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. 08-10-06

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

Re: Post-Mastectomy Breast Reconstruction Surgery Mandate

Question Presented:

Does the New York Insurance Law require an insurer to pay a claim for a “facility fee” for surgery performed in a physician’s office?

Conclusion:

No. The Insurance Law does not require an insurer to pay a claim for a “facility fee” for surgery performed in a physician’s office. The payment of any such fee is subject to the terms and conditions of the insurance policy and the agreement, if any, between the physician and the insurer.

Facts:

The inquirer poses this inquiry as a follow-up to Opinion of Office of General Counsel No. 08-06-08 (June 16, 2008) (“the Opinion”), which concluded that 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.

The inquirer questions the conclusion reached in the Opinion. He states:

In summary, it appears from your last correspondence that your opinion is the operating room fee (Hospital, ASC or OBS) is not a mandatory covered expense in breast cancer reconstruction cases. How can that be possible?

Analysis:

In the Opinion, the Department concluded that Insurance Law § 4303(x)(1), which applies to non-profit health plans and health maintenance organizations (HMOs), 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. That statute reads 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 . . . .

The Opinion also states that the coverage amount of a post-mastectomy breast reconstruction claim is to be considered “in a manner similar to other types of covered services under the governing policy,” and that any benefit to be paid is “subject to the terms of the insured’s policy, and if applicable, the insurer’s contract with the health care provider.”

The Department’s analysis of Insurance Law § 4303(x) in the Opinion was based upon a careful review of the statute’s plain terms, as well as legislative intent. The inquirer offers no compelling reason to revisit the conclusion reached in the Opinion.

As the Opinion notes, whether an insurer must pay a facility fee to a physician who performs post-mastectomy breast reconstruction surgeries in his office depends upon the terms and conditions of the insurance policy and the agreement, if any, between the physician and the insurer. The same rule applies to any type of office-based surgery, because nothing in Insurance Law or regulations promulgated thereunder requires an insurer to pay a claim for a “facility fee” to a physician who performs a surgery in his office. Of course, there is also nothing in the Insurance Law or regulations promulgated thereunder to prohibit an insurer from paying a facility fee to a physician. That, however, is a matter to be negotiated between the physician and insurer.

There is no merit to the inquirer’s assertion that the Opinion concludes that a hospital or ambulatory surgery center’s charge for the use of an operating room “is not a mandatory covered expense.” The Opinion makes no such statement. In fact, the Department’s regulations require an insurer to pay expenses associated with the use of an operating room in a hospital, including an operating room in a hospital’s ambulatory surgery center. See 11 NYCRR § 52.5 (Regulation 62).

This opinion is limited to an interpretation of the Insurance Law. The Department expresses no opinion about any other law, including whether the inquirer’s office-based surgery is subject to accreditation requirements of New York Public Health Law § 230-d. The New York State Department of Health has posted information about the Public Health Law’s regulation of physician’s office-based surgery on its website at http://www.health.state.ny.us/professionals/office-based_surgery/index.htm.

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