From the President: About that No-Fault regulation that takes effect on April 1, 2013...

On February 20, 2013, on behalf of the NYSCA membership, NYSCA President Dr. Bruce Silber wrote to the New York State Department of Financial Services seeking clarification of the, then, recently adopted No-Fault Regulation – FOURTH AMENDMENT TO 11 NYCRR 65-3 (INSURANCE REGULATION No. 68-C) Claims for Personal Injury Protection Benefits, I.D. No. DFS-20-12-00009-A, New York State Register, February 20, 2013, pp. 8-10.

In his query the Dr. Silber wrote:
As you may or may not recall, the New York State Chiropractic Association (NYSCA) offered comments on this regulation when it was first proposed last May. The Association has not received and has not seen any response to the observations the Association offered. The Association noted, however, that the State Register announced today (February 20, 2013) that the regulation has been adopted effective April 1, 2013.

In the meantime, a question has arisen regarding the regulation and how it will be implemented for which the Association seeks clarification. Specifically, the NYSCA seeks clarification of the following provisions:

New subdivision (g) of section 65-3.8 provides as follows:
(g) (1) Proof of the fact and amount of loss sustained pursuant to Insurance Law section 5106(a) shall not be deemed supplied by an applicant to an insurer and no payment shall be due for such claimed medical services under any circumstances:
(i) when the claimed medical services were not provided to an injured party; or
(ii) for those claimed medical service fees that exceed the charges permissible pursuant to Insurance Law sections 5108(a) and (b) and the regulations promulgated thereunder for services rendered by medical providers.

The problem area is (g)(1)(ii). Some NYSCA members have identified an ambiguity in the way these stipulations may be read.

On the one hand, it may be read that the regulation says that "no payment shall be due" for "those claimed medical service fees that exceed the charges permissible pursuant to the Insurance Law §§ 5108(a) and (b)" - that is, the WC fee schedule.

Specifically, §§ 5108(a) and (b) of Insurance Law stipulate as follows:

§ 5108. Limit on charges by providers of health services.
(a) The charges for services specified in paragraph one of subsection (a) of section five thousand one hundred two of this article and any further health service charges which are incurred as a result of the injury and which are in excess of basic economic loss, shall not exceed the charges permissible under the schedules prepared and established by the chairman of the workers' compensation board for industrial accidents, except where the insurer or arbitrator determines that unusual procedures or unique circumstances justify the excess charge.
(b) The superintendent, after consulting with the chairman of the workers' compensation board and the commissioner of health, shall promulgate rules and regulations implementing and coordinating the provisions of this article and the workers' compensation law with respect to charges for the professional health services specified in paragraph one of subsection (a) of section five thousand one hundred two of this article, including the establishment of schedules for all such services for which schedules have not been prepared and established by the chairman of the workers' compensation board.

Fees that are in "excess" - more than, above or beyond the amounts allotted in the Workers' Compensation fee schedule for individual services are not the real issue at hand here, although this is one way to read the ambiguity.

The concern that arises is that the Workers’ Compensation fee schedule permits doctors of chiropractic (and physical therapists) to be paid for only eight (8) units of treatment. Providers bill a combination of medically necessary therapies that oftentimes exceed the eight (8) units permitted. In addition, most electronic health care software programs follow the AMA CPT® coding rules and the software cannot be adjusted to bill only for, or exactly for eight (8) units or less when the services provided often tabulate for more. This is problematic since many practitioners provide and bill services in excess of the eight (8) units allotted pursuant to the revised and expanded Workers’ Compensation fee schedule. The Workers’ Compensation Board has accommodated the providers by allowing providers to bill for more than the eight (8) units payable but also stipulated that Workers’ Compensation payers would only be responsible for paying for maximum eight (8) units permitted.

If chiropractors (or physical therapists) provide and bill for services in excess of the eight (8) units allowed under the Workers' Compensation fee schedule, the No-Fault regulation adopted appears to allow insurers to deny payment automatically and in total, even though the dollar amount for services individually charged do not exceed the service dollar charges in the Workers Compensation fee schedule for those specific services.

The NYSCA does not contest the fact that providers should not be billing the payers of injured patients dollar amounts for individual and specific services that exceed the dollar amounts for individual services permitted by the Workers’ Compensation fee schedule. At the same time, however, the Association does not think it fair that the a provider’s payment could be automatically and completely denied should the practitioner provide and bill for services whose combined unit values go beyond the eight (8) units permitted by the Workers’ Compensation fee schedule, even though the dollar amounts (fees) for the individual services charges do not exceed and are consistent with the individual dollar amounts (fees) for those services found in the Workers’ Compensation fee schedule. This would be a disservice to the providers involved. If the eight (8) units of service carry over to the §§ 5108(a) and (b) fee schedule(s), then the Association feels that providers should be able to bill for services irrespective of the eight (8) unit service cap with the understanding that payers would only be obligated to pay for up to the eight (8) unit service limit.

Please clarify this ambiguity and how the Department intends on implementing this regulation.

As the deadline for implementation of the April 1, 2013 regulation looms, and not having heard from the Department of Financial Services relative to the Association’s February 20, 2013 inquiry above, I telephoned the Department of Financial Services and spoke directly to someone in the Insurance Bureau that works on No-Fault issues. After explaining the foregoing ambiguity again, the DFS representative explained that he believed the issue had been addressed in the State Administrative Procedure Act (SAPA) run-up to the regulation and that the Regulatory Impact Statement clearly states that ONLY the portion of a provider’s fee that exceeds the fee schedule will be denied, not the entire fee.

Not content to take the Department’s word, I looked up the Regulatory Impact Statement (RIS) directly and it seems to concur with the DFS statement. Under the rubric: “Preventing Billing in Excess of Mandated Fee Schedule or for Services Not Rendered,” the RIS states as follows:

Preventing Billing in Excess of Mandated Fee Schedule or for Services Not Rendered

Based on case law, two central issues have arisen in situations where an applicant for benefits bills for services in excess of the mandated fee schedule or for services that were never provided. In both instances, courts have ruled that an insurer that fails to timely deny a claim is precluded from asserting as a defense the fact that the provider overbilled or fraudulently billed for services never rendered. As a result, consumers have their benefits unjustly reduced.

Insurers support the Superintendent's attempt to remedy instances when services are overcharged or not provided, and several also believe such a remedy should extend to other reasons for denial of claim.

Attorneys representing applicants for benefits do not object to the Superintendent's attempt to remedy overcharges and phantom billing, but some are concerned that the draft amendment would result in the denial of a claim in its entirety when the applicant has billed in excess of the mandated fee schedule, not just to the extent of the excess.

In order to protect consumers from unjust depletion of benefits, the proposed amendment provides that proof of the fact and amount of loss sustained shall not be deemed to be received by an insurer when the applicant for benefits has billed in excess of the mandated fee schedule and/or for services not rendered. This provision will protect consumers from these fraudulent or abusive practices. Additionally, to absolve the fears of plaintiff attorneys, only the excess portion of an excessive bill is not due, not the entire bill.

For more information, see: Regulatory Impact Statement for the Fourth Amendment to 11 NYCRR 65-3 (Insurance Regulation No. 68-C)

I know a significant number of members were concerned with this issue and hopefully this provides some clarification. The representative of DFS that I spoke to said that the Department was interested in compliance and that if the Association hears from NYSCA members that No-fault claims were being denied in their entirety in response to this regulatory change to please let the Department know as soon as reasonably possible. Something we need to keep an eye on as the regulation rolls out.

Bruce Silber, DC
President, New York State Chiropractic Association


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