Analysis of Rhode Island H7002
1. Summary of the Bill
This bill makes two substantive policy changes affecting medical billing practices in Rhode Island:
Prohibition on Health Insurers Denying Third-Party Claims
The bill amends four separate insurance statutes (covering accident and sickness insurance, nonprofit hospital service corporations, nonprofit medical service corporations, and health maintenance organizations) to add a uniform prohibition: no health care entity or health plan may deny a claim for payment of a medical bill solely because the bill may have arisen from a third-party claim or incident. Workers' compensation claims (under chapter 33 of title 28) are explicitly excluded from this protection, meaning insurers may still decline such claims when workers' compensation is the applicable coverage.
New Ground for Physician Discipline
The bill adds a 33rd category of unprofessional conduct under the Board of Medical Licensure and Discipline: a physician who fails to submit medical bills to a health insurer solely because the bill may arise from a third-party claim or incident (again, excluding workers' compensation) can face disciplinary action.
Together, the two changes work in tandem: physicians are required to submit bills to health insurers even when a third-party liability claim (such as an auto accident) is involved, and health insurers are prohibited from refusing to process those bills on that basis alone.
2. Comparison with Other States
This bill addresses a common practice known as "health insurance primary" billing, where health insurers sometimes refuse to pay medical bills when a third-party tortfeasor (e.g., an at-fault driver in a car accident) may ultimately be responsible. Several states have addressed this issue:
- New York: New York Insurance Law § 5-109 and the No-Fault Insurance Law (Article 51) create a framework requiring health insurers to pay claims and then seek reimbursement (subrogation) from liable third parties or no-fault carriers. New York has addressed third-party billing conflicts primarily through its no-fault auto insurance system rather than a direct prohibition on third-party denials. https://www.nysenate.gov/legislation/laws/ISC/5109
- Connecticut: Connecticut General Statutes § 38a-816 prohibits unfair claim settlement practices, and state insurance regulations have addressed the practice of insurers deferring to third-party liability. However, Connecticut does not have a statute as direct as Rhode Island's proposed language explicitly prohibiting denial based solely on third-party involvement.
- Massachusetts: Massachusetts General Laws Chapter 176D governs unfair insurance practices and requires prompt payment of claims. Massachusetts also has a coordination of benefits framework, but does not have a specific statutory prohibition mirroring this bill's language.
- New Hampshire: New Hampshire RSA 420-J:8 includes a prohibition on certain claim denials and prompt payment requirements, but no specific provision directly paralleling this bill could be confirmed.
- Vermont and Maine: Comparisons with these states on this specific provision could not be found.
Among the comparison states, New York comes closest in addressing third-party billing conflicts, but through its no-fault insurance system rather than an outright prohibition on third-party denials. Rhode Island's approach — combining an insurer prohibition with a physician discipline mechanism — appears to be a relatively direct and distinctive legislative approach to this issue.
3. Potential Impact and Notable Aspects
- Patient Protection: The bill addresses a significant gap in patient coverage. When a patient is injured in a car accident or other incident involving a third party, health insurers sometimes refuse to pay, directing the patient to pursue the at-fault party first. This can leave patients without timely access to coverage while liability disputes are resolved — sometimes for years.
- Subrogation Rights Preserved: The bill does not appear to eliminate health insurer subrogation rights. Insurers would still be able to pay claims and seek reimbursement from the responsible third party afterward — they simply cannot refuse to pay in the first instance solely because of third-party involvement.
- Workers' Compensation Carve-Out: The explicit exclusion of workers' compensation claims is notable. Workers' comp operates as a separate, exclusive remedy system in Rhode Island, and the exclusion reflects the distinct statutory framework governing those claims.
- Dual Enforcement Mechanism: The combination of insurer liability (under the prompt payment statutes, including 12% annual interest penalties for non-compliance) and physician discipline creates strong incentives for compliance from both sides of the billing relationship.
- Breadth of Coverage: By amending four parallel insurance statutes simultaneously, the bill ensures consistent application across all types of health coverage entities operating in Rhode Island.