New York HCRA 2022 Covered-Lives Assessment Surcharges Announced

What is the New York HCRA?
The New York Health Care Reform Act is a state law enacted in 1996 that governs hospital reimbursement methodologies and regulates payments from insurers to health care providers in order to assist in maintaining hospitals’ financial sustainability and financing access to health care for all New Yorkers. Among these methodologies is the implementation of surcharges that apply to most medical provided in New York.

There are two surcharges that apply to health claim payers such as insurers and employer-sponsored group health plans, including self-funded plans:

The first surcharge goes towards subsidized indigent care and state healthcare initiatives. The surcharge applies to payments for inpatient and outpatient services, comprehensive diagnostic and treatment centers, and ambulatory surgery centers that are in New York. This surcharge applies regardless of where the insured individual lives or where the employer or group health plan resides.
The second surcharge goes toward a graduate medical education (GME) pool and is an annual covered-lives assessment (CLA) for health claim payers that cover New York residents. The GME CLA rates and percentage surcharges vary among eight regions, and the applicable rate depends on where the covered individual resides or receives in-state hospital care.

It is possible for both surcharges to apply to a provision of services.

How do the surcharges get paid?

Electing Payors: Opt-in and Registration as ‘Payer’

Health claim payers can register with the State as an elected payer and pay the surcharges at a reduced rate directly to the Office of Pool Administration.

At the time of a medical service, it must be indicated to the healthcare provider that a plan’s health claim payer is registered with the State. The healthcare provider can then confirm that registration online, and then will not add the surcharge to the bill as the health claim payer is paying via their registration with the State.

In order to become an electing payer, an insurer or TPA would need to complete and submit the appropriate Election Application.

Nonelecting Payors: Opt-out and Waiver

If a health claim payer does not register with the State, then the healthcare provider will have to add any applicable surcharge to the bill to be paid by any non-elected health claim payer (e.g. an insurer or TPA). The healthcare provider will then forward the paid surcharge amount to the State.

The surcharge that has to be added to the bill (because the health claim payer is not registered) are charged at a higher rate than the surcharge paid directly to the Office of Pool Administration by elected payers.

Regional Surcharge Differences:

New York has posted its 2022 regional covered-lives assessment (CLA) rates and percentage surcharges for graduate medical education (GME) under the state’s Health Care Reform Act (HCRA).

For electing payors: New York City has the highest annual CLA for electing payors: $173.67 per individual with self-only coverage and $573.12 per individual with family coverage. However, in Long Island, the CLA per covered individual shrinks to $61.92 (self-only) and $204.33 (family). The CLA drops as low as $9.60 (self) and $31.69 (family) in the 11-county Utica/Watertown region. These rates reflect minimal increases in the CLA from 2021 levels.

For nonelecting payors: The GME percentage surcharge that nonelecting payors pay directly to in-state hospitals where covered individuals incur certain expenses also varies by region. For example, the 2022 GME percentage surcharge on specified expenses reaches a high of 27.28% for a New York City hospital, but drops to 13.89% in Long Island and reaches a low of 2.25% in the Utica/Watertown area. These nonelecting-payor GME percentage surcharges have not increased since 2006.

Employer Actions

Due to the significant impact HCRA surcharges can have on nonelecting payors, self-funded plan sponsors with networks extending into any of the NY areas (or with a significant number of participants living in neighboring states), employers may want to review their election status with the plan administrator.

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