BILL NUMBER: S3510

SPONSOR: BRESLIN
 
TITLE OF BILL:  An act to amend the insurance law, in relation to
coverage for certain benefits under comprehensive motor vehicle insur-
ance

 
PURPOSE:

The purpose of this legislation is to eliminate the assignment of bene-
fits 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 exam-
ple, 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 coinci-
dence that no-fault fraudsters are reducing TENS billings and EMS bill-
ings 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 ramp-
ant 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 brac-
es, 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 transporta-
tion 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.769 of 2017-18;
S.1673 of 2015-16;
S.3540 of 2013-14;
S.5064-A of 2011-12

 
FISCAL IMPLICATIONS:

None to State.

 
EFFECTIVE DATE:
Immediately.