Local Law Amends New York City Charter and Establishes an Office of Healthcare Accountability

On June 8, 2023, the New York City Council passed a bill focused on healthcare accountability, with the goal of increasing access to healthcare services for New Yorkers. Entitled the Healthcare Accountability & Consumer Protection Act (the “Act”), this legislation includes Introduction 844, which establishes an Office of Healthcare Accountability, whose work would allow patients to see through a website what they would be charged for procedures at hospitals throughout New York City. As part of the Act, this Office would also report on insurance and pharmaceutical pricing, as well as monitor the amount of money the City is spending on healthcare services. In addition, the Act includes Resolution 512, which calls on New York State to create an independent commission to oversee hospital pricing and to increase access to healthcare services. This local law, referred to as Local Law 78, was signed by Mayor Adams on June 23, 2023, and will be effective beginning on February 22, 2024.

Pursuant to Local Law 78, the Office of Healthcare Accountability will be established by the Mayor as either a standalone office, within any office of the Mayor, or within any City agency or department. The Mayor will appoint a Director of Healthcare Accountability (or agency head, if such office is established within a City agency or department) to head the Office (the “Director”). Among the various powers and duties of the Director, the most significant will include:

• Providing recommendations regarding healthcare and hospital costs, including, but not limited to, the proportion of costs spent on hospital care, in an effort to differentiate the needs of and to assist in stabilizing safety net hospitals and their reimbursements from New York Medicaid;
• Analyzing City expenditures on healthcare costs for city employees, city retirees, and their dependents;
• Providing, on the Office’s website, in a simplified and publicly accessible format, information regarding the prices of common hospital procedures, based on any publicly available information relating to the price of hospital procedures, including disclosures required pursuant to state and federal law. This information will be formatted in a way to allow for price comparisons between hospitals for such common procedures;
• Convening key stakeholders in healthcare, including, but not limited to, representatives of hospitals, healthcare providers, health plans, and self-insured entities, to examine the costs of healthcare services in the City; and
• Collecting and making available, upon request, each New York City hospital’s United States Internal Revenue Service (“IRS”) Form 990, Schedule H, as required pursuant to Section 501(r) of the Internal Revenue Code (“Code”); copies of audited financial statements as required pursuant to Section 6033(b)(15)(b) of the  Code; and annual cost reports as required by the Centers for Medicare and Medicaid Services (“CMS”).

Local Law 78 further requires the Director submit to the Mayor, the Speaker of the City Council, and the Attorney General of the State of New York, and to post conspicuously on the Office’s website, a report detailing the pricing practices of hospital systems in the City. This report must be made no later than one (1) year after the effective date of Local Law 78 and by January 1 annually thereafter. The report must include, to the extent publicly available, the following elements:

• A summary of 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 or other classification of payer for each common procedure, including:
  • Reimbursements from New York Medicaid and Medicare and an analysis of whether such reimbursements meet the cost of caring for patients on such programs;
  • Negotiated prices by payer and health plan, the cash price, and the Medicare price; and
  • Average rates of denial by major insurance providers or payers of medically necessary care.
• A summary of each hospital’s and each major insurance provider’s or other payer’s pricing transparency requirements pursuant to state and federal laws;
• A breakdown of each major insurance provider’s and/or other payer’s profit margins, employee headcounts, overhead costs, and executive salaries and bonuses;
• A summary of each hospital’s community benefit information as publicly reported on the IRS Form 990, Schedule H, as required pursuant to Section 501(r) of the  Code;
• Each hospital’s publicly available implementation report regarding the hospital’s performance in meeting the healthcare needs of the community, providing charity care services, including the number of public benefit beneficiaries and uninsured individuals treated by each hospital, and improving access to healthcare services by the underserved, as required pursuant to subdivision 3 of Section 2803-l of the Public Health Law; and
• A summary of the impact of pharmaceutical pricing, insurance premiums, and the cost of medical devices on the City’s healthcare costs and individuals’ out-of-pocket spending.

According to Mayor Adams, the legislative actions resulting in the passage of Local Law 78 were largely driven by efforts to help New Yorkers get more affordable healthcare by “ensuring that there is cost transparency in our healthcare system.”  In fact, there is currently no other industry where a service is being procured by a consumer, who has no idea what the charge will be for that service.[1] The establishment of this Office will make New York City the first city in the nation to have an office dedicated to the healthcare accountability and affordability through price transparency. New York City Councilmember Julie Menin, who is largely spearheading this effort, stated:

“We cannot allow exorbitant health care costs to burden our families, businesses, and city government any longer. We have seen the positive impact of price transparency measures in other states, and it is time for New York City to curb excessive healthcare prices which currently cost the city $11 billion or ten percent of our city budget.” [2]

For more information regarding these new requirements please contact Arthur J. Fried and Amy Cooperstein.

[1] Amanda D’Ambrosio and Jacqueline Neber, “Health Pulse; Health Systems Prepare for Influx of Pollution-Related Admissions as Respiratory Hospitals Climb in NYC.” Crains New York Business (June 9, 2023)

[2] The Official Website of the City of New York. “Mayor Adams Signs Legislation Increasing Health Care Pricing Transparency.” (June 23, 2023) (https://www.nyc.gov/office-of-the-mayor/news/451-23/mayor-adams-signs-legislation-increasing-health-care-pricing-transparency).