New York’s Consumer Protection Laws Are Failing Hospital Patients

By Emily Vaculik, Albany Law Student, and Bob Cohen, Citizen Action Policy Director

When you buy a car, you can assume that the purchase price in your contract is the total amount you are expected to pay. It is illegal for the dealership to bill you extra for already included features like a roof rack weeks or months later. Yet, hospital patients sometimes receive additional bills for medical procedures weeks after the original bill. Health providers also sometimes engage in other deceptive practices, like billing patients for “facility fees” that don’t represent the specific medical procedures they performed, unclear bills that don’t explain the charges, and high “surprise bills” from out-of-network providers which you were led to believe were in network.

These practices would be prohibited by the Patient Medical Debt Protection Practices Act, which (A3470/S2521) HCFANY supports. However, many are also illegal under New York’s “deceptive practices” statute (General Business Law section 349), as well as a similar law governing the practices of the Attorney General (Executive Law section 63). The deceptive practices statute provides that consumers who suffer losses due to “materially misleading” acts or practices by businesses — including hospitals and other providers — can recover their damages through private court actions. The law, however, requires the complaint to concern “consumer-oriented conduct”: it must have the potential to impact more than one consumer. Among the practices that courts in different states have found to violate state deceptive practices laws are the failure to disclose mandatory tips by restaurants, and the failure by hospital to disclose their billing practices.

 While some of the practices prohibited by the PMDPA are also covered by existing law, that definitely does not at all mean that the bill isn’t needed! The damages under the deceptive practices law are totally inadequate. In addition, while you can now file a complaint with the Attorney General, if that office can’t informally resolve your complaint, your only course is to hope the Attorney General will select your case as one of the small number each year it can litigate, or (for issues where the amount in controversy is more than the monetary limits for Small Claims Court actions), you can try to find an attorney to bring an expensive and time-consuming deceptive practice court action on your behalf.

The PMDPA also lays out some of the specific practices that are illegal in detail, so you don’t have to rely on the judge agreeing with your interpretation of the law, as you would if you brought a deceptive practices lawsuit. Finally, some PMDPA provisions, like the cap on the interest rates hospitals can charge for medical bills are simply not covered by any existing law. Medical debt has a huge impact on New Yorkers, so we need a specific law that addresses the major abuses that impact us every day.

 The Supreme Court is again hearing arguments on the constitutionality of the Affordable Care Act (ACA). Some legal scholars believe the most likely outcome is that the individual mandate is removed while the rest of the law stays in place. That would have no meaningful impact on health coverage in New York.  (See our new fact sheet here for more info on the case.) However, overturning the entire law is still a possible outcome. Such a decision would affect New York and the rest of the country drastically. The Court may not reach any decision until next spring. Until then, nothing has changed – it is important to know that New York still has all the same coverage options as before. You can explore those options and enroll in health coverage here: https://nystateofhealth.ny.gov/.

Though it is unlikely, it is a good time to reflect on what would happen in New York if the ACA were overturned. Even with the ACA, New York still has over a million uninsured people – but many of those are uninsured because they are unaware of their eligibility for free or low-cost coverage. Without the ACA, those options would disappear. While many consumer protections would stay in place, millions of New Yorkers would lose their health insurance.  

Consumer Protections

New York State has adopted many of the ACA’s provisions into state law. Whatever else happens, New York State law:

  • Prohibits insurers from denying coverage to people with pre-existing conditions or charging them more;
  • Requires health plans to cover ten essential health benefits, including prescription drugs and maternity care;
  • Requires health plans to keep young adults on their parents’ coverage until age 26;
  • Requires plans to meet actuarial value requirements and limits maximum out-of-pocket spending; and
  • Prohibits lifetime or annual benefit limits.[1]

Many states rely on the Affordable Care Act for these protections and haven’t adopted them into their own laws.

Medicaid

New York’s pre-ACA Medicaid program covered more people than the Medicaid programs that existed in many other states. For example, New York allowed people with higher incomes to enroll and covered single, childless adults. New York did this through waivers with the federal government, agreements that let us change aspects of our Medicaid program with permission and still receive federal Medicaid funding.

The ACA made many of those features of New York’s Medicaid program available to all states, negating those waivers. Thus, if the ACA is overturned, New York’s Medicaid program would return to the most basic Medicaid program that exists in federal law. The only adults covered through that basic program are parents with income under 83 percent of the federal poverty level and pregnant women who earn under 133 percent of the federal poverty level.  Childless adults would not be eligible for Medicaid no matter how low-income. New York could renegotiate those waivers with the federal government, but in the meantime 2.1 million New Yorkers would lose Medicaid coverage. 

The Essential Plan

Section 1331 of the ACA provided states with the Basic Health Plan option, which offers low- or no-cost coverage to people who earn up to 200 percent of the federal poverty level but aren’t eligible for Medicaid. New York was one of the two states that adopted the Basic Health Plan, which is called the Essential Plan here and now covers around 850,000 New Yorkers. The Essential Plan could not exist at all without the ACA. A small number of people currently enrolled in the Essential Plan might be eligible for some form of Medicaid coverage, but for most the only option would be private individual market plans with no subsidies.

Individual Market

Before the ACA, over 14 percent of state residents were uninsured. When New Yorkers wanted to buy their own insurance, their only options were private plans that cost an average of $9,000 a year.[2] Fewer than 19,000 New Yorkers enrolled in those plans. The ACA allowed New York to create a simpler way to shop for health insurance (the New York State of Health) and introduced premium subsidies for people earning between 200 and 400 percent of the federal poverty level.

Now, over 270,000 New Yorkers have enrolled in private health plans.[3] Premiums for those plans are half what they were pre-ACA, and New Yorkers receive $600 million a year in premium subsidies and cost-sharing assistance that lowers costs even more. Almost 60 percent of people in New York’s individual market (around 160,000) receive that assistance, and it is likely that many would drop coverage without it. This could trigger a death spiral with higher and higher premiums until the individual market returns to its pre-ACA state.

Hospital Sustainability

Health insurance doesn’t just protect the individuals who enroll. More coverage means fewer people end up at our hospitals without any way to pay. If millions of New Yorkers suddenly lost health insurance, New York’s hospitals would end up with many more patients in need of care without a way to pay for it. While a lot of our safety net hospitals are still struggling financially, New York’s enthusiastic adoption of the ACA has meant they are in better shape than those in states that chose not to use all of the ACA’s new options.[4]


[1] New York State Insurance Law, sections 3216 and 3217.

[2] Noam N. Levey, “A cautionary tale in healthcare reform,” Feb. 21, 2010, The Los Angeles Times, https://www.latimes.com/archives/la-xpm-2010-feb-21-la-na-health-insurance21-2010feb21-story.html.

[3] Sonia Sekhar, “2020 Open Enrollment Recap and What’s Coming,” September 24, 2020, presentation at the OCHIA Partners Meeting.

[4] The Chartis Group, “The Rural Health Safety Net Under Pressure: Rural Hospital Vulnerability,” February 2020, https://www.ivantageindex.com/wp-content/uploads/2020/02/CCRH_Vulnerability-Research_FiNAL-02.14.20.pdf

Policymakers in New York are doing everything they can to protect New Yorkers from medical debt because of the coronavirus public health emergency. New Yorkers are enrolled in so many different types of health insurance that it can be hard to know when a COVID-19 protection applies to you. To help, HCFANY and the Medicare Rights Center have released a new flier explaining coverage of services related to coronavirus and accessing care during a public health emergency for people with Medicare.

What are those protections? For one, if you are enrolled in Medicare you should never have to pay a co-pay or coinsurance for COVID-19 testing. If you receive a bill for a COVID-19 test or follow-up appointment, ask the provider why – and if you can’t get them to fix it, call one of New York’s consumer assistance programs (like the Community Health Advocates) for help.

There are also safeguards so that you can access other types of health care safely. That includes coverage of telehealth visits that matches your coverage for in-person visits. It also includes a waiver of referral requirements and in-network charges for out-of-network care so that you can use the provider that is nearest and safest for you to use without worrying about out-of-network charges. Find out more by reading the fact sheet here: https://hcfany.org/resources/fact-sheet-medicare-coverage-and-coronavirus/

New York and the other states still need more from the federal government. Some of the proposals could increase protections and help for people with Medicare, like Heroes 2.0 which was already passed by the House. Heroes 2.0. prioritizes people with Medicare by:

  • Establishing a coronavirus-specific Medicare Part B Special Enrollment Period
  • Ensuring affordability is not a barrier to treatment 
  • Improving nursing home and resident safety
  • Supporting community living and state Medicaid programs 
  • Providing targeted financial relief to individuals and families

HEROES 2.0 may be considered in the Senate sometime this week.

2019 Census data shows that 13.9 percent of people who identified as American Indian or Alaska Natives are uninsured in New York, compared to just 5.2 percent for the general population. Only eight counties in New York produced enough data to create good estimates, but even if we can’t see it it’s likely that American Indians living in the rest of the state are also experiencing these disparities.

People who are members of federally recognized tribes and who live on or near federal reservations can access health care through the Indian Health Service, but this program is often underfunded and many people who identify as American Indians chose not to live on reservations. There are federal reservations in Allegany, Cattaraugus, Chautauqua, Erie, Franklin, Genesee, Madison, Niagara, Onondaga, Seneca, and Suffolk Counties. Data was unavailable for eight of those counties.

The biggest coverage gap is in Westchester County, where 31.1 percent of American Indians reported being uninsured while just 4.5 percent of the general population did. Westchester County does not have a federal reservation.

Coverage gaps lead to unequal access to health care, and during the COVID-19 pandemic may have contributed to higher death rates for other racial and ethnic minorities (see the CSS report, How Structural Inequalities in New York’s Health Care System Exacerbate Health Disparities During the COVID-19 Pandemic: A Call for Equitable Reform). New York’s American Indian population is relatively small, which means it is hard to get enough data to see how exactly that community is faring during the pandemic. But the data we can see suggests that American Indians are another community that is facing much worse outcomes than other groups.

If you are uninsured, you can use go to https://info.nystateofhealth.ny.gov/ to find out if you are eligible for any help and to learn more about the costs of available plans. There are also programs that can help you understand your options – you can call 888-614-5400 to reach the Navigator Network and get help anywhere in the state.