Supreme Court held that Medicaid fee schedule applies to CPM rental

Continuous Passive Motion (CPM) machines are therapeutic devices used after orthopedic surgery to maintain joint range of motion and reduce stiffness. In New York’s no-fault insurance system, disputes over CPM rental reimbursement have created significant litigation, particularly regarding whether providers can bill at “reasonable and customary” rates or must adhere to Medicaid fee schedules. The Queens County Supreme Court decision in Accelerated DME Recovery, Inc. addressed this contentious issue with potentially far-reaching implications for durable medical equipment billing practices.

New York’s no-fault regulations establish fee schedules for most medical services and equipment, limiting what providers can charge insurance carriers for accident-related care. However, when the fee schedule does not specifically list a service or item, questions arise about the appropriate reimbursement methodology. CPM rental became a battleground because providers argued they could charge market rates while insurers contended that Medicaid formulas should apply.

This dispute implicates broader questions about regulatory interpretation and whether administrative guidance from the Department of Health carries binding authority in no-fault reimbursement disputes. The Supreme Court’s analysis in Accelerated DME Recovery suggested that DOH opinions may be dispositive on fee schedule interpretation questions, potentially changing how courts evaluate reimbursement disputes across various categories of medical equipment and supplies.

Case Background

In the matter of Accelerated DME Recovery, INC. a/a/o Ana Pleitz v. State Farm Mutual Auto. Ins Co.. Index # 706132/15 (Sup. Ct. Queens Co. 2015)(Modica, AJSC), the durable medical equipment provider had obtained an arbitration award for CPM rental services. State Farm challenged this award through an Article 75 proceeding, arguing that the arbitrator had incorrectly applied a “reasonable and customary” billing standard when the Medicaid fee schedule formula should have governed. The case reached Supreme Court, Queens County, where Acting Justice Modica considered whether DOH guidance on CPM reimbursement should be treated as controlling authority.

Jason Tenenbaum’s Analysis

While the denial of an Article 75 challenge to a master arbitrator’s decision is not generally newsworthy, this Decision from Supreme Court appears to have gone a step further and on its face would have probably granted State Farm’s challenge to an arbitration award.

What you will discern through a reading of this opinion is the Court has found as a matter of law that the Medicaid formula for determining the proper amount of reimbursement for CPM, i.e. (1/6th * invoice /30) is proper. I would parenthetically note that the DOH opinion that State Farm obtained on this issue appears to be 1) dispositive; and 2) the potential death knell to the argument that CPM providers can charge reasonable and customary.

I sense this may be a game changer.

Good job to counsel for State Farm on this discreet issue. At fee schedule, will surgery providers deem CPM to be absolutely necessary for the recovery of surgery causally related to a motor vehicle accident? I know where my vote is on that question.

Legal Significance

The Accelerated DME Recovery decision has significant implications for how New York courts interpret fee schedule gaps and the weight they give to Department of Health administrative guidance. By treating the DOH’s Medicaid formula interpretation as dispositive, the Supreme Court effectively closed the door on provider arguments that CPM rentals fall outside the fee schedule and can therefore be billed at market rates.

This approach reflects a broader judicial trend toward strict fee schedule enforcement in no-fault cases. Courts have increasingly rejected provider attempts to characterize services as outside the fee schedule, recognizing that such interpretations would undermine the cost-containment purposes of New York’s no-fault system. The decision also demonstrates how administrative interpretations from regulatory agencies like DOH can carry substantial weight in civil litigation, even when those interpretations have not been formally promulgated as regulations.

The ruling’s potential impact extends beyond CPM machines to other durable medical equipment categories where similar billing disputes arise. If DOH guidance is treated as dispositive on fee schedule interpretation questions, providers will find it much harder to argue for “reasonable and customary” billing in categories not explicitly listed in the fee schedule.

Practical Implications

For medical equipment providers, this decision signals that CPM rental billing at rates above the Medicaid formula may be futile. The specific formula identified—(1/6th × invoice /30)—provides clear guidance on how carriers will calculate reimbursement, and challenging those calculations through arbitration or litigation faces steep hurdles after Accelerated DME Recovery.

The decision also raises strategic questions about whether CPM machines remain economically viable for providers to supply at fee schedule rates. As Jason Tenenbaum notes, surgeons may reconsider whether CPM therapy is “absolutely necessary” for post-accident recovery if reimbursement is limited to Medicaid rates. This could affect patient access to these devices and alter post-surgical treatment protocols.

For insurance carriers, the decision provides powerful ammunition for fee schedule defenses in DME disputes. Obtaining DOH guidance letters on disputed equipment categories may prove decisive in both arbitration and litigation, given the deference courts appear willing to accord such administrative interpretations.

Related Articles

• Fee schedule defense requirements and competent evidence standards
• Fee Schedule Defense Requirements in No-Fault Insurance Cases
• Understanding Medical Billing and Down-Coding in New York No-Fault Insurance Claims
• Article 75 challenges and complex default judgment cases
• New York No-Fault Insurance Law

Legal Update (February 2026): Since this 2016 decision regarding Medicaid fee schedule application to CPM rental reimbursements, New York’s no-fault fee schedules and Department of Health regulations governing durable medical equipment may have been amended or updated. Practitioners should verify current fee schedule provisions and any subsequent regulatory guidance or court decisions that may have affected CPM reimbursement calculations and billing practices.