HB271 By Representative Henry RFD Insurance Rd 1 12-MAR-15

SYNOPSIS: Under current law, a health insurer or vendor may initiate or change the method of payment to a health care provider to payment through a credit card, exposing the health care provider to unknown charges, without the health care provider having actual prior knowledge of the credit card payment method, or the language in the contract that allowed the initiation of or change to a credit card payment.

This bill would establish that any contract between a health insurer or its contracted vendor and a health care provider for the provision of health care services to a plan enrollee shall not contain restrictions on methods of payment from the health insurer or vendor to the health care provider in situations in which the only acceptable payment method is a credit card payment.

This bill would establish that prior to initiating payments, a health insurer or its contracted vendor must properly notify the health care provider.

This bill would establish that any clause contained in a contract in violation of these provisions shall be void.

A BILL TO BE ENTITLED AN ACT

Relating to health care contracts; to add Section 27-1-17.1 to Title 27, Chapter 1, Code of Alabama 1975, to provide that any contract issued, amended, or renewed on or after July 1, 2015, between a health insurer or its contracted vendor and a health care provider for the provision of health care services to a plan enrollee shall not restrict payments to only credit card payments; to provide that prior to initiating or changing payments to a provider using electronic funds transfer payments, to only credit card or virtual credit card payments, a health insurer or its contracted vendor must meet certain requirements to notify the health care provider of all fees associated with a particular payment method, provide clear instructions to health care provider as to how to opt out of the payment method at any time following the initial agreement to this payment method, and obtain written consent from the health care provider; and to provide that any clause in a contract in violation of the provisions of this section shall be void.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. Section 27-1-17.1 is added to Title 27, Chapter 1, Code of Alabama 1975, to read as follows:

§27-1-17.1.

(a) This section shall be known as and may be cited as the Transparency in Health Insurer Payment Transactions Act.

(b) The Legislature finds and declares the following:

(1) Despite the potential benefits associated with electronic funds transfer (EFT) payments, many health care providers are being subjected to fees associated with electronic payment that essentially reduce their contracted fee payment amounts.

(2) Some health care providers are being subjected to additional percentage-based fees for Health Insurance Portability and Accountability Act (HIPPA)-standard automated clearinghouse (ACH) EFT payments when the only fee that should be assessed with ACH EFT payments is a nominal banking fee.

(3) In recent years, many health insurers have started paying health care providers through payer-issued credit cards, often referred to as virtual or online credit cards, thereby shifting the costs of transferring money electronically from the health insurer to the health care provider.

(4) Although a valid electronic alternative to paper checks, the use of credit cards for payment requires health care providers to manually enter payments into the providers' own credit card processing systems.

(5) Processing through a credit card system often comes at a significant cost to health care providers, as payments are subject to interchange and transaction fees, thereby reducing the agreed upon contractual fee amount for the provided health care services.

(6) Health care providers are often unaware of these high fees when accepting credit card payments.

(7) Health plan credit card payments do not offer significant risk reduction for health care providers, but nevertheless carry increased processing charges, unlike patient credit card payments.

(8) Health insurers often receive cash-back incentives from credit card companies for such transactions.

(c) As used in this section, the following terms shall have the following meanings:

(1) CREDIT CARD PAYMENTS. A type of electronic funds transfer in which the health insurer or its contracted vendor sends credit card payment information and instructions to the health care provider, who then processes the payments using standard credit card technology. Credit card payments can include virtual or online credit card payments, whereby no physical credit card is presented to the health care provider and the single-use credit card expires upon payment processing.

(2) HEALTH CARE PROVIDER. For purposes of this section, the term "health care provider" means: A physician as defined under Section 34-24-50.1; other licensed health care professionals as defined in Title 34; a hospital as defined in Section 22-21-20; and a health care facility, or other provider who or that is accredited, licensed, or certified and who or that is performing within the scope of that accreditation, license, or certification.

(3) HEALTH INSURER. An entity or person that offers or administers a health insurance plan, coverage, or policy in this state, or contracts with health care providers to furnish specified health care services to enrollees covered under a health insurance plan or policy. Health insurer also includes any entity created under Article 9, Chapter 6, Title 22, commencing with Section 22-6-150.

(4) HEALTH INSURANCE PLAN. Any hospital and medical expense incurred policy, contract, health maintenance organization subscriber contract, or any other health care plan, policy, coverage, or arrangement that pays for or furnishes medical or health care services, whether by insurance or otherwise, offered in this state.

(5) NOMINAL. A monetary amount equal to or less than the bank fee associated with HIPPA-standard ACH electronic funds transfer (EFT).

(d) A contract issued, amended, or renewed on or after July 1, 2015, between a health insurer or its contracted vendor and a health care provider for the provision of health care services to a plan enrollee shall not contain restrictions on methods of payment from the health insurer or vendor to the health care provider in which the only acceptable payment method is a credit card payment.

(e) Prior to initiating or changing payments to a provider using electronic funds transfer payments, including virtual credit card payments, a health insurer or its contracted vendor must:

(1) Notify the provider of all fees associated with a particular payment method;

(2) Provide clear instructions to the provider as to how to opt out of the payment method at any time following the initial agreement to this payment method; and

(3) Following completion of subdivisions (1) and (2), obtain written consent from the health care provider for the payment method.

(f) Health care provider consent in accordance with subdivision (3) of subsection (e) need not be obtained prior to each subsequent transaction, but is required for each new type of electronic fund transfer payment initiated with a health care provider.

(g) A health insurer or its contracted vendor shall not impose any interchange, transaction, or processing fees, or other charges, on the health care provider beyond a nominal amount for receiving HIPPA-standard ACH electronic funds transfer (EFT) payments.

(e) The provisions of this section cannot be waived by contract, and any contractual clause in conflict with the provisions of this section or that purport to waive any requirements of this section are void.

Section 2. If any provision of this act is held by a court to be invalid, such invalidity shall not affect the remaining provisions of this act, and to this end the provisions of this act are declared severable.

Section 3. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.

Health Care Providers

Contracts

Health Care Services

Code Added