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A08169 Summary:

COSPNSRAnderson, Solages, Jackson, Simon, Mamdani, Fernandez, Hevesi, Dinowitz, Seawright, Sayegh, Rivera JD, Williams, Joyner, Tapia, Burgos, Barnwell, Colton, Glick, Gonzalez-Rojas, Forrest, Ramos, Aubry, Rivera J, Carroll, Burdick, Bichotte Hermelyn, Epstein, Gallagher, Jacobson, Septimo, De Los Santos, Kim, Jean-Pierre, Dickens, Niou, Rosenthal L, Griffin
Amd §3217-b, Ins L
Prohibits certain provisions in health plan contracts including most-favored-nation provisions and restrictions on disclosure of actual claim costs, prices or quality in certain situations.
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A08169 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  TITLE OF BILL: An act to amend the insurance law, in relation to certain prohibited contract provisions   PURPOSE OR GENERAL IDEA OF BILL: This bill, known as the Hospital Equity and Affordability Legislation (HEAL Act), aims to improve market access and increase transparency of health insurance contracts by banning certain anti-competitive provisions   SUMMARY OF PROVISIONS: Section one of the bill amends section 3217-b of the Insurance Law to prohibit insurers from entering into contracts with certain anti-compet- itive clauses such as most-favored-nation provisions. The bill would also allow insurers to disclose price and quality information regarding negotiated rates and other discounts with health care providers. Section two sets the effective date.   JUSTIFICATION: In recent years, hospital consolidation has resulted in dominant systems exercising anti-competitive market power. There have been a number of hospital mergers and acquisitions, with big hospitals acquiring smaller ones, along with physician practices. These hospital systems reduce competition and have the market power to dictate price. While these systems assert that the mergers will improve quality and reduce costs, the data does not support that. Instead they leverage their market power to increase prices when they negotiate rates and contracts with payers. And often these contracts include clauses that prohibit the disclosure of prices. The landscape, however, is changing. In California, a group of payers sued Sutter Health in a case that was joined by the State Attorney General. They argued that Sutter engaged in anticompetitive practices that drove up healthcare prices in Northern California. In March 2021, a Superior Court of California judge granted preliminary approval for a $575 million settlement, which also includes an agreement by Sutter Health to end "all or nothing" contract provisions requiring payers to contract with all Sutter hospitals if they wanted access to any Sutter facility. In New York, there are similar highly concentrated hospital markets. The recent public disputes between payers and the large systems have highlighted the need for increased transparency and visibility to the terms and conditions of such multi-year agreements and how such agree- ments are contributing to rising health care costs. Large hospital systems that maintain robust provider networks are leveraging that market share during negotiations to restrict health insurance networks designs and access. The result of these anti-competitive negotiation tactics is increased costs charged to insurance companies and self-in- sured entities, which ultimately are passed on to consumers, through premiums and cost sharing. Importantly, these agreements affect the networks for commercial lines of business including HMO, PPO, individual, small group, large group, self-insured benefit funds, the State of New York, the City of New York, other municipalities, Medicaid, and Medicare Advantage. This legis- lation aims to increase fairness and visibility by outlawing most favored nation clauses, which guarantee that a buyer of good or services (i.e. a payer) receives terms from a seller (i.e. a hospital or provid- er) that are at least as favorable as those provided to any other buyer. It would also bar anti-disclosure clauses, which are contractual provisions that prevent a party to the contract from revealing actual claims costs, negotiated rates or discounts, or patient cost-sharing data (protected health information would remain privileged and could not be disclosed). This bill would apply to all health plans negotiated by insurers, health maintenance organizations (HMOs), or third parties who administer a health plan on behalf of another entity such as a self-in- sured fund. In barring these two contract practices which are widely recognized to serve no purpose beyond the consolidation of market power and inflation of healthcare prices, this bill will increase transparency and ensure a fairer and more diverse healthcare marketplace for all.   PRIOR LEGISLATIVE HISTORY: None   FISCAL IMPLICATIONS: TBD   EFFECTIVE DATE: This act shall take effect on January 1st, 2023.
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