state as medical assistance for purposes of federal financial participation. The commissioner shall collect the allowances relying on such exclusions, pending any contrary action by the secretary of the department of health and human services. In the event the secretary of the department of health and human services determines that the allowances do not so qualify based on any such exclusion, then the exclusion shall be deemed to have been null and void as of January first, nineteen hundred ninety-seven, and the commissioner shall collect any retroactive amount due as a result, without interest or penalty provided the general hospital pays the retroactive amount due within ninety days of notice from the commissioner to the general hospital that an exclusion is null and void. Interest and penalties shall be measured from the due date of ninety days following notice from the commissioner or the commissioner's designee to the general hospital.

9. Revenue from the allowances pursuant to this section shall not be included in gross revenue received for purposes of the assessments pursuant to subdivision eighteen of section twenty-eight hundred seven-c of this article, subject to the provisions of paragraph (e) of subdivision eighteen of section twenty-eight hundred seven-c of this article, and shall not be included in gross revenue received for purposes of the assessments pursuant to section twenty-eight hundred seven-d of this article, subject to the provisions of subdivision twelve of section twenty-eight hundred seven-d of this article.

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PUBLIC HEALTH LAW SECTION 2807-t
(added by Chapter 639 of the Laws of 1996
and amended by Chapter 640 of the Laws of 1996)

§ 2807-t* Assessments on covered lives.

1. Definitions. (a) "Individual", means a person for whom the specified third-party payor has agreed to provide reimbursement for inpatient hospital services in the period other than:

(i) any person who is eligible for payments as a beneficiary of title XVIII of the federal social security act (medicare);

(ii) any person for whom the specified third-party payor has agreed to provide reimbursement for inpatient hospital services contingent upon such person's relationship to an "individual" as a spouse, child, stepchild, adopted child, family member, or dependent, as defined by the specified third-party payor, or as contingent upon any other similar relationship to an "individual" as such relationship is defined by the specified third-party payor;

(iii) any person for whom the specified third-party payor has agreed to provide coverage for hospital confinement on other than an expense incurred basis;

(iv) any person for whom the specified third-party payor has agreed to provide reimbursement for inpatient hospital services pursuant to the workers' compensation law, the volunteer firefighters' benefit law, or the volunteer ambulance workers' benefit law;

(v) any person for whom the specified third-party payor has agreed to provide reimbursement for inpatient hospital services pursuant to the comprehensive motor vehicle insurance reparations act;

(vi) any person (hereinafter referred to as the "primary insured ") otherwise meeting the definition of an "individual " as set forth under this section if the specified third-party payor has agreed to provide reimbursement for such person as part of a "family unit "; and

(vii) effective on and after April first, two thousand five, any person covered under a student policy issued pursuant to article forty-three of the insurance law, or a blanket student accident, blanket student health, or blanket student accident and health insurance policy.

(b) "Family unit " means any person for whom the specified third-party payor has agreed to provide reimbursement for inpatient hospital services in the period, together with one or more additional persons for whom the specified third-party payor has agreed to provide reimbursement for inpatient hospital services in the period contingent upon such person's relationship to said person as a spouse, child, stepchild, adopted child, family member, or dependent, as defined by the specified third-party payor, or as contingent upon any other similar relationship, as such relationship is defined by the specified third-party payor. Excluded from the definition is any family unit where the specified third-party payor has agreed to provide: coverage for hospital confinement on other than an expense incurred basis; reimbursement for inpatient hospital services pursuant to the worker's compensation law, the volunteer firefighters' benefit law, or the volunteer ambulance workers' benefit law; and reimbursement for inpatient hospital services pursuant to the comprehensive motor vehicle insurance reparations act. If a family unit of two persons includes one person who is eligible for payments as a beneficiary of title XVIII of the social security act (medicare), that family unit shall be deemed an individual for purposes of this section. If a family unit of three or more persons includes one person who is not eligible for medicare and the remaining two or more persons are eligible for medicare, that family unit shall be deemed an individual for purposes of this section. A family unit of two or more persons, all of whom are eligible for medicare, shall not be considered a family unit or an individual for purposes of this section.

(c) "Specified third-party payor ", for purposes of this section, shall have the same meaning as set forth in section twenty-eight hundred seven-s of this article.

(d) "Region ", for purposes of this section, shall have the same meaning as set forth in section twenty-eight hundred seven-s of this article.

2. Determination of annual regional payment amount. The sum total to be generated each year for each region shall be referred to as the annual regional payment amount, as determined in accordance with subdivision six of section twenty-eight hundred seven-s of this article.

3. Election. Any specified third-party payor may make an election to make payments for the assessments required by this section, on behalf of the liable persons or entities pursuant to subdivision eight of this section, directly to the commissioner or the commissioner's designee. The election pursuant to this subdivision must be in writing, filed with the commissioner or the commissioner's designee on such forms and in such manner as the commissioner shall require. An election by a specified third-party payor shall take effect for nineteen hundred ninety-seven on the next following January first, April first, July first, or October first not less than thirty days after the election is filed. Beginning December first, nineteen hundred ninety-seven, an election pursuant to this section must be made no later than December first of the year prior to the assessment year. However, any specified third-party payor licensed pursuant to the insurance law or certified pursuant to article forty-four of this chapter between December first of the year prior to the assessment year and December thirty-first of the assessment year may make an election subsequent to such licensure or certification and during said time period, to take effect on the next following January first, April first, July first or October first not less than thirty days after such election is filed. Specified third-party payors other than those licensed pursuant to the insurance law or certified pursuant to this chapter which have not provided coverage prior to December first of the year prior to the assessment year may make an election at any time from December first of the year prior to said assessment year to December thirty-first of said assessment year, to take effect on the next following January first, April first, July first or October first not less than thirty days after the election is filed. An election shall remain in effect unless revoked in writing by a specified third-party payor, which revocation shall be effective on the first day of the next calendar year quarter, provided that such payor has provided notice of its intention to so revoke at least thirty days prior to the beginning of such calendar quarter.

(a) A specified third-party payor filing an election pursuant to this subdivision must agree: to provide the data and information required by subdivision four of this section; to provide such certification of data and access to individual and family unit data for audit verification purposes as the commissioner shall require for purposes of this section; and to the jurisdiction of the state to maintain an action in the courts of the state of New York to enforce any provision of this section related to payment of the assessments.

(b) If a specified third-party payor is acting in an administrative services capacity on behalf of an organization, such as a self-insured fund, the consent of the organization to the election and the conditions pursuant to paragraph (a) of this subdivision must be submitted with the election. Such consent may be set forth in writing in the agreement between the specified third-party payor and the organization.

(c) If a specified third-party payor, including a payor operating in accordance with the insurance law or article forty-four of this chapter, making an election pursuant to this subdivision is acting in an administrative services capacity on behalf of an organization or organizations, such specified third-party payor must specify (i) whether such election applies to payments on behalf of all such organizations, and (ii) identify any organizations for which such specified third-party payor is acting to which the election does not apply and establish, in accordance with guidelines established by the superintendent of insurance, a system through which general hospitals and the commissioner can identify the status of a patient as a patient for whom the election does not apply.

(d) The commissioner may deny a specified third-party payor the opportunity to make an election pursuant to this subdivision based on repeated late payments, failure to remit correct amounts, or failure to provide adequate verification of the accuracy of payments.

(e) The commissioner or the commissioner's designee shall make available to all general hospitals a list of the specified third-party payors which have elected pursuant to this subdivision to remit payments pursuant to this section.

4. Assessments shall be calculated as follows:

(a) Every specified third-party payor that has made an election pursuant to this section shall report to the commissioner or the commissioner's designee the number of individuals for a period as determined by the commissioner during the calendar year prior to the assessment year residing within each region ("individual member months "). Every such specified third-party payor shall also report to the commissioner or the commissioner's designee the number of family units for a period as determined by the commissioner during the calendar year prior to the assessment year residing within each region ("family member months"). For purposes of this section, the family unit is considered to reside in the region in which the primary insured resides.

(b) The superintendent of insurance shall advise the commissioner of the average number of persons covered under family insurance contracts providing health care coverage approved by the superintendent for the year two years prior to the assessment year.

(c) The commissioner shall calculate the total number of "individual member months " for each region for all specified third-party payors to determine "aggregate individual member months " for each region.

(d) The commissioner shall calculate the total number of "family member months " for each region for all specified third-party payors to determine "aggregate family member months " for each region. The commissioner shall multiply the average number of persons covered under family insurance contracts, as reported to the commissioner by the superintendent of insurance, by the "aggregate family member months " to determine "adjusted aggregate family member months " for each region. The commissioner shall add the number of "adjusted aggregate family member months" for each region to the total number of "aggregate individual member months" for each region. This amount shall be known as "total covered member months" for each region.

(e) The annual regional payment amount for nineteen hundred ninety-seven, nineteen hundred ninety-eight, nineteen hundred ninety-nine, two thousand and each year thereafter, respectively for each region determined pursuant to subdivision two of this section shall be divided by an estimate derived from population based data sources of the total covered member months determined consistent with the provisions of paragraphs (a), (b), (c) and (d) of this subdivision in that region to establish the individual annual assessment for nineteen hundred ninety-seven, nineteen hundred ninety-eight, nineteen hundred ninety-nine, two thousand and each year thereafter, respectively. The individual annual assessment shall be multiplied by the average family size reported to the commissioner by the superintendent of insurance to establish the family unit annual assessment in that region for nineteen hundred ninety-seven, nineteen hundred ninety-eight, nineteen hundred ninety-nine, two thousand and each year thereafter, respectively.

(f) Effective January first, two thousand nine, a specified third-party payor that has made an election pursuant to this section may report to the commissioner or the commissioner's designee the number of individuals and family units enrolled as of the last day of each month in fulfillment of the monthly reporting requirement set forth in paragraph (a) of this subdivision. A specified third-party payor choosing to report monthly enrollment counts on this basis shall indicate its choice at the beginning of a calendar year in a form and manner specified by the commissioner and such reporting method shall remain in effect the entire calendar year.

5. Monthly payments.

(a) Within thirty days after the end of each month, a specified third-party payor which made an election pursuant to this section shall remit to the commissioner or the commissioner's designee one-twelfth of the individual annual assessment for each of the individuals residing in this state which were included on the membership rolls of that specified third-party payor during all or any portion of the prior month. Within thirty days after the end of each month, a specified third-party payor which made an election pursuant to this section shall also remit to the commissioner or the commissioner's designee one-twelfth of the family unit annual assessment for each family unit for which the primary insured resided in this state which were included on the membership rolls of that specified third-party payor during all or any portion of the prior month. Provided, however, for assessment obligations arising out of individual and family assessments established pursuant to this section on or after January first, two thousand, the commissioner may permit certain specified third-party payors which have at least one full year of pool payment experience to submit such payments on an annual basis, based on an annual demonstration by a payor through its prior year's pool payment experience that total pool obligations under this section and sections twenty-eight hundred seven-j and twenty-eight hundred seven-s of this article are not expected to exceed ten thousand dollars in the current pool year. If a specified third-party payor fails to make such payments within sixty days of notification of a delinquency, the commissioner may assess a civil penalty of up to ten thousand dollars for each failure, provided, however, that such civil penalty shall not be imposed if the payor demonstrates good cause for such failure to timely make such payments, and further provided that the amount of such penalty shall not exceed the amount of the delinquent liability.

(b) The specified third party-payor shall be entitled to rely on the residence location information provided to the payor by an employer, group or other party providing enrollment information to the specified third-party payor, provided the specified third-party payor has no reason to doubt the accuracy of the information.

(c) Specified third-party payors shall not be responsible for remitting the monthly assessment for any individual or for any family unit for any month in which it is subsequently determined that the specified third-party payor had no liability to provide coverage for inpatient hospital services for such individual or family unit.

6. Prospective adjustments. The commissioner shall annually reconcile the sum of the actual payments made to the commissioner or the commissioner's designee for each region pursuant to section twenty-eight hundred seven-s of this article and pursuant to this section for the prior year with the regional allocation of the gross annual statewide amount specified in subdivision six of section twenty-eight hundred seven-s of this article for such prior year. The difference between the actual amount raised for a region and the regional allocation of the specified gross annual amount for such prior year shall be applied as a prospective adjustment to the regional allocation of the specified gross annual payment amount for such region for the year next following the calculation of the reconciliation. The authorized dollar value of the adjustments shall be the same as if calculated retrospectively.

7. (a) In the case two or more specified third-party payors covering a single contract holder where both specified third-party payors cover separate components of the inpatient care benefits otherwise subject to the assessment, the assessment shall be apportioned between the insurers.

(b) With regard to assessment obligations arising out of individual and family assessments established pursuant to this section, where a single contract holder has separate components of the inpatient care benefits otherwise subject to the assessment covered by two or more entities, the assessment may be apportioned between the entities, provided that:

(i) Apportionment agreements or arrangements may only be entered into between or among specified third-party payers which have elected to make direct payments to the commissioner or the commissioner's designee pursuant to this subdivision; and

(ii) The aggregate of apportioned covered lives assessment payments must result in the payment of one hundred percent of the applicable covered lives assessment; and

(iii) Apportionment agreements between or among apportioning payers and any modifications, amendments or termination of such agreements must be in writing and signed by all such payers, provided, however, that where one apportioning payor agrees to pay one hundred percent of the applicable covered lives assessment, no written agreement shall be required, provided there is other written evidence of the arrangement and any modifications, amendments and/or terminations thereof, emanating from the apportioning payor paying one hundred percent of the applicable covered lives assessment to the other apportioning payor or payors or to the particular group to which the arrangement relates, and further provided that such written evidence contains the name of the particular group to which the arrangement relates; and

(iv) Copies of apportionment agreements, and any modifications, amendments and/or terminations thereof, and written evidence of arrangements by which one apportioning payor agrees to pay one hundred percent of the applicable covered lives assessment, and any modifications, amendments and/or terminations thereof, must be maintained in the files of each apportioning payor while the apportionment is in effect and for a period of not less than six years after termination thereof and shall be made available to the department upon request for audit verification purposes.

8. Liability for assessments.

(a) The assessments determined in accordance with this section shall, for individuals who have paid premiums directly to an insurer or to a health maintenance organization certified pursuant to article forty-four of this chapter or article forty-three of the insurance law for health care coverage which includes coverage of inpatient hospital services, be the liability of said individuals. The assessments determined in accordance with this section shall, for groups and entities who have paid premiums to an insurer or to a health maintenance organization certified pursuant to article forty-four of this chapter or article forty-three of the insurance law for health care coverage which includes coverage of inpatient hospital services, be the liability of said groups and entities. The assessments determined in accordance with this section shall, for individuals, groups and entities who have contributed to a self-insured fund for health care coverage which includes coverage of inpatient hospital services, be the liability of said individuals, groups or entities.

(b) Specified third-party payors shall make payments to the commissioner or the commissioner's designee of the full amount of the assessments determined in accordance with this section. Specified third-party payors may recover amounts due or paid to the commissioner or the commissioner's designee from the parties liable in accordance with paragraph (a) of this subdivision.

9. A specified third-party payor must either:

(a)jointly elect to pay the assessment pursuant to this section and the allowance pursuant to paragraph (c) of subdivision two and subdivision five of section twenty-eight hundred seven-j of this article; or

(b) pay the surcharge for an allowance determined in accordance with paragraph (b) of subdivision two of section twenty-eight hundred seven-j of this article, including the allowance determined in accordance with section twenty-eight hundred seven-s of this article.

10. (a) Payments and reports submitted or required to be submitted to the commissioner or to the commissioner's designee pursuant to this section by specified third-party payors shall be subject to audit by the commissioner for a period of six years following the close of the calendar year in which such payments and reports are due, after which such payments shall be deemed final and not subject to further adjustment or reconciliation, provided, however, that nothing herein shall be construed as precluding the commissioner from pursuing collection of any such payments which are identified as delinquent within such six year period, or which are identified as delinquent as a result of an audit commenced within such six year period, or from conducting an audit of any adjustments and reconciliation made by a specified third party payor within such six year period.

(b) Specified third-party payors which, in the course of an audit pursuant to this section fail to produce data or documentation requested in furtherance of such an audit, within thirty days of such request, may be assessed a civil penalty of up to ten thousand dollars for each such failure, provided, however, that such civil penalty shall not be imposed if such specified third-party payor demonstrates good cause for such failure. The imposition of civil penalties pursuant to this section shall be subject to the provisions of section twelve-a of this chapter.

(c) Records required to be retained for audit verification purposes by specified third-party payors in accordance with this section shall include, but not be limited to, on a monthly basis, the source records generated by supporting information systems, financial accounting records, relevant correspondence and the addresses and dates of coverage for all individuals and family units, as defined by paragraphs (a) and (b) of subdivision one of this section, and such other records as may be required to prove compliance with, and to support reports submitted in accordance with, this section.

(d) If a specified third-party payor fails to produce data or documentation requested in furtherance of an audit pursuant to this section for a month to which an assessment applies, the commissioner may estimate, based on available financial and statistical data as determined by the commissioner, the amount due for such month. If the impact of the enrollment exemptions permitted pursuant to this section cannot be determined from such available financial and statistical data, the estimated amount due may be calculated on the basis of aggregate data derived from such available data for the year subject to audit. The commissioner shall take all necessary steps to collect amounts due as determined pursuant to this paragraph, including directing the state comptroller to offset such amounts due from any payments made by the state to the third party payor pursuant to this article. Interest and penalties shall be applied to such amounts due in accordance with the provisions of subdivision eight of section twenty-eight hundred seven-j of this article.

(e) The commissioner may, as part of a final resolution of an audit conducted pursuant to this subdivision, waive payment of interest and penalties otherwise applicable pursuant to subdivision eight of section twenty-eight hundred seven-j of this article, when amounts due as a result of such audit, other than such waived penalties and interest, are paid in full to the commissioner or the commissioner's designee within sixty days of the issuance of a final audit report that is mutually agreed to by the commissioner and auditee, provided, however, that if such final audit report is not so mutually agreed upon, then neither the commissioner nor the auditee shall have any obligations pursuant to this paragraph.

(f) The commissioner may enter into agreements with specified third-party payors in regard to which audit findings have been made pursuant to this section, extending and applying such audit findings or a portion thereof in settlement and satisfaction of potential audit liabilities for subsequent un-audited periods through the two thousand five calendar year. The commissioner may waive payment of interest and penalties otherwise applicable to such subsequent unaudited periods when such amounts due as a result of such agreement, other than waived interest and penalties, are paid in full to the commissioner or the commissioner's designee within sixty days of execution of such agreement by all parties to the agreement.

* Expires December 31, 2011