New York City's Health Care Price Transparency Law Takes Effect

In summer of 2023, New York City Mayor Eric Adams signed Intro. 844-A (Local Law 844-A) and amended the New York City Charter. Local Law 844-A directs Mayor Adams to establish an Office of Healthcare Accountability that will serve to increase health care price transparency in New York City. Though health care price transparency laws have been enacted at the state level across the nation, New York City has become the first municipality in the nation to implement a price transparency law. Indeed, New York City Councilmember Julie Menin, who sponsored Local Law 844-A, emphasized “the positive impact of price transparency measures in other states, and it’s time for New York City to curb excessive health care prices” alongside other states during the bill’s signing ceremony. The law took effect on February 18, 2024.

Duties of the Director of Office of Healthcare Accountability

Under Local Law 844-A, Mayor Adams is required to appoint a Director of the Office of Healthcare Accountability, who will be responsible for the following:

• Providing recommendations regarding health care and “hospital” costs, including, but not limited to, the proportion of health care costs that are spent on hospital care;
• Analyzing the city's expenditures on health care costs for city employees, city retirees, and their dependents;
• Detailing information regarding the publicly available price of common hospital procedures on its website so that the public can compare prices between hospitals;
• Convening key stakeholders, such as representatives of hospitals, health care providers, health plans, and self-insured entities, to examine health care service costs in New York City; and
• Collecting and making available to the public, upon request, each hospital's IRS Form 900, Schedule H, audited financial statements, and annual cost reports.

Notably, Local Law 844-A defines “hospital” to mean a “general hospital” as defined in N.Y. Public Health Law 2801(10). A “general hospital” is a hospital that provides medical and surgical services primarily to in-patients or under a physician's supervision on a 24-hour basis. General hospitals have provisions to allow for admission or treatment of persons needing emergency care. This defined term does not include residential health care facilities, public health centers, diagnostic centers, treatment centers, out-patient lodges, dispensaries, laboratories, or central service facilities that serve more than one institution.

Reporting Requirements

No later than February 18, 2025, and annually by January 1 of each following year, the Director must submit to the mayor, to the Speaker of the New York City Council, and to the New York State Attorney General, a report detailing hospital systems’ pricing practices in New York City. This report must also be published on the Office of Healthcare Accountability’s website. The report must include a summary of the following data (to the extent that the data is publicly available):

• Prices charged for common hospital procedures disaggregated by hospital, utilizing a baseline price, such as Medicare;

• Prices charged for common hospital procedures disaggregated by:

• Hospital;

• Type of procedure;

• Average rate of reimbursement received by the hospital from each “major insurance provider” (which is defined as a health insurance company whose business accounts for a significant portion of hospital payments) for each common procedure, including reimbursements from Medicaid and Medicare and an analysis of whether such reimbursements meet the cost of caring for patients on such programs, and where practicable, negotiated price by payer and health plan, the cash price, and the Medicare price; and

• The average rate of denial by major insurance providers or payors of “medically necessary care”.

• Each hospital’s and each major insurance provider’s or other payer’s pricing transparency requirements pursuant to state and federal law;

• A breakdown of each major insurance provider’s and other payor’s profit margins, employee headcounts, overhead costs, and executive salaries and bonuses;

• Each hospital’s community benefit information as publicly reported on the IRS Form 990, Schedule H, and each hospital’s publicly available implementation report regarding their performance in meeting their community’s health care needs, providing charity care services, and improving access to health care services; and

• The impact of pharmaceutical pricing, insurance premiums, and the cost of medical devices on the city’s health care costs and individuals’ out-of-pocket spending.

Conclusion

Over the past year, New York’s health care legislation has been advanced with the goal of increasing price transparency. This is evidenced by the recent enactment of New York’s material health care transaction review law and its facility fee law, which like Local Law 884-A, include public notice requirements to increase public consciousness of health care costs and impact. 

As Local Law 884-A has only just taken effect, there is still much to be learned about how the Office of Healthcare Accountability will operate. As of the date of this blog post, the mayor has not yet appointed a Director nor has the Office’s website been made publicly available. Furthermore, certain key terms used throughout the law have not been defined by the Office, such as what precisely renders a hospital procedure “common”, and what amount of business comprises a “significant portion” of a hospital’s payments to render an insurer a “major insurance provider” of a hospital. In the coming months, we can expect to see the Office of Healthcare Accountability provide more clarifications on these definitions and potentially more municipalities across the nation following New York City’s lead.

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