Beginning June 21, 2023, New York State (NYS) Public Health Law (PHL) Section 2830 requires hospitals and healthcare professionals to provide written notice to patients before the patient is charged a facility fee.

Overview of Hospital Billing

Billing by hospitals and certain medical facilities typically involves a combination of a facility fee and a professional fee. Facility fees account for the overhead costs of maintaining a hospital, or other health care facility, and refer to the payments for services provided by the hospital, or other health care facility, for either in-patient or out-patient care. Revenue earned from facility fees may go towards electricity, equipment, supplies, non-physician staff, and other costs directly attributable to the operation of the facility itself. By contrast, professional fees account for the services provided by the physician or other health care professional.

New Statutory Language

The new section in NYS PHL § 2830 regulates the billing of facility fees and requires advance notice of the fee to the patient.[1] The notice, which when provided must be given to the patient in writing, is likely intended to inform the patient of the facility fee that the hospital or other health care facility will charge and whether the patient’s insurance will cover this fee. In justifying the passage of the bill, its sponsors stated that the “bill does not bar providers from charging patients for facility but would require that the patient be notified of the fee, and whether the patient’s health coverage will cover it, prior to receiving the medical service.”[2]

NYS PHL § 2830 provides that if health care providers enter “into a business relationship with a hospital or health system that will result in the provider’s patients being subject to facility fees, the health care provider must notify its patients of the change and that facility fees will not be applicable to services received from the health care provider.”[3] This language supports the justification for the bill, indicating when a provider’s patients were not subject to facility fees in the past but will be subject to these fees on a going forward basis. A common scenario in which this may occur could be a merger or acquisition between a physician and the entity charging the facility fee, with the result being that the physician needs to provide the patient advance notice of the change in billing.

Notably, NYS PHL § 2830 does not establish an outright ban on the charging of facility fees or ban charging the facility fee to the patient the way that the No Surprises Act or various state equivalents prohibit balance billing to patients. The only instance where facility fees are explicitly prohibited from being charged is when the services provided are related to the provision of preventive care services, as defined by the United States Preventive Services Task Force.[4]

Provider Requirements

NYS PHL § 2830 imposes various requirements on the timing and manner in which a physician, hospital, or other health care facility notifies the patient of a potential facility fee.

Specifically, the statute indicates that the notice regarding the facility fee must:

• Be provided to the patient at least seven (7) days in advance of each date of service.
  • However, if the appointment to the health care facility is not made at least seven (7) days in advance, then a written notice on the date of service is acceptable.
• Explain the amount of the fee.
• Explain the purpose of the fee.
• State whether the patient’s insurance plan will pay the fee.
• Give uninsured patients information on how to apply for financial assistance.
• Be provided in plain language in conspicuous twelve-point bold face type.
• Be available in the top six languages spoken in the hospital’s service area.[5]

Though not required, notice of a hospital and health care facility charging a facility fee are strongly encouraged to be given to patients in a separate and unique document.[6] The statute suggests that doing so can ensure patients are adequately notified of the facility fee and that they have an opportunity to request clarification.

Provider Concerns

New York hospitals have expressed concerns about the applicability of NYS PHL § 2830 and the ability to providing notice that is compliant with the statute.

The first sentence of the Section 2 of the statute applies to a “hospital or health system or health care provider” and broadly any entity within those three categories from “bill[ing] or seek[ing] payment from a patient for a facility fee that is not covered by the patient’s health insurance unless the patient was notified prior to the date of service that a facility fee would be applicable.”[7] However, the second sentence of Section 2 of the statute seems to specifically call out those health care providers who have “enter[ed] into a business relationship with a hospital or health system that will result in the provider’s patients being subject to facility fees.”[8] On its face, it is unclear if the second sentence of Section 2 of the statute serves to narrow the applicability of the notice requirement or simply underscores that such a transaction may be a trigger for providers needing to comply with NYS PHL § 2830.

Further, based upon a strict reading of the fourth notice requirement (“whether the patient’s insurance plan will pay the fee”), the notice requirement seems applicable to any facility fee, regardless of whether the fee is covered by insurance or not. This creates ambiguity for hospitals as to when they are required to provide notice especially as it is unclear why a patient would need notice of a fee their health insurance plan is covering in full. In practice, receiving such a notice could actually create additional confusion for patients especially if the patient’s assume that notice of the fee is instead a bill for services rendered.

For any provider to whom the statute does apply, facility fees will differ based on the amount and nature of the services provided. Hospitals and providers may have trouble predicting or indeed be unable to predict which services will be necessary based on a patient’s initial appearance at the facility. This creates significant variability in what the amount of the fee may be, though under a strict reading of the statute, an estimate of the fee will not suffice to meet the requirement to provide an explanation of the fee, as described above.

Conclusion

Industry stakeholders have reached out to the New York State Department of Health (NYSDOH) to seek clarification regarding NYS PHL § 2830, though it is possible there may not be additional guidance from NYSDOH in the immediate term. In the meantime, providers may wish to rely on or augment their current generic patient forms as those forms should already notify patients of a risk of responsibility in the event that their insurance does not cover the services rendered. For hospitals this is already a requirement under New York State law and may serve as a good faith effort to comply with the notice requirements under the new statute. 

[1] N.Y. Pub. Health Law § 2830.

[2] 2021 New York Senate Bill No. 2521, New York Two Hundred Forty-Fourth Legislative Session.

[3] N.Y. Pub. Health Law § 2830.

[4] N.Y. Pub. Health Law § 2830.

[5] N.Y. Pub. Health Law § 2830.

[6] N.Y. Pub. Health Law § 2830.

[7] N.Y. Pub. Health Law § 2830.

[8] N.Y. Pub. Health Law § 2830.

Kyla Portnoy, law clerk, also contributed to this article.