The New York Department of Financial Services on Tuesday finalized regulations limiting the amount that insurers can reimburse policyholders for health care services performed outside of the state.
The new regulation, which was first proposed in May, is in an effort to bolster the state’s no-fault insurance law that provides reimbursement of medical expenses and lost wages for a policyholder who is injured in a vehicle accident regardless of who is at fault.
The rule came after the department became aware that some providers have been charging the prevailing fee, or more, in areas outside of New York. The fees being charged in some instances exceed the state’s limits and may lead to higher premiums, reduced coverage and more litigation, the department said in a news release.
The department also claims that New York residents who are eligible for no-fault benefits because of their injuries are “influenced” to seek care from out-of-state providers. The department declined to identify who the providers were.
DFS Superintendent Maria Vullo said in a statement that the state’s no-fault law “ will not be abused by out-of-state providers charging excessive rates.”
“By limiting the amounts reimbursable under no-fault law to New York parameters, the regulation eliminates abuses and ensures that policy limit amounts will provide for necessary policyholder benefits and lost wages, while leveling the playing field for New York insurers,” she further added.
A trade group representing the state’s property and casualty insurers, the New York Insurance Association, praised the new rule.
Under the regulation, insurers’ reimbursements for services have to be lower than the amount charged by a provider, and the prevailing fee in the geographic location of the provider with respect to services, which constitute emergency care initiated within 48-hours of a motor vehicle accident for a traumatic injury or medical condition resulting from an accident.
When health care services reimbursable under the state’s no-fault law are performed on a New York resident outside of the state’s borders, the amount that an insurer can reimburse for the services is capped at the fee applicable in the region in New York that has the highest value in the no-fault fee schedule for such a service, the final rule states.
Ellen Melchionni, the president of the NYIA—said in an email that fraud and abuse “plague” the no-fault insurance system and that the group supports DFS’s new regulation.
“The no-fault system was established to help those injured in an auto accident receive treatment quickly. This prompt method of payment helps those who are injured, but is also being exploited by unscrupulous healthcare practitioners. This new regulation from DFS will no longer permit excessive billing from out-of-state providers. Sometimes those being treated through the no-fault system are purposely sent to out-of-state providers so the practitioner can bill the insurance company exorbitantly higher rates. DFS has taken the appropriate stance of not tolerating this abuse,” Melchionni said.
“NYIA encourages public policymakers to continue to close loopholes like this one and take a stand against the multimillion dollar illegal enterprise of no-fault auto insurance fraud,” Melchionni said.