New York Addresses Excessive Out-of-State No-fault Billing with Amendment to Regulations

Pursuant to the New York No-fault Regulations, no-fault professional health services rendered in New York State are reimbursable in accordance with established fee schedules. Until a relatively recent amendment by the New York State Department of Financial Service, the permissible charge for services rendered outside New York State was limited to the “prevailing fee” in the geographic location of the provider.

That aspect of the regulations created a “billing loophole” that opened the door for significant billing abuse and potential fraud by out-of-state providers who were providing no-fault professional health services to New York claimants. As a result of this billing loophole, many New York health service professionals “steered” no-fault patients to providers outside New York, where the prevailing fee for professional health services is typically both inflated and well in excess of New York State’s established fee schedules for corresponding health services.

For example, this billing loophole encouraged New York providers to refer New York surgical candidates to have their procedures in New Jersey ambulatory surgery centers in circumstances where New Jersey’s prevailing fee for such procedures exceeded the corresponding New York fee schedule. Almost assuredly, the surgeries would have been performed in New York State if it were not for the disparity in fee schedule and the increased fee reimbursable to the out-of-state medical providers and facilities. This billing loophole defeated a few of the tenets of the fee schedule: (1) to significantly reduce the amount paid by insurers for medical services; (2) to help contain the no-fault premium; and (3) to avoid unjust depletion of a claimant’s no-fault benefits.

In closing this loophole, the New York State Department of Financial Service amended Regulation 68.6. Pursuant to that regulation, providers rendering non-emergency care services outside New York will be limited to the highest amount set forth in the applicable New York State fee schedule if that amount is lower than both: (1) the amount charged by that provider; and (2) the prevailing fee in the geographic region of that provider or the amount set forth in the fee schedule for the geographic region of that provider. Providers rendering non-emergency care services outside New York will be limited to the amount charged by that provider if that amount is lower than both: (1) the highest amount set forth in the applicable New York State fee schedule; and (2) the prevailing fee in the geographic region of that provider or the amount set forth in the fee schedule for the geographic region of that provider. Finally, providers rendering non-emergency care services outside New York will be limited to the prevailing fee in the geographic region of that provider or the amount set forth in the fee schedule for the geographic region of that provider, if it is lower than both: (1) the highest amount set forth in the applicable New York State fee schedule; and (2) the amount charged by that provider.

By advancing a new and basic formula for ascertaining the permissible charge for professional health services rendered outside New York, the amendment to Regulation 68.6 closes a billing loophole and should reduce carriers’ arbitration and litigation costs, which are typically passed to consumers in the form of higher premiums, and avoids unjust depletion of claimant benefits. An additional byproduct of the amendment should result in claimants remaining closer to home for professional health services.

*Scott is an associate in our New York City office. He can be reached at 212.376.6405 or saginsberg@mdwcg.com.

_{Defense Digest, Vol. 24, No. 1, March 2018. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}