New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

The Office of General Counsel issued the following opinion on April 30, 2008, representing the position of the New York Insurance Department.

RE: DRG Medical Implants and No-Fault Insurance Reimbursement

Question Presented:

Does WCL § 13(a-1) alter the payment rates for medical procedures performed under the no-fault insurance system?

Conclusion:

No. WCL § 13(a-1) does not alter the payment rates for medical procedures performed under the no-fault insurance system. WCL § 13(a-1) only applies to payment rates for the spinal procedures performed under the workers’ compensation system.

Facts:

The inquiry is of a general nature, without reference to particular facts.

Analysis:

The no-fault insurance system and the workers’ compensation system are legally distinct. The no-fault system is set forth in Article 51 of New York Insurance Law, titled the comprehensive Motor Vehicle Insurance Reparations Act.

N.Y Ins. Law § 5108 (McKinney Supp. 2008), which governs the permissible charges for services rendered by health providers under the no-fault system, is germane to the inquiry. The statute reads as follows:

(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.

Pursuant to Insurance Law § 5108, the Superintendent of Insurance promulgated § 68.1(a) of the N.Y. Comp. Codes R. and Regs. tit. 11, Pt. 68 (Regulation 83), which adopts the workers’ compensation fee schedule for no-fault claims. 11 NYCRR § 68.1 reads as follows:

(a) The existing fee schedules prepared and established by the chairman of the Workers' Compensation Board for industrial accidents are hereby adopted by the Superintendent of Insurance with appropriate modification so as to adapt such schedules for use pursuant to the provisions of section 5108 of the Insurance Law.

Because the no-fault system has adopted the fee schedule of the workers’ compensation system, reimbursement for professional health services is customarily comparable for both systems. Inpatient services such as the spinal procedures at issue here are an exception, however, because payments to health providers for inpatient services are governed by the New York Public Health Law, which generally provides that inpatient health providers are to be reimbursed by third party payors on a Diagnostic Related Group (DGR) basis, as set by the New York State Department of Health. Public Health Law § 2807-c reads, in relevant part as follows:

(b) Payments to general hospitals for reimbursement of inpatient hospital services provided to patients eligible for payments pursuant to the comprehensive motor vehicle insurance reparations act… shall be case based payments per discharge, for each diagnosis-related group…

Chapter 592 of the Laws of 2006 amended Workers’ Compensation Law (“WCL”) § 13 to increase the rates of payment for implantable hardware and instrumentation in connection with certain spinal procedures performed under the workers’ compensation system. As codified at WCL § 13(a-1), Chapter 592 limits the scope of the statute to procedures performed under the workers’ compensation system; there is nothing in the statutory provision with respect to reimbursement under the no-fault system or the Public Health Law. Stated differently, Chapter 592 did not amend the Insurance Law, Public Health Law or the DRGs promulgated thereunder in any manner. Therefore, the Public Health Law, through the setting of DRG rates, remains the sole statutory mechanism for establishing permissible charges for inpatient hospital health services rendered under the no-fault system, including the spinal procedures made applicable to workers’ compensation under WCL § 13(a-1).

For further information, you may contact Principal Attorney Lawrence M. Fuchsberg at the New York City office.