BILL NUMBER:  S769

 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.1673 of 2015-16;
S.3540 of 2013-14;
S.5064-A of 2011-12

 FISCAL IMPLICATIONS :

None to State.

 EFFECTIVE DATE :
Immediately.