New York State Health Care Reform Act (HCRA)

Notification Regarding the Surcharge Remittance Obligations of Electing Insurers that Enter Into Financial Risk Transfer Arrangements with Non-Provider Intermediary Entities

Question: Clarify the surcharge remittance obligations of an electing insurer that enters into a financial risk transfer arrangement whereby the insurer makes contractually based payments to a non-provider intermediary ("intermediary") which in turn contracts with health care providers to provide health care services to the insurer's subscribers for a specified fee.

Response:The intermediary would remit the surcharges directly to the Pool if the financial risk transfer agreement states that the intermediary is liable for the surcharges and the intermediary has filed a valid election application. However, if the intermediary has not filed a valid election application, the intermediary would be required to forward the surcharges to the electing insurer for remittance to the Pool. In the absence of the liability being specified in the written agreement, the electing insurer would retain responsibility for direct payment of the HCRA surcharges on affected services provided to their subscribers, consistent with established subscriber contract terms. For audit verification purposes, electing payors are required to maintain allowance expenditure data, including data to substantiate surcharge payments made by an intermediary pursuant to a financial risk transfer agreement, and to provide the State with access to such data pursuant to PHL section 2807-j (5) (a) and the payor's election application agreement.