The Office of General Counsel issued the following opinion on March 7, 2003, representing the position of the New York State Insurance Department.

Re: Health Service Billings Under No-Fault

This is in response to a request that the Department reconsider its position as expressed in its April 24, 2002 letter which stated that, under the New York No-Fault law, health services performed by a non-physician employee of a physician may only be billed by a medical professional corporation at the No-Fault fee schedule rate established for the licensed treating provider who actually provides the services and not at the physician rate.

N.Y. Ins. Law § 201 and § 301 (McKinney 2000) vest the Superintendent of Insurance with broad power to interpret, clarify and implement legislative policy. Ostrer v. Schenck, 41 N.Y. 2d 782, 396 N.Y.S.2d 335 (1977); Breen v. Cunard Lines Steam Ship Company, 33 N.Y. 2d 508, 355 N.Y.S.2d 333 (1974); New York Public Interest Research Group, Inc. (NYPIRG) v. New York State Department of Insurance, 66 N.Y. 2d 444, 497 N.Y.S.2d 645 (1985). In order to implement N.Y. Ins. Law Article 51 (McKinney 2000) (the "No-Fault law") the Superintendent has promulgated N.Y. Comp. Codes R. & Regs. tit. 11, § 65 ("Regulation 68") and N.Y. Comp. Codes R. & Regs. tit. 11, § 83 (2002) ("Regulation 83"). The Superintendent, in Regulation 83, adopted the Workers’ Compensation fee schedules for health services provided under No-Fault and has also established certain other fee schedules for professional health services for which schedules have not been established by the Chairman of the Workers’ Compensation Board. Collectively, this opinion will refer to such fee schedules, which are contained in Appendix 17-A, as the No-Fault fee schedules.

The No-Fault fee schedules were promulgated in accordance with N.Y. Ins. Law § 5108 (McKinney 2000), which limits charges by providers of health services in connection with the treatment of persons making No-Fault insurance claims. Section 5108(b) provides that the Superintendent of Insurance, after consultation with the Chairman of the Workers’ Compensation Board and the Commissioner of Health, shall promulgate rules and regulations implementing and coordinating the provisions of the No-Fault law and the Workers’ Compensation law as to charges for health services under No-Fault, including fee schedules for health services that have not been established by the Workers’ Compensation Board.

However, the No-Fault insurance system significantly differs from the workers’ compensation insurance system, and these distinctions require a different approach to what is an appropriate health service billing methodology. For example, whereas the Workers’ Compensation Law requires pre-authorization for certain health consultations, procedures and therapies, such authorization is not required under No-Fault. Additionally, the cost controls that are derived as a result of the application of the Workers’ Compensation Law have not been made applicable to No-Fault and the Insurance Law does not contain any similar cost-control provisions. Accordingly, although § 5108(b) provides that the Superintendent coordinate No-Fault law and Workers Compensation law as to the No-Fault fee schedules it does not bind the Department as regards the methodology behind No-Fault related health service billings. As discussed above, the workers’ compensation statute has implications for cost control that are appropriate for workers’ compensation insurance, but are not appropriate or applicable under No-Fault insurance.

In addition, contrary to the inquirer’s assertion, in opining as to the billing methodology used by medical professional corporations where services rendered by non-physicians are billed by the professional corporation at physician rates, the Department did not rely solely upon the Department of Health’s interpretation of such billing as expressed in its letter of August 11, 1999. Therefore, even if the Department of Health ("DOH") may have subsequently stepped back from its earlier position on health service billings, this does not require the Department to change its reimbursement interpretation of No-Fault law. Indeed, as the inquirer has acknowledged the letters of the DOH explicitly defer to the Insurance Department for determinations regarding billing practices involving the No-Fault Insurance Program.

In addition, please note that the opinion expressed by Alan Rachlin, Principal Attorney, in his letter of February 21, 2001 is not inconsistent with the Department’s current position. That opinion did not address the appropriate billing methodology under the specific fee schedules for No-Fault, but rather, makes a distinction between medical professional corporation billings for services performed by independent contractors, as opposed to owners and employees of the professional corporation. The opinion concludes that where the health service is performed by an independent contractor, the professional corporation cannot bill for those services as the treating provider.

For the reasons stated herein, the Department affirms the position it has previously taken in its April 24, 2002 letter.

For further information you may contact Associate Attorney Barbara A. Kluger at the New York City Office.