OGC Op. No. 08-05-08
The Office of General Counsel issued the following opinion on May 19, 2008, representing the position of the New York State Insurance Department.
RE: Post-Mastectomy Breast Reconstruction Surgery Mandate
Does N.Y. Ins. Law § 4303(x)(1) (McKinney Supp. 2008) require an employer self-funded health plan to pay a claim for a facility fee, as described below, for post-mastectomy breast reconstruction surgery performed in a physician’s medical office?
No. The Insurance Law does not apply to claims submitted to an employer self-funded health plan, even if the plan is administered by an insurer.
The inquirer is a licensed physician and who performs breast reconstruction surgeries in an area within his medical office that he describes as an “office-based surgical facility” that does not require a license under Article 28 of the Public Health Law. For such services, the inquirer prefers to charge two separate fees, one for his professional services and another that he refers to as a “facility fee” for the use of his office-based surgical facility.
This inquiry arises because ABC Insurance Company (“ABC”), an insurer for which the inquirer is not a participating provider, has not paid several claims for the inquirer’s facility fee for breast reconstruction surgeries. (In fact, the inquirer submitted claims to employer self-funded health plans that are only administered by ABC. The Insurance Department’s records do not indicate that any of the affected claims have been made against health insurance policies actually issued by ABC.) The inquirer asks whether Insurance Law § 4303(x)(1) requires ABC to pay his facility fee claims.
The inquirer asserts that Insurance Law § 4303(x)(1) requires ABC to pay his facility fee claims for post-mastectomy breast reconstruction surgeries that he performs in his office. That statute provides:
(x) (1) Every contract issued by a medical expense indemnity corporation, hospital service corporation or health service corporation which provides coverage for surgical or medical care shall provide the following coverage for breast reconstruction surgery after a mastectomy:
(A) all stages of reconstruction of the breast on which the mastectomy has been performed; and
(B) surgery and reconstruction of the other breast to produce a symmetrical appearance;
in the manner determined by the attending physician and the patient to be appropriate. Such coverage may be subject to annual deductibles or coinsurance provisions as may be deemed appropriate by the superintendent and as are consistent with those established for other benefits within a given policy . . . . (Emphasis added).1
Insurance Law § 4303(x)(1) does not, however, apply to employer self-insured health plans, such as those administered by ABC. Rather, the self-provision of health benefits by an employer to employees constitutes a employee welfare benefit plan (“benefit plan”), as defined in the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C.. §§ 1001-1461 (LEXIS 2007).See> Opinion of Office of General Counsel No. 02-08-13 (August 15, 2002). Specifically, 29 U.S.C. § 1002(1) provides:
The terms ‘employee welfare benefit plan’ and ‘welfare plan’ mean any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care benefits, or benefits in the event of sickness, accident, disability, death or unemployment. . . .2
Pursuant to ERISA, benefit plans are not insurers for purposes of state regulation. See 29 U.S.C. § 1144(b)(2)(B). In addition, state laws governing such plans are preempted by ERISA, see 29 U.S.C. § 1144(a), except that pursuant to 29 U.S.C. § 1144(b)(2)(A) (commonly known as the “insurance savings clause”), New York retains jurisdiction over the policy provisions of an insurance policy issued to an ERISA benefit plan. See, e.g., Opinion of Office of General Counsel No. 04-01-10 (January 7, 2004).
Given that the claims at issue here were made against a self-funded benefit plan and not against an insurance policy issued to the benefit plan, Insurance Law § 4303(x)(1) has no application here. Nevertheless, ERISA itself includes a section with similar provisions to Insurance Law § 4303(x)(1). That statute, 29 U.S.C. § 1185b, states as follows:
(a) In general. A group health plan, and a health insurance issuer providing health insurance coverage in connection with a group health plan, that provides medical and surgical benefits with respect to a mastectomy shall provide, in a case of a participant or beneficiary who is receiving benefits in connection with a mastectomy and who elects breast reconstruction in connection with such mastectomy, coverage for —
(1) all stages of reconstruction of the breast on which the mastectomy has been performed;
(2) surgery and reconstruction of the other breast to produce a symmetrical appearance; and
(3) prostheses and physical complications of mastectomy, including lymphedemas;
in a manner determined in consultation with the attending physician and the patient. Such coverage may be subject to annual deductibles and coinsurance provisions as may be deemed appropriate and as are consistent with those established for other benefits under the plan or coverage. Written notice of the availability of such coverage shall be delivered to the participant upon enrollment and annually thereafter.
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(d) Rule of construction. Nothing in this section shall be construed to prevent a group health plan or a health insurance issuer offering group health insurance coverage from negotiating the level and type of reimbursement with a provider for care provided in accordance with this section.
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Questions about the application of 29 U.S.C. § 1185b should be directed to:
Employee Benefits Security Administration
United States Department of Labor
33 Whitehall Street
New York, NY 10004
For further information you may contact Senior Attorney Brenda Gibbs at the Albany Office.
1 Insurance Law §§ 3216(i)(20) and 3221(k)(10) set forth the same requirements and apply to commercial individual and group accident and health insurance policies, respectively.
2 29 U.S.C. § 1003(b) provides that plans such as governmental or church plans are not covered by ERISA.