Section 68.6. Health services performed outside New York State.

(a) (1) If a professional health service reimbursable under [section 5102(a)(1) of the] Insurance Law section 5102(a)(1) is performed outside [New York] this State, the [permissible charge] amount that the insurer shall reimburse for [such] the service shall be the lower of the amount charged by the provider and the prevailing fee in the geographic location of the provider with respect to services:

(i) that constitute emergency care;

(ii) provided to an eligible injured person that is not a resident of this State; or

(iii) provided to an eligible injured person that is a resident of this State who, at the time of treatment, is residing in the jurisdiction where the treatment is being rendered for reasons unrelated to the treatment.

(2) For purposes of this subdivision, emergency care means all medically necessary treatment initiated within 48 hours of a motor vehicle accident for a traumatic injury or a medical condition resulting from the accident, which injury or condition manifests itself by acute symptoms of sufficient severity such that absence of immediate attention could reasonably be expected to result in: death; serious impairment to bodily functions; or serious dysfunction of a bodily organ or part. Medically necessary treatment shall include immediate pre-hospitalization care, transportation to a hospital or trauma center, emergency room care, surgery, critical and acute care. Emergency care extends during the period of initial hospitalization until the patient is discharged from the hospital.

(1) the amount of the fee set forth in the region of this State that has the highest applicable amount in the fee schedule for that service;

(2) the amount charged by the provider; and

(3) the prevailing fee in the geographic location of the provider.

1. Statutory authority: Sections 202 and 302 of the Financial Services Law, and Sections 301, 2601, 5221, and Article 51 of the Insurance Law.

Insurance Law Section 301 and Financial Services Law Sections 202 and 302 authorize the Superintendent of Financial Services (the “Superintendent”) to prescribe regulations interpreting the provisions of the Insurance Law, and effectuate any power granted to the Superintendent under the Insurance Law.

Insurance Law Section 2601 prohibits insurers from engaging in unfair claim settlement practices and requires insurers to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.

Insurance Law Section 5221 specifies the duties and obligations of the Motor Vehicle Accident Indemnification Corporation with respect to the payment of no-fault benefits to qualified persons.

Article 51 of the Insurance Law contains the provisions authorizing the establishment of a no-fault reparations system for persons injured in motor vehicle accidents, and Section 5108 specifically authorizes the Superintendent to adopt or promulgate fee schedules for health care benefits payable under the no-fault system.

2. Legislative objectives: Chapter 892 of the Laws of 1977 recognized the necessity of establishing schedules of maximum permissible charges for professional health services payable as no-fault insurance benefits in order to contain the costs of no-fault insurance. To that end, in accordance with Insurance Law section 5108(b), the Superintendent adopted those fee schedules that are promulgated by the Chairman of the Workers' Compensation Board (the “Chairman”). In addition, the Superintendent, after consulting with the Chairman and the Commissioner of Health, established fee schedules for those services for which schedules have not been prepared and established by the Chairman.

3. Needs and benefits: The current rule provides that the maximum permissible charge for health care services rendered outside this State to a person eligible for New York no-fault benefits shall be the prevailing fee in the geographic location of the provider. The proposed rule limits insurers’ reimbursement of no-fault health care services provided outside the State at the election of a New York State eligible injured person to the lowest of (1) the amount of the fee in the region in New York State that has the highest applicable amount in the fee schedule for that service; (2) the amount the provider charged; and (3) the prevailing fee in the geographic location of the provider. If the jurisdiction where the out-of-state provider renders treatment has established a fee schedule for services rendered in connection with motor vehicle-related injuries, the prevailing fee shall be the amount prescribed in that fee schedule for the respective service. This limit on reimbursement does not apply to services provided out-of-state that would constitute emergency care, that is provided to a non-resident of this State, or provided to a resident of this State who, at the time of treatment, is residing in the jurisdiction where the treatment is being rendered for reasons unrelated to the treatment.

This amendment is necessary because under the current regulation, there has been a marked increase in the submission of over-inflated claims from out-of-state providers, largely because of the lack of a uniform interpretation of the prevailing fees outside the State. No-fault claimants are being referred to certain health care providers outside New York, usually in New Jersey, who take advantage of the absence of specific fee schedules and submit excessive charges under exaggerated claims, well above the corresponding New York State fee schedules applicable to those health care services rendered. Since basic personal injury protection coverage under no-fault is only $50,000, the higher the bills, the sooner the injured person will find coverage exhausted. This results in no-fault benefits available to injured persons being depleted more quickly, to their detriment.

Representatives of both the insurance industry and the medical profession have conveyed to the Department that amending the current regulation is necessary in order to close these loopholes that have resulted in increased no-fault claim bills. In addition, numerous arbitrators that serve on the Department’s no-fault arbitration panel have indicated that this issue has generated a significant number of disputes due to the significant disparity between the excessive fees being charged by out-of-state health care providers and those permitted under the current rule. By setting a maximum fee that out-of-state health care providers may receive as reimbursement for no-fault-related health services, this amendment should lead to reduced arbitration and litigation costs for insurers and self-insurers, which are typically passed to consumers in the form of higher premiums, as well as help to stem the rapid depletion of no-fault benefits available to eligible injured persons.

4. Costs: This rule imposes no compliance costs upon state or local governments. However, the rule will impact out-of-state health care providers who will now be reimbursed for health services pursuant to the applicable fee schedule prescribed in the proposed rule.

5. Local government mandates: This rule does not impose any requirement upon a city, town, village, school district, or fire district. However, local governments who are self-insurers for no-fault coverage shall only be required to reimburse out-of-state health care providers at the rates prescribed in the proposed rule, rather than the subjective prevailing rate in the geographic location of the out-of-state provider.

6. Paperwork: This rule does not impose any additional paperwork on any persons affected by the rule.

7. Duplication: This rule will not duplicate any existing state or federal rule.

8. Alternatives: In order to effectuate the cost savings goals of New York’s no-fault laws, the Department has determined that there are no other viable alternatives to this rule.

9. Federal standards: There are no minimum federal standards for the same or similar subject areas. The rule is consistent with federal standards or requirements.

10. Compliance schedule: The rule will be effective 90 days after publication of the notice of adoption in the State Register, so as to provide enough lead time for insurers, self-insurers and out-of-state licensed health care providers to obtain copies of the applicable fee schedule and implement the rule.

A revised Regulatory Flexibility Analysis for Small Businesses and Local Governments (“RFA”) and Rural Area Flexibility Analysis (“RAFA”) are not required because the revisions to the proposed regulation do not change the conclusions set forth in the previously published RFA and RAFA.

A revised Job Impact Statement is not required because the revisions to the proposed regulation do not change the statement regarding the need for a Job Impact Statement that was previously published.

The Department received eight comments from various property/casualty insurers and trade associations comprised of New York State automobile insurers in response to its publication of the proposed rule in the New York State Register.

All the commentators applauded the Department for its proposed amendments to Insurance Regulation 83 because of the ongoing abuse of the no-fault system with respect to out-of-state providers who, taking advantage of current provisions in the regulation, submit grossly inflated bills for services rendered, thus quickly depleting the $50,000 no-fault coverage limit available to an eligible injured party (“EIP”). Commentators assert further that this abuse drives up insurance costs and result in numerous fee disputes in arbitration and the courts.

Summaries of the comments on the proposal and the Department’s responses thereto are as follows.

Proposed 11 NYCRR Section 68.6(a)(1) (Definition of “prevailing fee”)

Comments

Two commentators asserted that the absence of what constitutes the prevailing fee is a problem insurers are currently facing. One commentator recommends that Section 68.6(a)(1) be amended to state that the reimbursement shall be “the fee schedule as it applies to auto injury or Workers Compensation claims. If no such fee schedule exists, then the amount to reimburse shall be the otherwise prevailing fee in the geographic region of the provider.”

Department’s Response

The Department has amended paragraph (a)(1) and subsection 68.6(c) to clearly define the amount that the insurer is obligated to reimburse an out-of-state provider, as well as clarified the meaning of “prevailing fee.” However, worker’s compensation fee schedules would be inapplicable because, unlike New York, not every jurisdiction has adopted its worker’s compensation fee schedule to apply to motor vehicle no-fault claims. If a state did so adopt the schedule, it would apply.

Proposed 11 NYCRR Section 68.6(a)(1)(ii) and (iii) (Services for which the proposed reimbursement is eligible)

Comments

Some commentators asserted that eligible injured persons that are not “residents” of New York or those who are outside New York for a continuous period of “at least 14 days” requires clarification. The commentators asserted that residency would need to be defined, that the proposed rule as written may create another loophole for those who can “create residency” or assert that they were visiting with relatives when the sole purpose of the visit is to obtain treatment in a jurisdiction that has a higher reimbursement rate for services, and that the burden would be placed on insurers to disprove residency. Two commentators suggested that the common law definition of residency (evidence of an intent to remain in a particular location coupled with some degree of permanence) apply. Another commentator suggested that either the exception in (iii) be eliminated or be amended to state “… an eligible injured person who RESIDES outside this state for a continuous period of at least 14 days.” [Emphasis in original.]

Department’s Response

The purpose of this amendment to Insurance Regulation 83 is to curb the abusive practice of steering New York-resident EIPs to out-of-state providers for treatment solely because of higher reimbursement rates than the New York fee schedule allows. EIPs are encouraged into engaging in this practice with the promise that the greater the amount of treatment the higher the bodily injury award. The amendment was not intended to apply where the EIP legitimately requires or seeks treatment out-of-state, such as the case for an insured’s teenaged son (or daughter) attending college outside New York. As such, the Department rejects eliminating or broadly negating the provisions proposed in the amendment. However, the Department agrees that subparagraph 68.6(a)(1)(iii) should be amended to clarify to whom the provision will apply. As such, the revised proposal states: “… provided to an eligible injured person that is a resident of this State who, at the time of treatment, is residing in the jurisdiction where the treatment is being rendered for reasons unrelated to the treatment.”

Proposed 11 NYCRR Section 68.6(a)(2) (Definition of “emergency care”)

Comments

Some commentators asserted that the definition of “emergency care” is overly broad and invites more litigation in the no-fault process. More specifically, some commentators disagreed that medical care initiated at a hospital within “120 hours” constitutes “emergency care.” They assert that this timeframe is a “seemingly longer period than what one would anticipate is immediate need for medical attention.” They recommended that the timeframe be reduced to 48 hours. A few of the commentators also asserted that references to “acute symptoms” and “serious dysfunction” require clarification and interpretation of those terms will require insurers to hire medical experts to determine what particular type of health services qualifies.

Department’s Response

The Department agrees that the 120-hour time frame should be decreased to 48 hours, and also revised the definition of emergency care to clarify that emergency care extends from the period of initial hospitalization through the discharge of the person from the hospital. The Department disagrees that references to “acute symptoms” and “serious dysfunction” are unclear in the context of emergency care and does not believe that interpretation of those terms will lead to increase litigation and cause insurers any additional expenses to interpret the meaning of those terms.

Proposed 11 NYCRR Section 68.6(c) (maximum amount that insurers shall be obligated to reimburse)

Comments

Two commentators asserted that the provision as written is vague and will invite litigation with respect to an analysis of the respective state’s law because in some states it may not be “illegal” to charge more than a fee schedule permits. One commentator recommended that the provision be amended to state that the maximum reimbursement either be the amount permitted on the highest fee schedule in New York State or the fee schedule rate in the jurisdiction where the services were performed; or in the absence of a fee schedule in the foreign jurisdiction, the lesser of the fee schedule permitted in New York or “the usual and customary reasonable reimbursement rate in the geographic location where the service was performed.”

Department’s Response

The Department agrees with the comments that subdivision 68.6(c) was vague and revised the subdivision to clarify the meaning of “prevailing fee” when the provider is located in a jurisdiction that has established a fee schedule in connection with claims for motor vehicle-related injuries.

Amended No-fault form NF-1

Comment

One commentator noted that an out-of-state provider may balance bill an eligible injured person for the amount not reimbursed pursuant to Insurance Law Section 5102, and for which an insurer has no obligation to pay. The commentator suggested that the no-fault form NF-1 (the no-fault application cover letter) be amended to advise EIPs that non-emergency treatment rendered outside New York State will be reimbursed at the New York fee schedule, and that the injured party may be billed for any amount in excess of the amount reimbursable under the fee-schedule.

Department’s Response

The Department disagrees with this proposal. Form NF-1 is a cover letter attached to the no-fault application, and its sole purpose is to advise the EIP of his/her entitlements under no-fault. It would be strange to include language on Form NF-1 regarding out-of-state fee reimbursement amounts when no mention is even made on the form regarding in-state reimbursement amounts. Furthermore, if the Department were to amend this form, it would necessitate an amendment to Insurance Regulation 68 and not Insurance Regulation 83, which is the subject of this proposal. Insurers, however, are free to notify EIPs on a separate form of the possibility of being balanced billed for which the EIP would solely be responsible after the insurer has discerned that treatment is being sought out-of-state.