Usual and Customary Rate mandate is an affordability killer

In the complex world of health care, most New Yorkers only care about two things: getting care and being able to afford it. But a technical rule in New York's insurance law makes the second goal frequently impossible. New York's Usual and Customary Rate mandate is an affordability killer for our state's small businesses and families.

When an out-of-network doctor and an insurance company can't agree on a price, they enter what's called independent dispute resolution. In New York, arbitrators are legally directed to consider the UCR, which is based on what doctors in a specific area decide they would like to get paid — their "charges" — rather than the actual market cost.

The issue is that these charges are often artificially inflated. A doctor can bill $10,000 for a procedure that costs $1,000 to perform. If enough doctors in a ZIP code hike their charges, the UCR benchmark rises automatically. For instance, in one case, a surgeon's charges in one ZIP code on Long Island were $35,000 for an uncomplicated emergency appendectomy. The same service in a nearby ZIP code reflected billed charges of $5,100.

This is a daily reality for residents in high-cost regions like Long Island. Recent data shows that Long Island has the highest hospital costs in the state; nearly 60% of Long Islanders have delayed care due to cost. This process is so skewed that payment for a laparoscopic appendectomy, for example, can jump from $4,404 in Queens to $25,000 on Long Island, even if the care is comparable. When specialty providers use the UCR mandate to justify inflated bills, the resulting arbitration decisions drive up premiums for every small business from Montauk to Mineola.

This system has been on the books since New York passed its "Surprise Bill Law" in 2014. While intended to protect consumers, the reliance on UCR has created a blank check for out-of-network specialists. Over the last decade, payments frequently have been 20%-100% higher than reasonable market standards.

There is momentum for change. Gov. Kathy Hochul, in her budget proposal, has advanced a series of thoughtful reforms that would end the era of blank check health care. Now the State Legislature must adopt the same reasonable standards advanced by the governor. That will provide relief to families on Long Island and around New York. It is an essential move to protect consumers from excessive, unnegotiated prices and ensures that health care access, rather than outsized profit margins, remains the priority.

By mandating the use of the current UCR, New York is effectively protecting the enormous profit margins of out-of-network specialists at the expense of your local deli, neighborhood bookstore and the average family. To fix our health care affordability crisis, we must move toward benchmarks based on reality. Until we take this giant thumb off the scale, New York's small businesses and families will continue to pay the price for inflated health care bills.

This guest essay reflects the views of Lev Ginsburg, executive director of the New York State Conference of Blue Cross Blue Shield Plans.