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From Banking and Finance Law Daily, March 16, 2015

NY’s Lawsky wants health care reform, more enforcement for Wall Street misconduct

By Colleen M. Svelnis, J.D.

Benjamin M. Lawsky, New York Superintendent of Financial Services spoke at the State University of New York at Albany, concentrating his remarks on Wall Street enforcement, and health care payment reform. Lawsky addressed the lack of criminal prosecutions or efforts to hold individual, senior executives on Wall Street accountable for misconduct, stating that “[w]hile the New York State Department of Financial Services (DFS) does not have authority to bring criminal prosecutions, it has taken a number of actions to expose and penalize misconduct by individual senior executives—including all the way up to the C-Suite, when appropriate.”

Wall Street actions. Lawsky noted that the DFS required the Chief Operating Office of BNP Paribas (see Banking and Finance Law Daily, July 1, 2014) as well as the Chairman of Ocwen Financial to step down (see Banking and Finance Law Daily, Dec. 22, 2014) under the enforcement actions brought against the companies. Lawsky also mentioned that the recent settlement with Commerzbank (see Banking and Finance Law Daily, March 12, 2015) requires the termination of several employees, including the head of anti-money laundering compliance for its New York branch.

Lawksy continued by saying that “even if there are certain circumstances where the misconduct does not rise to the level of criminal fraud, civil financial regulators can also play a role in imposing individual accountability.”

Recent issues. Turning to investigations of recent market manipulation on Wall Street, Lawsky said “markets do not just rig themselves. It requires deliberate misconduct by individuals.” Additionally, he said that “a lot of the misconduct that occurs on Wall Street boils down to simple fraud.”

Health care reform. Lawsky said that New York’s health exchange has enrolled more than 2 million New Yorkers in coverage. He wants to focus on continuing to improve both the cost and the quality of care, saying “out-of-control health care costs hinder economic development for the state.” Lawsky says he is working to address these issues through:

  • increased access to coverage for all New York residents;

  • integration of primary, specialty and behavioral care;

  • transparency of both quality and cost;

  • population health; and

  • moving away from paying for value.

Payment reform models. Focusing his remarks on “paying for value,” Lawsky stated that this payment model, where insurers pay hospitals and physicians a fee for each service that they perform, “rewards providers for doing more without regard to the quality, efficiency, or outcome of the procedures.” He wants to move New York away from this fee-for-service model.

Lawsky cited a recent DFS survey showed that every major health insurer was engaged in some form of payment reform effort, but noted, however, that most of these payment reform models were pilot projects, accounting for less than 15 percent of their provider payments.

The DFS, Lawsky said, intends to use its regulatory oversight to encourage commercial health insurers to move to alternate payment models. Lawksy hopes to do the following:

  1. Identify, standardize and measure the success of payment reform models.

  2. Create incentives to move in that direction

  3. Work to ensure timely approval of products with tiered networks, where insurers offer lower copayments to providers that meet certain payment reform standards.

  4. Use its rate review authority to encourage payment reform.

Companies: BNP Paribas; Commerzbank AG; Ocwen Financial

MainStory: TopStory BankSecrecyAct CrimesOffenses DirectorsOfficersEmployers EnforcementActions FinancialStability NewYorkNews

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