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Hospital staffing crisis in NY prompts insurance change

Striking healthcare workers demonstrating outside Mercy Hospital.
Striking healthcare workers demonstrating outside Mercy Hospital. Staffing has been a key issue in bargaining talks.

Business groups and the insurance industry say a state directive temporarily suspending the preauthorization requirement for surgeries and other medical procedures is likely to increase the cost of health care plans for employers and their personnel.

Under a sweeping directive issued by Gov. Kathy Hochul's administration last week, a requirement that health insurance claims be reviewed by health plans both retrospectively and concurrently was also sidelined.

Hochul officials cast the move as "bold action" aimed at addressing staffing shortages and other health care facilities. Those staffing challenges have been exacerbated by Hochul's mandate that all health care workers receive the vaccinations for COVID-19.

Lev Ginsburg, senior director of government affairs for The Business Council of New York State, a group that advocates for employers, told CNHI the insurance preauthorization requirement "serves as a check and balance for the cost of health care," as it has ensured the procedures performed at hospitals and health clinics are medically necessary. Not having the requirement in place will drive up the cost of health care, he argued.

The fact that employers are highly concerned about the state's directive shows the matter does not simply boil down to another disagreement between insurers and the hospital lobby, but is one that is a much broader consumer issue, Ginsburg said.

Hochul's emergency order is set to expire Oct. 27.

It contained several other provisions, such as allowing doctors and other health care professionals from other states to practice in New York.

The directive suspending the preauthorization reviews was sought by the Greater New York Hospital Association.

The industry group praised Hochul for her "decisive action" in suspending preauthorization review and other provisions of the state Insurance Law.

Eric Linzer, president of the New York Health Plan Association, said it is an "open question" as to the extent of the hospital staffing shortages being used as a justification for Hochul's emergency order.

Linzer noted there were reports at the time the order was issued last week that hospitals were "continuing to provide the full spectrum of care" to patients at their facilities.

He also said the order could end up having "adverse effects" on patients being discharged from hospitals as the insurers will be unable to determine if there are "necessary supports in place for follow-up care and their recovery."

Gary Fitzgerald, president of the Iroquois Healthcare Alliance, an umbrella group of some 50 upstate hospitals, said the health care administrators he checks in with daily are fully supportive of the order.

"We have a severe staffing shortage now, and anything that makes it easier to deliver care and not jump through hoops at this time of crisis is welcome," Fitzgerald said in an interview.

Bill Hammond, a health policy researcher for the Empire Center for Public Policy, an Albany think tank, said if the staffing shortages have worsened as a result of the vaccine mandate, Hochul could have simply suspended that mandate instead of suspending the preauthorization review requirement.

Hammond also said it is likely that hospitals that have no staffing shortage will now invoke the emergency order to "evade standard, routine oversight of their billing that is absolutely important to maintain the integrity of the insurance system."

The Greater New York Hospital Association advised its members that the state order included other "flexibilities" that provide hospitals and nursing homes with the authority to discharge, transfer and admit patients based on staffing shortages, as authorized by the state Department of Health.

"Physicians may perform visits to nursing home residents via telemedicine," the association advised. "Certain recordkeeping requirements are suspended."

The order is expected to remain in effect through the current expiration date.

“This temporary provision provides an option for facilities to dedicate more clinical staff for direct patient care if necessary to address a shortage," Hochul spokeswoman Hazel Crampton-Hays said. "Ensuring access to quality care is everyone’s primary concern."

The health care vaccine mandate took effect Sept. 27 — the same day the emergency order was issued.