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DFS Suspends Certain Utilization Review Requirements

In response to rising demand for inpatient hospital care due to an increase in COVID-19 Omicron variant cases combined with staffing shortages, the Department of Financial Services (DFS) is suspending existing preauthorization requirements for certain services to facilitate hospitals to rapidly transfer or discharge patients.

Circular Letter 1 (2022) advises that insurers and utilization review agents should suspend certain utilization review requirements for 30 days starting Jan. 6, 2022 to assist hospitals with staffing and resources issues. The letter is aimed at insurers authorized to write accident and health insurance in New York State, Article 43 corporations, health maintenance organizations, student health plans certified pursuant to Insurance Law § 1124, municipal cooperative health benefit plans, and prepaid health services plans with respect to commercial coverage, Child Health Plus, Essential Plan, and Medicaid managed care coverage (collectively “issuers”), independent agents performing utilization review under contracts with such issuers, and licensed independent adjusters.

To enable hospitals to readily discharge insureds to lower levels of care when medically appropriate, issuers should suspend preauthorization requirements for in-network inpatient rehabilitation services following a hospital admission for 30 days starting Jan. 6th. Issuers should provide hospitals with an up-to-date list of all in-network rehabilitation facilities and skilled nursing facilities (SNFs) in order to facilitate such discharges, and hospitals should use their best efforts to provide notice of the discharge to the issuer within 48 hours. An issuer may require the rehabilitation facility or SNF to provide notification of the admission to the issuer and may review inpatient rehabilitation services for medical necessity concurrently or retrospectively.

The letter also reminds issuers that Insurance and Public Health Law require an issuer that does not have an in-network provider, including an inpatient rehabilitation services provider, able to accept the insured to provide access to an out-of-network provider at the in-network cost-sharing.

An issuer should also suspend preauthorization review for in-network hospital-to-hospital transfers for 30 days, although the hospital should use its best efforts to provide 48 hours’ notice to the issuer after the transfer, including information necessary for an issuer to assist in coordinating care and discharge planning.

To the extent that they have not already done so, hospitals and issuers are also encouraged to work collaboratively to resolve issues relating to payment for hospital transfers. If an issuer does not have a contract with a hospital that addresses such transfers, the issuer and hospital should work in good faith to determine the appropriate policies and payment for the transferring or the receiving hospital, including whether the stay should be considered a short stay. In the absence of contract language providing for a transfer payment policy, payments for transfers involving Medicaid managed care insureds should be guided by Medicaid fee-for-service program policies. Issuers may review these services for medical necessity concurrently or retrospectively.

While DFS does not have direct jurisdiction over Medicare Advantage plans, it strongly encourages issuers to apply the provisions of the Circular Letter to their Medicare Advantage offerings as well. Third-party administrators, which are licensed by the Department as independent adjusters, are also strongly encouraged to apply the provisions of the Circular Letter to their administrative service arrangements with self-funded plans.

Questions regarding the letter can be submitted to DFS at health@dfs.ny.gov.

LeadingAge NY Contact: Darius Kirstein, dkirstein@leadingageny.org, 518-867-8841