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Title: Section 86-3.3 - Rates for hospital services

Effective Date


86-3.3 Rates for hospital services. Hospitals certified under article 28 of the Public Health Law may not deny admission solely on grounds of HMO membership. This section applies to the general prepaid membership of an HMO; Medicare and Medicaid reimbursement for such services shall be as described in subdivision (h) of this section. Reimbursement to be paid by HMO's to hospitals for these services shall be determined as follows:

(a) Hospitals certified under article 28 of the Public Health Law shall be reimbursed for the inpatient care of HMO members at a rate which does not exceed the DRG case based rates of payment, adjusted for non-covered services determined pursuant to section 86-1.51(a) of this Title , or equivalent mechanism for the local area if rates are not being used. Hereafter, these rates shall be called DRG case based rates. No supplementary charges may be made by a hospital except as specified in subdivision (c) or (d) of this section.

(b) When there is more than one DRG case based rate in effect at a rvice hospital, the rate covering the most comprehensive range of services utilized by HMO patients shall be the HMO rate, unless the difference between the comprehensive rate and a less inclusive rate is due to categories of services not utilized in care of HMO inpatients, in which case the less inclusive rate shall be utilized.

(c) When the HMO inpatient utilizes physician or ancillary services whose allowable costs are not included in the DRG case based rate being utilized, for example, anesthesiologist services if not included in the DRG case based rate, reimbursement for such services shall be negotiated by the HMO and the hospital or provider.

(d) In cases of nonmedically ordered patient comfort or amenity services not covered by the DRG case based rate, a hospital may bill an HMO member or HMO plan according to local practice or agreement with the HMO.

(e) Health maintenance organizations, except those affected by outpatient rate provisions certified pursuant to hospital reimbursement formulas submitted under Subpart 86-1 of this Part, shall submit proposed outpatient reimbursement formulas which are reasonable and adequate to meet the costs which must be incurred by efficiently and economically operated facilities. In order to enable the full exchange of information between health maintenance organizations and hospitals, as may be necessary for submission and consideration of the proposed outpatient reimbursement formulas as required hereunder and to minimize potential litigation resulting from approval hereunder of any reimbursement formula and rates submitted without benefit of such full information from hospitals, each such health maintenance organization or a group of health maintenance organizations may confer with a hospital, group or association of hospitals, prior as well as subsequent to submission of its proposed reimbursement formula and rates, concerning the reimbursement formula and rates to be submitted for consideration and approval hereunder. Concerning any such conference with any group or association of hospitals, the State Commissioner of Health require from any such health maintenance organizations such report, by way of summary minutes or otherwise, as may be reasonably necessary to the discharge of the responsibilities of the commissioner under this subdivision. However, nothing in this subdivision shall prohibit an individual HMO and an individual hospital from mutually agreeing to any other manner of payment for outpatient services, provided the commissioner first approves such alternate method of payment.

(f) Notwithstanding the provisions of sections 86-1.51 and hospital for inpatient services provided to subscribers of health maintenance organizations which in the aggregate are less than what the hospital would have otherwise received under the provisions of this Subpart and Subpart 86-1, unless the health maintenance organization demonstrates that lower payments are justified because the arrangement will result in lower hospital costs and the payments approximate cost. Notwithstanding any inconsistent provision of this section, for the period January 1, 1988 through December 31, 1990, negotiated agreements between health maintenance organizations and general hospitals which were approved by the commissioner in accordance with the provisions of Chapter 906 of the laws of 1985 and which were in effect on June 1, 1987 may continue.

(g) Nothing in this Subpart shall prohibit article 44 HMO's from contracting with article 43 hospital service plans for hospital reimbursement and/or other services, subject to the requirements of the Superintendent of Insurance.

(h) Notwithstanding any inconsistent provisions of this section, health maintenance organizations operating in accordance with the provisions of article 43 of the insurance law or article 44 of the Public Helath Law, having enrollees eligible for inpatient general hospital payments as beneficiaries of title XVIII of the federal social security act (Medicare) shall reimburse general hospitals for inpatient services for these enrollees in accordance with the provisions contained in title XVIII of the federal social security act (Medicare). Hospitals shall receive Medicaid rates of payments for the care of HMO/Medicaid clients.


VOLUME A-2 (Title 10)