New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
ONE COMMERCE PLAZA
ALBANY, NEW YORK 12257

David A. Paterson
Governor

Eric R. Dinallo
Superintendent

OGC Op. No. 08-06-07

The Office of General Counsel issued the following opinion on June 16, 2008 representing the position of the New York State Insurance Department.

Re: Post-Mastectomy Breast Reconstruction Surgery Mandate

Question Presented:

Does Insurance Law § 4303(x)(1) (McKinney Supp. 2008) require an insurer to pay a claim for a facility fee for post-mastectomy breast reconstruction surgery performed in a physician’s office?

Conclusion:

No. Insurance Law § 4303(x)(1) does not require an insurer to pay a claim for a facility fee for post-mastectomy breast reconstruction surgery performed in a physician’s office.

Facts:

The inquirer is a licensed physician 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. The inquirer asks whether Insurance Law § 4303(x)(1) requires an insurer to pay his facility fee claims.

The inquirer poses this inquiry as a follow-up to Opinion of General Counsel No. 08-05-08 (May 19, 2008), which concluded that facility fee claims to a self-funded employer health plan were not subject to the jurisdiction of the Department but to the United States Department of Labor. The inquirer asks the Department to consider whether an insurer is required to pay a facility fee claim with respect to claims that are subject to the Department’s jurisdiction.

Analysis:

The inquirer asserts that Insurance Law § 4303(x)(1), which applies to non-profit health plans and health maintenance organizations (HMOs), requires an insurer to pay facility fee claims for post-mastectomy breast reconstruction surgeries.1 Insurance Law § 4303(x)(1) states as follows:

(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).

The inquirer claims that insurers must pay the facility fee because of Insurance Law § 4303(x)’s use of the words “in the manner determined by the attending physician and the patient to be appropriate.” However, that phrase does not require insurers to pay whatever charges the physician and patient deem appropriate. Rather, that construction vests the patient and the attending physician with discretion in choosing the type of reconstruction.

The Department’s reading of Insurance Law § 4303(x) is consistent with the statute’s legislative history. The sponsor’s memo states that “a patient who must undergo a mastectomy . . . should have the right to decide with their [sic] primary care physician or surgeon, how rehabilitation will occur after surgery.” 1997 N.Y. Sess. Laws 2025. The memo further states that “[t]his legislation would preserve a patient’s ability to consider all post-treatment options without limitations set in place by insurance industry policy.” 1997 N.Y. Sess. Laws 2026.

Moreover, Insurance Law § 4303(x) specifically authorizes an insurer to apply annual deductibles or coinsurance provisions to the mandated breast reconstruction coverage, provided that such deductibles and coinsurance provisions are consistent with those established for other policy benefits. This language evidences legislative intent that post-mastectomy breast reconstruction surgeries be treated, with respect to determining coverage amount, in a similar manner to other types of covered services. Thus, interpreting the phrase “in the manner determined by the attending physician and patient to be appropriate” to mean that the insurer must pay whatever charges are determined appropriate by the physician and the patient is incongruous with the plain terms and legislative intent of the statute. Rather, the benefit paid is subject to the terms of the insured’s policy, and if applicable, the insurer’s contract with the health care provider.

In sum, Insurance Law § 4303(x) does not require an insurer to pay whatever charges the patient and physician deem appropriate for post-mastectomy reconstruction surgeries. Rather, the coverage amount must be determined in a manner similar to other types of covered services under the governing policy.

For further information you may contact Senior Attorney Brenda Gibbs at the Albany Office.

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1 Insurance Law §§ 3216(i)(20) and 3221(k)(10) contain the same requirements as that statute and apply to commercial individual and group accident and health insurance policies, respectively.