The New York Legislature recently enacted legislation that will require all health insurance plans that issue policies that provide for the use of a provider network to obtain network adequacy certification. The new provisions expand requirements that were previously applicable in New York only to health maintenance organizations (“HMOs”) licensed under Article 43 of the Insurance Law or Article 44 of the Public Health Law to all types of insurers and policies issued in New York, including preferred provider organizations (“PPOs”) and exclusive provider organizations (“EPOs”) that are approved by the Department of Financial Services/Department of Insurance (“Department”).  The law requires that the networks be approved by the Superintendent of Financial Services at the time that the policy is approved and at least every three years thereafter.[1] In the event the network is already approved by the New York Department of Health, the network is deemed approved by the Superintendent. The implementation date for the law is March 31, 2015; however, it is not yet clear how the Department will address existing unapproved networks that are part of network-based products.

The standard for network adequacy is described as whether the network is sufficient to meet the health needs of the insureds and provide an appropriate choice of providers sufficient to render the services covered under the policy or contract.[2] The criteria for making this assessment are the same ones that apply to HMOs, as set forth in New York Public Health Law § 4403(5), including whether: 

  • there are a sufficient number of geographically accessible participating providers;
  • there are opportunities to select from at least three primary care providers pursuant to travel and distance time standards, providing that such standards account for the conditions of accessing providers in rural areas;
  • there are sufficient providers in each area of specialty practice to meet the needs of the enrollment population; 
  • there is no exclusion of any appropriately licensed type of provider as a class; and
  • contracts entered into with health care providers neither transfer financial risk in a manner inconsistent with the provisions of the law, nor penalize providers for unfavorable case mix.[3]

The following criteria will also be considered:

  • the availability of appropriate and timely care that is provided in compliance with the standards of the federal Americans with Disability Act to assure access to health care for the enrollee population;
  • the network’s ability to provide culturally and linguistically competent care to  meet the needs of the enrollee population; and
  • with the exception of initial licensure, the number of grievances filed by enrollees relating to waiting times for appointments, appropriateness of referrals, and other indicators of plan capacity.[4]

The law applies only to insurance-based products issued and delivered in New York; accordingly, networks that offer services only to self-funded plans or in connection with insurance products issued in other states would not appear to be impacted. Health insurance plans that are impacted should review their networks carefully to assess and ensure that they meet the applicable standards in advance of any review by the Department.

Shilpa Prem