Government Empls. Ins. Co. v Avanguard Med. Group, PLLC, 2015 NY Slip Op 01413 (2d Dept. 2015)
(1) “We hold that, absent express statutory or regulatory authorization, a no-fault insurer is not required to pay a facility fee for office-based surgery performed in a practice and setting accredited under Public Health Law § 230-d.”
(2) “Insurance Law § 5108 provides, with some exceptions, that charges for services covered under Insurance Law § 5102 “shall not exceed the charges permissible under the schedules prepared and established by the chairman of the workers’ compensation board for industrial accidents” (Insurance Law § 5108[a])[FN3]. Where Workers’ Compensation schedules have not been prepared for certain services covered under Insurance Law § 5102, Insurance Law § 5108 requires that the Superintendent of Financial Services establish schedules after consulting with the [*3]chairperson of the Workers’ Compensation Board and the Commissioner of Health”
(3) “The implementing and coordinating regulations of the Department of Financial Services [FN4]—11 NYCRR 65 3.16 (Regulation No. 68-C; “Measurement of no-fault benefits”)—refer, in turn, to “Regulation No. 83.” Regulation No. 83 (11 NYCRR 68.0) adopts the Workers’ Compensation schedules that were already in existence (see 11 NYCRR 68.1 [“Adoption of certain workers’ compensation schedules”]; 12 NYCRR 329.3 [“Medical fee schedule; incorporation by reference”]), and establishes schedules for services not already contained in Workers’ Compensation schedules (11 NYCRR 68.2 [“Establishment of certain health provider schedules”]).”
(4) “Further, Avanguard points out that Regulation No. 83 includes a default provision in recognition that not all covered services will be contained in the applicable fee schedules. This provision—11 NYCRR 68.5 (“Health services not set forth in schedules”)—provides a mechanism for determination of appropriate fees for those services that are included within the definition of “basic economic loss” but are not contained in a schedule. Avanguard contends that, under this “default” regulation, it is entitled to a facility fee and that this fee is the same fee provided to ambulatory surgical centers under article 28 of the Public Health Law.
(5)“the determination of what is a necessary expense must take Insurance Law § 5108 into account. There is no provision in the Workers’ Compensation schedules expressly providing for payment of facility fees for office-based surgery performed in a practice and setting accredited under Public Health Law § 230-d. The absence of such a provision supports GEICO’s argument that a facility fee is not a necessary expense for medical services performed by a practice and in a facility accredited under Public Health Law § 230-d”
(6)“Section 68.5 Health services not set forth in schedules
“If a professional health service is performed which is reimbursable under section 5102(a)(1) of the Insurance Law, but is not set forth in fee schedules adopted or established by the superintendent, and:
“(a) if the superintendent has adopted or established a fee schedule applicable to the provider, then the provider shall establish a fee or unit value consistent with other fees or unit values for comparable procedures shown in such schedule, subject to review by the insurer; or
“(b) if the superintendent has not adopted or established a fee schedule applicable to the provider, then the permissible charge for such service shall be the prevailing fee in the geographic location of the provider subject to review by the insurer for consistency with charges permissible for similar procedures under schedules already adopted or established by the superintendent” (11 NYCRR 68.5; [emphasis added]).
Under this regulation, a provider may be entitled to reimbursement in situations when there is no fee schedule for a particular service. Avanguard cannot accurately assert that there is no existing fee schedule that determines the amount of a facility fee. Indeed, it is undisputed that Avanguard has consistently billed GEICO for facility fees based on the existing fee schedule and “PAS” codes that are applicable to Public Health Law article 28 ambulatory surgical centers (see 10 NYCRR 86-4.1, 86-4.40). Accordingly, there is indeed a fee schedule for facility fees. That schedule, however, it is not applicable to Avanguard. Thus, a prerequisite to application of the default provision is absent.
(7) “The conclusion that the default provision is inapplicable makes sense in light of its purpose. The default provision relates to particular procedures that do not appear on any existing fee schedule (see 11 NYCRR 68.5[a], [b]). A facility fee is not a fee for a particular medical procedure, but a blanket charge added to the billing for all procedures. In other words, Avanguard contends that, under the default regulation, an entire category of fees should be deemed compensable. We reject such a broad interpretation of the default provision, because the obvious intent of the default provision is to fill in discrete gaps in the schedules, not to make an entirely new category of “service” compensable”
12 Responses
R.I.P. licensed acupuncturists.
Good point Jason. It really has little long term impact. Procedures will be done at a surgical center. Of course, the decision hurts the OBS. Moreover, fewer offices will seek OBS accreditation and patients will have to go to hospitals and Art 28s for relatively minor procedures. There would appear to be no benefit to a doctor to seek the expense of outfitting an office under OBS criteria now.
The carriers could have sought to negotiate a rate with individual OBSs to save money. In the long term, Avengaurd is a pyrrhic victory.
Anonymous – re-read the decision. The default provision applies to acupuncture because, among other reasons, there is a fee schedule and acupuncture is a medical procedure. It appears that the App Div concludes that the PAS rate for Art. 28s is a specifically crafted legislation concerning the OBS facility bill which is NOT a medical service.
On the contrary, the decision supports the default provision as it may apply to medical services such as acupuncture and specifically distinguishes medical services from facility billing under the Public Health Law and Insurance Law.
JT..I’m not surprised. The Appellate Division doesn’t see No-Fault cases every day and isn’t subject to the constant onslaught of the “if it’s not in the fee schedule it’s the usual and customary…” argument ad nauseum. I think No-Fault attorney’s have talked themselves into this circular logic that if there’s no price tag…it costs whatever I say it costs. If you went to a store and there was something with no price tag…maybe it’s not for sale.
I watched the oral arguments on this case and I’m not surprised by this outcome. Judge Balkin, who wrote the opinion, made an interesting point: Regulation 68 CREATES the right to bring a suit for first-party benefits, which you otherwise would not be able to do. It is a pure creature of legislature. It follows that if you have to start reading the legislative tea leaves to infer rights, you’ve gone too far.
I doubt this is last we’ll hear of Mark Gladstein, for what it’s worht.
People will still go to OBSes for moderate procedures – those are still reimbursable. So maybe there will be fewer doctors setting up OBSes as a get rich quick scheme, but they still want to perform the procedures themselves and get paid for them, so they’re not going to sit back and wait for an ASC to open up a slot.
I don’t understand GEICO’s reasoning to challenge the OBSs. OBS, for the most part, do procedures cheaper than the Art 28 ASCs. Way less than in NJ from my novice understanding. Yes, Yog OBS will still do moderate procedures but ASCs will make room. It is only a matter of time.
Is the consensus that this will increase costs or decrease costs for treatment in no fault?
I think it will ultimately increase costs. But I am new to all this.
This is how Nazi Germany started.
So what is the impact on NJ facility fees?
I think you are spot on legalbeagle. Very short sighted on the part of Geico because instead of working to contain costs they are just driving doctors to do procedures at an Article 28.
I dont see an impact for NJ facilities as they are accredited surgical centers. Whether those facilities are subject to NY rates or Jersey rates is likely to be a battle in the future.
In my opinion, carriers should now negotiate with the OBS as the legislation permits. That way they can reduce costs and its a win win for all sides. Avenguard certainly puts the carriers in a good place to negotiate a facility fee.
I doubt that shall ever occur though. GEICO will be paying $1266 PAS rates to Article 28s and nothing will change.
“The representative from Berkshire Hathaway has the floor”
Zieg Heil to the president GEICO
Bombs away is your punishment
Pulverize the Eiffel towers
Who criticize your GEICO-MENT
Bang bang goes the broken glass and
Kill all the f*&^ that don’t agree
Trials by fire, setting fire
Is not a way that’s meant for me
I suspect I’ll stay in the minority, but I just can’t see how this will lead to such an explosion in ASC usage. The doctors can still do everything they could before in their OBSes, but they won’t get a ridiculous added fee for it. Hypothetically, why would a doctor who wants to perform moderate procedures in his office (i.e. the reason OBSes came into existence) stop doing them there, where it would remain most convenient, in order for an ASC to get an additional fee?
No question, there will be ASCs that will look to capitalize on this, but for doctors who got accredited simply to be able to perform surgeries in their offices – where they have relatively unlimited time and do not have to worry about filling slots in an ASC’s calendar – why would they delay?
I think there will be changes for OBS. There is overhead for the facility and physician fee is a very small compared to the costs. Medical professionals and equipment are not cheap. Without a facility fee the overhead costs are overwhelming. From a fairness perspective it is unfair for the obs to make a so much that an office would have to do for so little. Not this is unique to No-Fault. This insanity is being played out in private insurance and medicare too. A procedure an OBS could do costs much less than what is being done in an ASC.