Relates to coverage for certain benefits under comprehensive motor vehicle insurance

BILL NUMBER:S1673

Title of bill

An act to amend the insurance law, in relation to coverage for certain benefits under comprehensive motor vehicle insurance

Purpose

The purpose of this legislation is to eliminate the assignment of benefits for durable medical equipment in the no-fault system.

Summary of provisions

Section 1 adds a new subsection (n) to section 5102 of the insurance law to define "health service provider "

Section 2 adds a new section 5110 to the insurance law to prohibit the assignment of benefits for durable medical equipment to a health service provider unless the health service provider has been approved by the National Supplier Clearinghouse as an authorized Medicare supplier of durable medical equipment, prosthetics, orthotics and supplies Durable equipment includes, but is not limited to, durable medical equipment and supplies, medical/surgical supplies, orthopedic footwear and orthotic and prosthetic appliances.

Justification

In recent years an increasing portion of the no-fault fraud has been observed in the area of durable medical equipment (DME). In many instances the DME wholesaler is involved in the scam and the provider is committing fraud in conjunction with the medical supply companies Many of these DME frauds occur in the following manner.

Many items are subject to the fee schedule Items not subject to the fee schedule are billed at a rate of 50% over cost. However, the wholesaler will often fabricate a price, and then add on the 50% profit. For example, TENS & EMS machines (which emit electrical impulses) perform nearly the same functions. Until last year TENS machines were not subject to the fee schedule, so TENS and EMS billing was relatively equal However, last year TENS machines were put on the fee schedule. It is no coincidence that no-fault fraudsters are reducing TENS billings and EMS billings have dramatically increased so that these fraudsters can fabricate a price and then add in the 50% profit on top.

As is readily seen by these cases, this area of no-fault fraud is rampant and growing at a tremendous rate producing the fastest and most cash profit of any fraud. Since Jan 1, 2009, there have been 739 new DME providers registered in NYS There were 340 new facilities registered in Brooklyn alone but only 10 in Buffalo.

In one especially egregious case, one patient's DME billing included 16 different items totaling over $6,000 including a luxury turbo bath spa, an infrared heat wand, a wand massager, two different post-op knee braces, a back support seat, a TENS belt and others. The patient reports that they never used any of the items which were billed for.

This legislation is not unique in prohibiting assignment of benefits for a lawful no-fault expense Assignment of benefits for transportation expenses was originally allowed but the no-fault system quickly saw an explosive rise in those expenses. The Insurance Department amended the no-fault regulations to prohibit assignment of benefits for transportation and the expenses fell very quickly. Prohibiting assignment of benefits to health providers for DME should see the same outcome while still allowing the no-fault claimant to directly receive payment for their legitimate DME needs.

Legislative history

S.3540 of 2103-14; S.5064-A of 2011-12

Fiscal implications

None to State

Effective date

Immediately