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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. 09-04-02

The Office of General Counsel issued the following opinion on April 6, 2009, representing the position of the New York State Insurance Department.

Re: Applicability of Workers’ Compensation Board Directive to Durable Medical Equipment Fee Schedule in No-Fault Claims

Question Presented:

Is the Workers’ Compensation Board’s (“WCB”) directive of July 18, 2008 concerning the inapplicability of the durable medical equipment (“DME”) fee schedule to medical providers supplying such equipment applicable to no-fault claims?

Conclusion:

Yes, the WCB’s directive of July 18, 2008 concerning the inapplicability of the DME fee schedule to medical providers supplying such equipment is applicable to no-fault claims.

Facts:

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

Analysis:

Under New York’s “no-fault” insurance law, see Article 51 of the New York Insurance Law, a provider of health services is limited in what he can charge to an insurer by the amounts specified in the workers’ compensation fee schedules. See N.Y. Ins. Law § 5108 (McKinney 2000). Section 68.1(a) of N.Y. Comp. Codes R. & Regs. tit. 11, pt. 68 (Regulation 83) adopts certain workers’ compensation fee schedules for purposes of the no-fault law. That regulatory provision reads as follows:

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.

Furthermore, 11 N.Y.C.R.R. 68.1(b)(1) incorporates the grounds rules of the workers’ compensation fee schedules by providing in relevant part that “[t]he general instructions and ground rules in the workers’ compensation fee schedules apply” for purposes of no-fault billing. Thus, any charges for health services submitted to an insurer for reimbursement under the no-fault law are limited to the fee schedules and ground rules put forth by the WCB. This includes charges for DME, for which the WCB has established a fee schedule.

Injured persons typically receive DME either directly from a medical provider or from a DME supplier, as when the equipment has been prescribed by a physician. On July 18, 2008, the WCB issued a directive addressing the fee schedule for DME. The directive makes the DME fee schedule inapplicable to medical providers supplying DME, and reads in relevant part as follows:

The Durable Medical Equipment Fee Schedule does not apply to medical providers supplying durable medical equipment to injured workers as part of medical treatment described in the New York Workers’ Compensation Medical Fee Schedule. Billing and reimbursement follows the ground rules as described in the fee schedule.

The directive thus establishes a separate reimbursement system for medical providers supplying DME directly to patients, while leaving in effect the current DME fee schedule for suppliers of DME (who are not licensed medical providers) to patients.

For those medical providers, the directive states that billing and reimbursement will instead follow “the ground rules” set forth in the fee schedule. With respect to the reimbursement of medical providers, Ground Rule No. 4 of the Medical Fee Schedule reads in pertinent part as follows:

Supplies and materials provided by the physician…over and above those usually included with the office visit or other service rendered may be charged for separately…. Payment shall not exceed the invoice cost of the item.

Ground Rule No. 4 thus requires that the compensation physicians may receive for providing DME directly to patients shall not exceed the invoice cost of the item.

Since 11 N.Y.C.R.R. 68.1(b)(1) (Regulation 83) adopts the WCB’s fee schedules and ground rules for no-fault billing and reimbursement, and because physicians are excluded from the DME fee schedule, the WCB’s directive interpreting the DME fee schedule applies to charges arising from no-fault claims, in accordance with the clear intent of Insurance Law § 5108(a) to ensure that no-fault health services are reimbursed in accordance with the WCB fee schedule. Thus, the DME fee schedule applies only to DME suppliers, and not to medical providers supplying DME directly to patients, for purposes of reimbursing the cost of DME under the no-fault law.

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