New York Department Adopts Health Risk Transfer Regulation

By Staff Writer

August 10, 2001 at 08:00 PM

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NU Online News Service, Aug. 10, 4:56 p.m. – The New York State Insurance Department has announced the final adoption of Regulation Number 164, a regulation that establishes standards for transfers of financial risk between insurers and health care providers.

The regulation affects all carriers licensed to sell health and accident insurance in New York that want to pay providers a flat, "capitated" fee for each patient served, rather than a fee for each service delivered.

The regulation forbids providers who agree to flat-fee contracts from going after the patients if they have trouble getting the payments they expect from the carriers.

The regulation also forbids carriers from using the default of a provider as an excuse for getting out of their commitments to health plan members. "Notwithstanding any agreement to the contrary, the insurer retains full financial risk on a prospective basis for the provision of health care services pursuant to any applicable policy or regulation, " the regulation states.

A group practice or other company that wants to accept capitated payments must show that it has a net worth equal to at least 12.5% of its total annual in-network capitation revenue from all insurance companies, or cash and easily cashed assets with a value equal to at least 5% of its total capitation revenue.

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