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

OGC Op. No. 08-05-14

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

Re: Usual and Customary or Reasonable Fees for Health Insurance Reimbursements

Question Presented:

1. Does the New York Insurance Law or the regulations promulgated thereunder define or establish “usual and customary or reasonable” (“UCR”) fees for specific medical procedures?

2. If not, how are UCR fees established?

Conclusion:

1. No. The New York Insurance Law and the regulations promulgated thereunder do not define or establish UCR fees for specific medical procedures.

2. While the methods vary by insurer and geographic area, an insurer typically establishes UCR fees using claim data collected by the insurer, or data purchased from a data collection agency. The New York State Insurance Department (“Department”) does not participate in the establishment of UCR fees.

Facts:

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

Analysis:

Most health insurance policies pay providers who are not part of the insurer’s network for services rendered based on UCR fees. See Usual and Customary Allowances, Insurance Help for the Seriously Ill and Their Caregivers, State of New York Insurance Department, http://www.ins.state.ny.us/website1/inshelp/c_uca.htm. While the Insurance Law and the regulations promulgated thereunder refer to “usual and customary or reasonable” fees (see, e.g., Insurance Law § 3217(a)), they do not define the term or establish such fees. Instead, UCR fees are typically defined in the insurance policy or contract between the insurer or health maintenance organization (“HMO”) and the insured. See OGC Opinion 07-02-13 (Feb. 13, 2007). Nevertheless, a “reasonable and customary” fee generally is defined as the “usual fee for a procedure charged by the majority of physicians with similar training and experience within the same geographical area.” See Barron’s Dictionary of Insurance Terms 393 (3d ed. 1995). While the methods for arriving at that fee vary by insurer and geographic area, an insurer typically establishes UCR fees using claim data collected by the insurer, or data purchased from a data collection agency. See Usual and Customary Allowances at http://www.ins.state.ny.us/website1/inshelp/c_uca.htm. The Department does not participate in the establishment of UCR fees.

For further information, you may contact Attorney Joana Lucashuk at the New York City office.