CPM – now it is up to DFS and WCB to address the problem

Matter of Global Liberty Ins. Co. v ISurply, LLC, 2018 NY Slip Op 04961 (1st Dept. 2018)

The CPM saga came down to the  2014 letter addressing an inquiry from an insurance carrier and a 2016 letter that was responsive to an inquiry from a prominent plaintiff no-fault attorney.  The Court did not care about informal DOH opinions and WCB opinions, or the famous “FAQ” that appeared to override the 2016 letter.

Sadly, this issue has been playing out for about 6 years, mostly in arbitration.  It has had some action in the Courts, but more sporadic.  From my vantage point, the issue needed an end date.  It made no sense to have a purely legal issue bouncing back and forth in probably over 100,000 awards and court decisions.

First, for those who have questioned “what is CPM/CTU”, it is post-rehabilitative machinery that is supposed to increase healing and functionality following extremity surgery.  It is rented from about a 30-60 day period depending on the provider/supplier.  The equipment wholesales for between $6,000-$10,000.  If I am wrong, correct me – I do not have an invoice in front of me.

The rental rate that has been accepted in arbitration and court is $85-$100 per day.  The item as a 2-3 year useful life.  Again, this is what I have heard. It could be more.

therefore, assuming the equipment is used 320 days per year for 3 years, this would yield a billable value of close to $100,000 for the life of the machine.  Not bad for a $6000 investment.  And now you see the genesis of the frustration some of the pragmatists in no-fault have with what is happening here.

The Appellate Division, although couching the decision in terms of rationality held as matter of law that reimbursement shall be at the value of the rental to the general public.  Of course, nobody rents these machines on a cash basis, this there is no accurate general public fee absent “Ingenix” that exists.  And, if you want to call Ingenix a true valuation as to the cost to the general public, then you are sadly mistaken.  The Court’s holding:

“Global failed to present sufficient evidence demonstrating that the Department of Health (DOH) had determined a price for these rentals. The July 3, 2014 letter from Joanne Criscione, Senior Attorney for the Bureau of Health Insurance Programs Division of Legal Affairs for the DOH appeared to indicate that DOH had adopted “a medicaid reimbursement policy for durable medical equipment (DME) rental items that have not been assigned a Maximum Reimbursement Amount (MRA). For DME items that do not have a MRA, the rental fee is calculated at 1/6th of the equipment provider’s acquisition cost.” In her June 8, 2016 letter, however, she makes clear that her July 3, 2014 letter “was not a determination by the Department of Health area office establishing the reimbursement rate” and she “merely state[d] the Medicaid reimbursement as that policy is set forth in the Medical Provider Manual for DME.” None of Global’s other evidence establishes that DOH had adopted the “1/6th of the equipment provider’s acquisition cost” rate.

It is true that the Medicaid DME fee schedule, which listed certain codes for DMEs, some of which had a MRA and some of which did not, established that for those that did not have a MRA, the monthly rate of 1/6th of the equipment provider’s acquisition cost would apply. And it is also true that, pursuant to 12 NYCRR § 442.2(b), “the total accumulated monthly charges shall not exceed the fee amount allowed under the Medicaid fee schedule.” However, it was not irrational for the arbitrator to conclude that this 1/6th rate applied only to items which had codes listed in the Medicaid fee schedule, which the CPM and CTU at issue here did not. Therefore, as Global neither demonstrated that DOH had adopted the 1/6th rental fee guideline, or that DOH had otherwise determined a rental fee, it was not irrational for the arbitrator to conclude that the reimbursement rate would be “the monthly rental charge to the general public” (12 NYCRR 442.2(b).”

Now, it is up to DFS and WCB to finally address this issue.

One more thing.  Many of you out there are unaware of this, and I was not going to share until this opinion was published.  But, WCB has already ruled on this issue, and I suspect this is what prompted the FAQ:

In the Matter of Long Island DDSO, 2016 WL 7010143 (2016):

Time for action on this issue now!