Another old fee schedule 20553 reduction case

Workers’ Compensation Fee Schedule Reductions in No-Fault Cases

New York’s no-fault insurance regulations permit insurers to reduce medical bills to amounts consistent with the workers’ compensation fee schedule when providers bill charges exceeding those established rates. This fee schedule defense has generated substantial litigation, with healthcare providers challenging both the applicability of workers’ compensation rates to no-fault claims and the specific methodologies insurers use to calculate proper reimbursement.

The workers’ compensation fee schedule contains numerous Ground Rules governing how specific procedures should be coded and reimbursed. Ground Rule 3 addresses situations where the fee schedule lacks a specific code for a particular service, while Ground Rule 5 governs selection among multiple potentially applicable codes. Proper application of these Ground Rules can result in dramatic reductions from billed amounts to allowable reimbursement.

Case Background

In Alleviation Medical Services, P.C. v State Farm Mutual Auto Insurance Co., the healthcare provider billed $4,000 for medical services using CPT code 20553. State Farm reduced the bill to $645.90, arguing that the workers’ compensation fee schedule controlled reimbursement and that proper application of Ground Rules 3 and 5 required substituting CPT code 20552 to calculate the allowable amount.

The provider challenged the reduction, arguing State Farm failed to demonstrate it properly applied the fee schedule methodology. State Farm submitted an affidavit explaining its application of Ground Rules 3 and 5, showing how it determined that CPT code 20552 provided the appropriate basis for calculating reimbursement. Interestingly, State Farm’s affidavit also mentioned an alternate calculation methodology that would have yielded only $416.85, though the carrier did not actually use that lower calculation.

The Appellate Term, Second Department, reviewed whether State Farm established its prima facie entitlement to the fee schedule reduction.

Alleviation Med. Servs., P.C. v State Farm Mut. Auto. Ins. Co., 2015 NY Slip Op 50778(U)(App. Term 2d Dept. 2015)

“Plaintiff’s main argument on appeal with respect to defendant’s cross motion is that defendant failed to demonstrate that it had properly reduced the sum billed for CPT code 20553 from $4,000 to $645.90 pursuant to the workers’ compensation fee schedule. Contrary to plaintiff’s contention, the affidavit submitted by defendant was sufficient to demonstrate, prima facie, that Ground Rule 3 and Ground Rule 5 were appropriately applied to the services billed, and that defendant properly applied CPT code 20552 in order to determine the amount due, which it calculated to be $645.90. It is of no relevance to the determination of this appeal that defendant has described a potential alternate calculation which, had defendant used it, would have concluded that only $416.85 was due.”

It is so nice to see the Court mention codes by number and to explain their methodology for reaching a given conclusion that the reduction is correct. Now I am curious how much money the carrier would recoup if they brought an unjust enrichment claim against Alleviation/ Guiterrez for the difference between $645,90 and $416,85 that was paid.

Assume there were 5000 claims with this pattern. That would be $1,145,250.

Legal Significance

The Alleviation Medical Services decision provides rare judicial clarity on workers’ compensation fee schedule application methodology. Most fee schedule cases involve conclusory allegations that insurers improperly reduced bills, without detailed analysis of which Ground Rules apply or how specific codes should be substituted. This decision’s explicit discussion of Ground Rules 3 and 5, and the court’s explanation of CPT code selection, gives practitioners concrete guidance about how to structure fee schedule defenses.

Jason’s observation about the alternate calculation methodology raises intriguing questions about insurers’ obligations when multiple fee schedule interpretations are possible. State Farm acknowledged that an alternative methodology would have justified paying only $416.85 instead of $645.90, yet chose the more generous calculation. The court held this irrelevant to the appeal, but the larger question remains: when fee schedules permit multiple reasonable interpretations, must insurers use the interpretation most favorable to providers, or can they select any reasonable methodology?

Jason’s unjust enrichment hypothetical identifies significant potential exposure for healthcare providers who systematically received higher payments than alternative fee schedule calculations would permit. If carriers can establish that providers received overpayments based on incorrect fee schedule applications, and if those overpayments occurred across thousands of claims, the aggregate financial exposure could be substantial. However, unjust enrichment claims face procedural and substantive challenges, including statutes of limitations and whether providers acted in good faith reliance on the carrier’s initial payment determinations.

Practical Implications

Insurance carriers defending fee schedule reductions should provide detailed affidavits explaining not just the final calculation but the specific Ground Rules applied and the step-by-step methodology for arriving at the reduced amount. Generic assertions that bills were “reduced to fee schedule” will not satisfy prima facie burdens. Carriers benefit from having fee schedule experts prepare detailed analyses showing applicable codes and Ground Rules for each reduction.

Healthcare providers challenging fee schedule reductions must develop affirmative evidence that the carrier’s Ground Rule application was incorrect, not merely assert that reductions were improper. This requires providers to obtain their own fee schedule expertise, analyzing which codes and Ground Rules actually apply to the services rendered. Providers should also investigate whether carriers applied consistent methodologies across all claims or selectively chose calculation methods depending on which produces larger reductions.

Related Articles

• Understanding Medical Billing and Down-Coding in New York No-Fault Insurance Claims
• Fee Schedule Defense Requirements in No-Fault Insurance Cases
• Fee schedule defense – competent evidence?
• First application of 11 NYCRR 65-3.8(g)(1)(ii)
• New York No-Fault Insurance Law

Legal Update (February 2026): The fee schedule provisions and Ground Rules referenced in this 2015 case have been subject to multiple regulatory amendments since publication. Practitioners should verify current reimbursement rates under 11 NYCRR 65-3 and applicable Ground Rule calculations, as both CPT code valuations and reduction methodologies may have been substantially modified in the intervening period.