On May 24, 2017, the New York State Department of Financial Services (“DFS”) released its revised proposed Thirty-third Amendment to 11 NYCRR 68 (Insurance Regulation 83) (the “Amendment”), which is set to take effect on August 22, 2017, and will limit reimbursement to healthcare providers rendering medical services outside the state to the highest reimbursement amount allowed under the Workers’ Compensation fee schedule that applies to reimbursement of benefits under the New York State No-fault law. (The public comment period to the revised Amendment ends on June 23, 2017.) In issuing the Amendment, the DFS is addressing the ongoing abuse of the No-fault system with respect to some out-of-state providers who, “taking advantage of current provisions in the regulation, submit grossly inflated bills for services rendered, thus quickly depleting the $50,000 no-fault coverage limit available to an eligible injured party.” See DFS Assessment of Public Comments.
In that regard, the No-fault system has been plagued by the increasing phenomena concerning the reimbursement of out-of-state providers under the No-fault law in which claimants are being referred from New York No-fault clinics to surgical centers in New Jersey that bill for ambulatory surgical procedures such as MUAs, trigger point injections and arthroscopies at rates that have no relation to those under fee schedules that might exist in the service-providers’ home states or, if there Is no fee schedule, bare no relation to the prevailing rate in the geographic location for where the services were rendered. Regulation 83, governing the reimbursement of out-of-state providers, currently provides:
“If a professional health service is performed outside New York State, the permissible charge for such service shall be the prevailing fee in the geographic location of the provider” (11 NYCRR § 68.6).
The case of Surgicare Surgical Assoc. v National Interstate Ins. Co., 2014 WL 6610048, 2014 N.Y. Slip Op. 24362) (Anthony Cannataro, J.), provides a good example of an out-of-state provider seeking reimbursement at an exorbitant rate, diminishing the coverage available to the insured for other medically necessary services. There, the provider performed arthroscopic surgery on a covered person in New Jersey and submitted a claim for reimbursement under the applicable New York No-fault policy. Although the state of New Jersey has a fee schedule that applies to the reimbursement of medical services under the New Jersey’s No-fault law, the provider submitted a bill to the insurer for approximately $5,000 more than the amount it would have been reimbursed had the claim involved a New Jersey auto policy and, as a result, been governed by the New Jersey fee schedule. The insurer reimbursed the amount permitted under the New Jersey fee schedule, essentially maintaining that, pursuant to Regulation 83, the New Jersey fee scheduled reflected the permissible amount in the geographic area. The provider sued for the difference. After discussing the applicable regulations and policy considerations behind the enactment of the New York No-fault law, including, among other things, the legislative intent of cost containment, a New York City Civil Court judge held that, “when services are rendered outside of New York but in a jurisdiction which utilizes a fee schedule, the insurer complies with Section 68.6 by paying the ‘permissible’ charge for that particular medical service, that is, the amount permitted by that jurisdiction’s fee schedule.” The provider appealed and the Appellate Term affirmed. See Surgicare Surgical Assoc. v National Interstate Ins. Co., 2015 NY Slip Op 25338 (App. Term 1st Dept. 2015).
In other instances, the amount sought by out-of-state providers has been tens of thousands of dollars above the amount that would be permitted under New York Fee Schedule. Recognizing the potential for fraud and abuse, the Amendment provides an effective solution to the exploitation of the No-fault system by out-of-state providers and, adopts, to some extent, the holding in Surgicare and, by regulation, strengthens the limits placed on reimbursement of such providers. Specifically, the Amendment states:
(b) Except as provided in subdivision (a) of this section, if a professional health service reimbursable under Insurance Law section 5102(a)(1) is performed outside this State with respect to an eligible injured person that is a resident of this State, the amount that the insurer shall reimburse for the service shall be the lowest of:
(1) the amount of the fee set forth in the region of this State that has the highest applicable amount in the fee schedule for that service;
(2) the amount charged by the provider; and
(3) the prevailing fee in the geographic location of the provider.
(c) In this section, if the jurisdiction in which the treatment is being rendered has established a fee schedule for reimbursing health services rendered in connection with claims for motor vehicle-related injuries and the fee schedule applies to the service being provided, the prevailing fee shall be the amount prescribed in that jurisdiction’s fee schedule for the respective service.
Under the Amendment, the most an out-of-state provider will be entitled to be reimbursed for medical services is the highest allowable amount under the New York No-fault fee schedule as determined by the region of the state that provides for the greatest reimbursement (typically the New York City region). If, however, the provider submits a bill for less than that allowed under the New York Fee Schedule or the prevailing fee in the geographic location of the provider is less, reimbursement will be at the lesser amount. Consistent with the decision in Surgicare, if the state where the services are rendered has established a fee schedule for reimbursement of the billed for medical services in connection with automobile accident related injuries (i.e., a No-fault statute), the prevailing fee in the geographic location is the amount set forth in that state’s fee schedule and, if that amount is less than the New York Fee Schedule, reimbursement is at the prevailing rate for the geographic location.
The Amendment includes an important exception for emergency services. When services are provided by an out-of-state provider under emergent circumstances, reimbursement is the lower of the amount charged by the provider and the prevailing fee in the geographic location of the provider. Thus, when emergency care is provided out-of-state, the New York Fee Schedule will not apply, however, if the state in which the services are provided has its own fee schedule that applies to reimbursement of medical services provided to auto-accident victims, the out-of-state fee schedule applies. The Amendment defines emergency care as:
…all medically necessary treatment initiated within 48 hours of a motor vehicle accident for a traumatic injury or a medical condition resulting from the accident, which injury or condition manifests itself by acute symptoms of sufficient severity such that absence of immediate attention could reasonably be expected to result in: death; serious impairment to bodily functions; or serious dysfunction of a bodily organ or part. Medically necessary treatment shall include immediate pre-hospitalization care, transportation to a hospital or trauma center, emergency room care, surgery, critical and acute care. Emergency care extends during the period of initial hospitalization until the patient is discharged from the hospital.
By seeking to eliminate a significant loophole exploited by some out-of-state health care providers, the Amendment reflects the DFS’ recognition of the important cost-containment objectives of the No-fault law, which by fulfilling, also ensures that covered individuals do not have their available benefits drastically reduced by opportunistic service providers. It is apparent that the DFS hopes to accomplish its regulatory purpose by curtailing the financial incentive for out-of-state providers to treat New York state auto-accident victims, which should result in the arrest of the explosive growth in the treatment by such providers.
