Amd §§3217-b & 4325, Ins L; amd §4406-c, Pub Health L
Authorizes an insurer to pay a claim for reimbursement made by a provider using a credit card, virtual credit card or electronic funds transfer payment method that imposes on the provider a free or similar charge to process the payment; defines "virtual credit card" as a single-use series of numbers linked to a fixed dollar amount and provided by an insurer to a provider for the purpose of paying a claim for health care services performed by the provider; makes related provisions.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A3986A
SPONSOR: Bores TITLE OF BILL:
An act to amend the insurance law and the public health law, in relation
to the use of virtual credit cards by insurers and certain health care
plans
SUMMARY OF PROVISIONS:
Section 1. Amends Section 3217-b of the Insurance Law to require that an
insurer seeking to pay a provider using a credit card, virtual credit
card, or EFT that imposes a fee or similar charge on the provider to
process the payment must first (1) notify the provider, of the potential
fees or charges, (2) offer the provider an alternative payment method
that does not impose fees or charges, and (3) allow the provider or a
designee to elect to accept such payment types. Further, this section
establishes that an election to accept or decline a specific type of
payment shall remain in effect until the provider notifies the insurer,
in writing, of a change in the designated payment type. It requires
contracted vendors to adhere to these provisions, prohibits waiving this
section in new contracts, and mandates that an insurer have permission
before charging a fee solely for transmitting a payment to a provider.
The section also defines provider and virtual credit card for purposes
of this section of law.
Section 2. Creates a new Section 4242 of the Insurance Law to include
the same provisions as section 1.
Section 3. Amends section 4325 of the Insurance Law to include the same
provisions as section 1.
Section 4. Amends section 4406-C of the Public Health Law to include the
same provisions as section 1.
Section 5. Establishes an effective date.
JUSTIFICATION:
As alternative payment methods increase, provider choice in payment
method decreases. Payment types such as virtual credit cards may apply
higher processing fees than those agreed upon for regular credit cards
under insurer-provider contracts. As a result, providers are left to
deal with bank charges and other fees levied to counter the evolving
software and security needs for new payment types. Unless insurers are
required to seek permission, they often begin paying providers using
costly alternative payment types without providing any notice.
To increase transparency and provider choice, this legislation would
require insurers give appropriate notice and allow providers to elect to
utilize an alternative payment method for claims.
LEGISLATIVE HISTORY:
S9621 of 2023-24: Referred to Insurance Committee
FISCAL IMPLICATIONS:
None.
EFFECTIVE DATE:
This act shall take effect one hundred eighty days after it becomes a
law and shall apply to policies and contracts issued, renewed, modified,
altered or amended on and after such date.
STATE OF NEW YORK
________________________________________________________________________
3986--A
2025-2026 Regular Sessions
IN ASSEMBLY
January 30, 2025
___________
Introduced by M. of A. BORES, EPSTEIN -- read once and referred to the
Committee on Insurance -- committee discharged, bill amended, ordered
reprinted as amended and recommitted to said committee
AN ACT to amend the insurance law and the public health law, in relation
to the use of virtual credit cards by insurers and certain health care
plans
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 3217-b of the insurance law is amended by adding a
2 new subsection (p) to read as follows:
3 (p)(1) An insurer may pay a claim for reimbursement made by a provider
4 using a credit card, virtual credit card, or electronic funds transfer
5 payment method that imposes on the provider a specifically identified
6 fee or similar dedicated charge to process the payment if in advance of
7 using such reimbursement method:
8 (A) The insurer notifies the provider of the potential fees or other
9 charges associated with the use of the credit card, virtual credit card,
10 or electronic funds transfer payment;
11 (B) The insurer offers the provider an alternative payment method that
12 does not impose fees or similar charges on the provider; and
13 (C) The provider or a designee of the provider elects to accept
14 payment of the claim using the credit card, virtual credit card, or
15 electronic funds transfer payment method.
16 (2) A decision pursuant to paragraph one of this subsection shall
17 remain in effect until the provider notifies the insurer, in writing, of
18 a change in the designated payment type.
19 (3) If an insurer contracts with a vendor to process payments of
20 providers' claims, the insurer shall require the vendor to comply with
21 the provisions of paragraph one of this subsection.
22 (4) No policy or contract issued, renewed, modified, altered or
23 amended after the effective date of this section shall contain
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03607-04-5
A. 3986--A 2
1 provisions allowing for waiver of the notice requirements contained in
2 this subsection.
3 (5) For any contract that is in effect on or before the effective date
4 of this subsection or that is entered into, amended or renewed on or
5 after the effective date of this subsection, an insurer that initiates a
6 payment to a provider using, or changes the payment method to, a health
7 care electronic funds transfers and remittance advice transaction shall
8 not charge a fee solely to transmit the payment to the provider unless
9 the provider consents to the fee.
10 (6) For purposes of this subsection, the following terms shall have
11 the following meanings:
12 (A) "Provider" shall mean a health care professional or a group of
13 health care professionals licensed pursuant to title eight of the educa-
14 tion law that has a participating provider contract with an insurer to
15 provide health care services to an insured.
16 (B) "Virtual credit card" shall mean a single-use series of numbers
17 linked to a fixed dollar amount and provided by an insurer to a provider
18 for the purpose of paying a claim for health care services performed by
19 the provider.
20 § 2. Section 4325 of the insurance law is amended by adding a new
21 subsection (p) to read as follows:
22 (p) (1) A corporation organized under this article may pay a claim for
23 reimbursement made by a provider using a credit card, virtual credit
24 card, or electronic funds transfer payment method that imposes on the
25 provider a specifically identified fee or similar charge dedicated to
26 process the payment if in advance of using such reimbursement method:
27 (A) The corporation notifies the provider of the potential fees or
28 other charges associated with the use of the credit card, virtual credit
29 card, or electronic funds transfer payment;
30 (B) The corporation offers the provider an alternative payment method
31 that does not impose fees or similar charges on the provider; and
32 (C) The provider or a designee of the provider elects to accept
33 payment of the claim using the credit card, virtual credit card, or
34 electronic funds transfer payment method.
35 (2) A decision pursuant to paragraph one of this subsection shall
36 remain in effect until the provider notifies the corporation, in writ-
37 ing, of a change to the designated payment type.
38 (3) If a corporation contracts with a vendor to process payments of
39 providers' claims, the insurer shall require the vendor to comply with
40 the provisions of paragraph one of this subsection.
41 (4) No policy or contract issued, renewed, modified, altered or
42 amended after the effective date of this section shall contain
43 provisions allowing for waiver of the notice requirements contained in
44 this subsection.
45 (5) For any contract that is in effect on or before the effective date
46 of this subsection or that is entered into, amended or renewed on or
47 after the effective date of this subsection, a corporation that initi-
48 ates a payment to a provider using, or changes the payment method to, a
49 health care electronic funds transfers and remittance advice transaction
50 shall not charge a fee solely to transmit the payment to the provider
51 unless the provider elects to accept payment in accordance with subpara-
52 graph (B) of paragraph one of this subsection.
53 (6) For purposes of this subsection, the following terms shall have
54 the following meanings:
55 (A) "Provider" shall mean a health care professional or a group of
56 health care professionals licensed pursuant to title eight of the educa-
A. 3986--A 3
1 tion law that has a participating provider contract with a corporation
2 to provide health care services to an insured.
3 (B) "Virtual credit card" shall mean a single-use series of numbers
4 linked to a fixed dollar amount and provided by a corporation organized
5 under this article to a provider for the purpose of paying a claim for
6 health care services performed by the provider.
7 § 3. Section 4406-c of the public health law is amended by adding a
8 new subdivision 14 to read as follows:
9 14. (a) A health care plan may pay a claim for reimbursement made by a
10 provider using a credit card, virtual credit card, or electronic funds
11 transfer payment method that imposes on the provider a specifically
12 identified fee or similar dedicated charge to process the payment if in
13 advance of using such reimbursement method:
14 (i) The health care plan notifies the provider of the potential fees
15 or other charges associated with the use of the credit card, virtual
16 credit card, or electronic funds transfer payment;
17 (ii) The health care plan offers the provider an alternative payment
18 method that does not impose fees or similar charges on the provider; and
19 (iii) The provider or a designee of the provider elects to accept
20 payment of the claim using the credit card, virtual credit card, or
21 electronic funds transfer payment method.
22 (b) A decision pursuant to paragraph (a) of this subdivision shall
23 remain in effect until the provider notifies the health care plan, in
24 writing, of a change to the designated payment type.
25 (c) If a health care plan contracts with a vendor to process payments
26 of providers' claims, the health care plan shall require the vendor to
27 comply with the provisions of paragraph (a) of this subdivision.
28 (d) No policy or contract issued, renewed, modified, altered or
29 amended after the effective date of this section shall contain
30 provisions allowing for waiver of the notice requirements contained in
31 this subdivision.
32 (e) For any contract that is in effect on or before the effective date
33 of this subdivision or that is entered into, amended or renewed on or
34 after the effective date of this subdivision, a health care plan that
35 initiates a payment to a provider using, or changes the payment method
36 to, a health care electronic funds transfers and remittance advice tran-
37 saction shall not charge a fee solely to transmit the payment to the
38 provider unless the provider elects to accept payment in accordance with
39 subparagraph (ii) of paragraph (a) of this subdivision.
40 (f) For purposes of this section, the following definitions shall
41 apply:
42 (i) "Provider" shall mean a health care professional or a group of
43 health care professionals licensed pursuant to title eight of the educa-
44 tion law that has a participating provider contract with a health care
45 plan to provide health care services to an enrollee.
46 (ii) "Virtual credit card" shall mean a single-use series of numbers
47 linked to a fixed dollar amount and provided by a health care plan to a
48 provider for the purpose of paying a claim for health care services
49 performed by the provider.
50 § 4. This act shall take effect on the one hundred eightieth day after
51 it shall have become a law and shall apply to policies and contracts
52 issued, renewed, modified, altered or amended on and after such date.
