Key Takeaway
Learn about Article 28 licensing requirements for surgical centers in NY. Expert analysis of Upper E. Side Surgical v State Farm case and reimbursement rules.
Understanding Surgical Center Reimbursement Requirements Under New York No-Fault Law
For medical providers and surgical centers operating throughout Long Island and the greater New York City area, understanding the complex requirements for no-fault insurance reimbursement is crucial for maintaining successful practice operations. The groundbreaking decision in Upper E. Side Surgical, PLLC v State Farm Ins. Co., 2012 NY Slip Op 50184(U)(Dis. Ct. Nassau Co. 2012), provides critical clarification regarding Article 28 licensing requirements and office-based surgery facilities.
This Nassau County court decision has significant implications for surgical centers, ambulatory surgery facilities, and other medical providers throughout Suffolk County, Queens, Brooklyn, Manhattan, and the broader New York metropolitan area. Understanding these requirements can mean the difference between successful reimbursement and costly payment denials.
The Legal Foundation: Office-Based Surgery Law vs. Article 28 Requirements
The court’s analysis centers on the distinction between traditional Article 28 facility licensing and the more recent Office-Based Surgery (OBS) Law enacted on July 14, 2007. The decision makes clear that:
“Plaintiff does assert, however, that there is no requirement in the Regulations that NYS Public Health Law Article 28 licensure is a prerequisite to No-Fault Claims reimbursement. The current applicable law, New York’s Office Based Surgery (OBS) Law passed on July 14, 2007 (Public Health Law § 230-d), requires merely that an office-based surgery facility must obtain and maintain full accredited status by a national-recognized accrediting agency approved by the Commissioner of Health. As to proof of same, Plaintiff provides as its Exhibit A, its certification that it was accredited from 02/27/2010 to 02/27/2011 by the American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF), which included the time period of this claim. Under PHL § 230-d, AAAASF, is one of three accreditation entities which has been approved by the Commissioner. No claim is made by the Defendant that the Plaintiff provider is not in full compliance with the required registrations, certifications or accreditations to conduct its office-based surgery business under the applicable laws of New York, particularly PHL § 230-d.”
Key Implications for Surgical Centers and Medical Providers
Reimbursement Eligibility Without Article 28 Status
The court’s ruling establishes that surgical centers can receive no-fault reimbursement even without Article 28 facility status, provided they maintain proper accreditation under the Office-Based Surgery Law. This is particularly significant for smaller surgical practices and specialty centers that may not meet the full requirements for Article 28 licensing but maintain appropriate professional accreditation.
Fee Schedule Limitations
While confirming reimbursement eligibility, the court also clarified important limitations regarding fee schedules:
“This Court finds that the Plaintiff is not authorized to be reimbursed for the medical/surgical services it provided to its assignor under the ‘facility fee’ schedule in accordance with The Products of Ambulatory Surgery (PAS) classification system because it is not an Art. 28 facility. Plaintiff is, however, entitled to reimbursement under Insurance Law § 5102(a)(1) for the medical/surgical services it provided to its assignor”
Understanding the Reimbursement Rate Framework
The Central Question of Rate Determination
The court identified the critical issue facing many surgical centers: “The next question for the Court to answer is, ‘What is the rate of reimbursement?’”
The decision notes significant challenges in determining appropriate reimbursement rates:
“Accordingly, inasmuch as no proof has been submitted that the Superintendent of Insurance has adopted or established a fee schedule applicable to the plaintiff/provider, a question of facts exists as to the amount of the charge for services. Moreover, no proof has been submitted as to the local geographic prevailing fee, which plaintiff provider would be entitled to be reimbursed for its services. While in certain instances, the workers’ compensation fee schedules have been utilized to established local prevailing fees, such is not the case with regard to a facility fee for office based surgery facilities, at least as far as the Court can discern. Thus, a trial of the issue is necessary.”
Practical Solution for Rate Determination
The court’s practical approach suggests a workable solution for reimbursement rate disputes:
“My answer is that 68.5(b) is satisfied through finding what a nearby Article 28 facility would be compensated and pegging that amount to the compensation that would be due and owing to an accredited office based surgical center. So, a trial is probably not needed since Plaintiff would be entitled to the fee an Article 28 near its location is receiving. Another way of saying this is that the case should settle for the amount that would be paid to a nearby Article 28 facility.”
Accreditation Requirements for Long Island and NYC Surgical Centers
Approved Accrediting Organizations
Under Public Health Law § 230-d, surgical centers must maintain accreditation from one of three approved organizations:
- American Association for Accreditation of Ambulatory Surgery Facilities (AAAASF)
- Joint Commission on Accreditation of Healthcare Organizations (JCAHO)
- Accreditation Association for Ambulatory Health Care (AAAHC)
Maintaining Continuous Accreditation
The case emphasizes the importance of maintaining continuous accreditation throughout the period when services are provided. Providers must ensure their accreditation remains current and properly documented to support reimbursement claims.
Strategic Considerations for Medical Practice Management
Documentation Requirements
Surgical centers should maintain comprehensive documentation of their accreditation status, including:
- Current accreditation certificates
- Renewal documentation
- Compliance records with accrediting body requirements
- Quality assurance documentation
- Staff credentialing records
Billing and Reimbursement Strategies
Understanding the distinction between facility fees and professional service fees becomes crucial for proper billing. While office-based surgical centers may not qualify for full Article 28 facility fee schedules, they remain entitled to appropriate reimbursement under Insurance Law § 5102(a)(1).
Geographic Market Analysis: Long Island and NYC Healthcare Landscape
Market Dynamics in Nassau and Suffolk Counties
The Long Island healthcare market presents unique challenges and opportunities for surgical centers. With a dense population requiring accessible surgical services, properly accredited office-based surgery facilities can provide valuable alternatives to traditional hospital settings while maintaining appropriate quality standards.
Competitive Positioning
Understanding reimbursement requirements allows surgical centers to position themselves competitively in the market while ensuring compliance with all regulatory requirements. This knowledge becomes particularly valuable when negotiating with insurance carriers and establishing fee structures.
Regulatory Compliance and Risk Management
Office-Based Surgery Law Compliance
Surgical centers must ensure full compliance with Public Health Law § 230-d requirements, including:
- Maintaining current accreditation
- Meeting all facility safety standards
- Ensuring appropriate physician credentialing
- Implementing required quality assurance programs
- Maintaining appropriate emergency protocols
Insurance Carrier Relations
The Upper E. Side Surgical decision provides valuable leverage in negotiations with insurance carriers who may improperly deny claims based on Article 28 status requirements. Providers can reference this precedent when challenging inappropriate denials.
Future Implications and Legislative Considerations
Evolving Healthcare Delivery Models
As healthcare continues shifting toward more efficient, cost-effective delivery models, office-based surgery facilities represent an important component of the overall healthcare landscape. This decision supports the viability of these alternative delivery models while maintaining appropriate quality standards.
Potential Legislative Changes
Healthcare providers should monitor potential changes to both the Office-Based Surgery Law and no-fault insurance regulations that might impact reimbursement requirements or fee schedule determinations.
Frequently Asked Questions
Q: Do I need Article 28 licensing to receive no-fault insurance reimbursement for surgical services?
A: No, according to the Upper E. Side Surgical decision, you do not need Article 28 licensing if you maintain proper accreditation under the Office-Based Surgery Law (Public Health Law § 230-d).
Q: What accreditation do I need for my surgical center?
A: Your facility must maintain accreditation from one of three approved organizations: AAAASF, JCAHO, or AAAHC, as specified under Public Health Law § 230-d.
Q: How are reimbursement rates determined for office-based surgical centers?
A: The court suggested that rates should be comparable to what nearby Article 28 facilities receive for similar services, though specific rate determination may require case-by-case analysis.
Q: Can insurance companies deny claims solely based on lack of Article 28 status?
A: No, insurance companies cannot deny no-fault claims solely because a properly accredited office-based surgery facility lacks Article 28 licensing.
Q: What documentation should I maintain to support reimbursement claims?
A: Maintain current accreditation certificates, compliance documentation, quality assurance records, and proof that accreditation was current during the service period.
Get Expert Legal and Regulatory Guidance
Navigating the complex intersection of healthcare regulation and insurance reimbursement requires sophisticated legal expertise. Whether you’re establishing a new surgical center, dealing with reimbursement disputes, or ensuring regulatory compliance, having experienced legal counsel makes the difference between success and costly mistakes.
Our legal team understands the intricacies of New York healthcare law, no-fault insurance requirements, and the regulatory landscape affecting medical providers throughout Long Island, Nassau County, Suffolk County, and the greater New York City area.
Don’t let regulatory uncertainty impact your practice’s financial success. Contact us today at 516-750-0595 for expert guidance on healthcare compliance, insurance reimbursement, and protecting your medical practice’s interests.
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Legal Update (February 2026): Since this 2012 decision, New York’s no-fault regulations under Insurance Law § 5102 and related fee schedule provisions may have been substantially amended. The Office-Based Surgery Law requirements and Article 28 licensing criteria referenced in this analysis have likely undergone regulatory updates that could affect reimbursement eligibility for surgical centers. Practitioners should verify current provisions in the no-fault regulations and Public Health Law requirements before relying on this precedent for reimbursement claims.
