Cuomo Targets Deceptive No-Fault Insurance Docs and Medical Mills

New Regulation Enables DFS to Ban Doctors from No-Fault System if Caught Cheating

A statewide initiative has been enacted to stop deceptive doctors and shut down medical mills that plague New York's no-fault insurance payment system and cost New Yorkers hundreds of millions of dollars in insurance costs.

At the Governor's direction, the Department of Financial Services (DFS) is issuing a new regulation that will enable it to ban doctors who engage in fraudulent and deceptive practices as part of the no-fault system. 

The regulation implements a 2005 law that gives DFS the power to regulate doctor participation in the no-fault system. 

Through audits as well as through information from law enforcement and insurance companies, DFS has already identified 135 medical providers whose billing practices have raised concerns regarding possible no-fault fraud. 

As part of an ongoing investigation, letters are being sent to all 135 medical providers demanding information. Failure to answer the letters may automatically lead to the medical provider being banned from the no-fault system. 

"The state has no tolerance for medical providers or doctors ripping off the system," said Governor Cuomo. 

"This affects all New Yorkers because we all pay the consequences with higher insurance premiums, and that's why I asked the Department of Financial Services to take this action. I commend Superintendent Lawsky and the team at DFS for their dedication to this investigation and look forward to bringing these health care providers to justice."

Superintendent Lawsky noted, "Rather than caring for victims of auto accidents, these doctors and other health care providers engage in scams, bilking millions of dollars from insurance companies each year. Their unlawful schemes are also directly responsible for driving up insurance premiums for everyone. We are going to call them to account and put them out of the no-fault business." 

A DFS investigation has found evidence of doctors and other practitioners providing unnecessary treatment to car accident victims as well as doctors "renting" their tax ID number to fraudulent medical practices that submit fake bills to insurance companies. Without the doctors, the scheme cannot work.

The plan will issue a new regulation enabling DFS to ban doctors who engage in fraudulent and deceptive practices from participating in the no-fault system.

It will also send letters to the already identified 135 medical providers, whose billing practices have raised concerns regarding possible no-fault fraud, and demanding information regarding their corporate structure, payment requests, and the doctor's direct participation in the practice. 

The providers are being directed to complete and return the DFS form 14 days after they receive the notice. The agency will use the answers to investigate their no-fault insurance billing practices and determine whether the providers are the true owners and operators of their businesses. 

Any provider who refuses to respond to the DFS letters may be banned from participating in the no-fault system.

The regulation says that DFS will have to send a list of any medical providers suspected of no-fault fraud to the Departments of Health (DOH) and the State Education Department (SED) for their review. DFS will then conduct hearings. 

Providers found to have violated the law will be banned from participating in the no-fault payment system. In appropriate cases, DOH and SED may revoke any medical licenses and law enforcement will decide whether criminal charges should be filed.

Rampant criminal abuse of New York's no-fault auto insurance system has driven up auto insurance premiums for consumers. Currently, New York has the fourth highest auto insurance rates in the nation. These sky high rates are due, in large part, to heavy fraud in NY's no-fault system. 

The no-fault insurance law was designed to lower insurance premiums and make it easier for accident victims to receive medical treatment, regardless of who is at fault. Usually, no-fault insurers pay medical providers directly, assuming that a licensed doctor provided the treatment and the treatment was necessary. 

"My office has seen the massive fraud and abuse stemming from our state's no-fault insurance program, which has contributed to inordinately high auto insurance rates for New Yorkers. For example, we successfully prosecuted the members of a large medical mill ring called the St. Nicholas Group, which netted millions of dollars in fraudulent claims. I thank Governor Cuomo for his work to stop criminals from taking advantage of our state's insurance program," said Manhattan District Attorney Cyrus R. Vance, Jr.

Senator James L. Seward, Chair of the Senate Insurance Committee, stated, "I applaud Superintendent Lawsky and stand ready to support him in his fight to crack down on no-fault fraud and the criminals who profit from this illegal enterprise. Activating this powerful tool to decertify doctors who cheat the system is long overdue. I sponsored this reform in 2005 and am pleased the Superintendent is taking steps to implement it—helping fight fraud and get insurance rates under control. "

Assemblyman Joseph D. Morelle, Chairman of the Assembly Insurance Committee, commented, "Every year auto insurance fraud unnecessarily costs New Yorkers millions of dollars. I applaud Governor Cuomo and Superintendent Lawsky for their commitment to ending auto insurance fraud in our state and bringing unscrupulous medical providers to justice."

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DFS Investigation Exposes Unexpected Medical Costs

Report Finds Overwhelming Need for More Transparency and Better Consumer Protections

The Department of Financial Services (DFS) is investigating unexpected out-of-network medical costs affecting New Yorkers across the state, many of whom cannot afford to pay out-of-pocket expenses. 

In addition, DFS released a report that finds an overwhelming need for increased transparency from insurers and medical service providers, and improved consumer protection measures to ensure that New Yorkers stop receiving unexpected bills.

The investigation was sparked by an overwhelming amount of consumer complaints. DFS found that unexpected out-of-network medical bills are one of the most common complaints received by the agency.

New Yorkers can read the report via the following link: http://www.governor.ny.gov/assets/documents/DFS%20Report.pdf

“The high cost of health insurance and health care are an enormous burden for most New Yorkers,” Governor Cuomo said. 

“Our investigation shows that too many people are being hit with medical bills that are too high when they thought their care was covered by their insurance. We can’t allow that to continue. We must work with the insurance companies and medical service providers to ensure that all New Yorkers fully understand and are aware of the terms of their healthcare contracts.”

Financial Services Superintendent Benjamin M. Lawsky said, “Our report shows that all too often people who try their hardest to stay in network still get stuck with the most unwelcome surprise -- a big out of network bill. We need to reform our system now to protect middle class New Yorkers who can least afford these additional burdensome costs."

"This is a widespread problem that particularly plagues cancer patients. New Yorkers who are dealing with the stress and anxiety of being treated for cancer should not have added burden of thinking about unexpected exorbitant costs that they cannot afford. I applaud Governor Cuomo and Superintendent Lawsky for their leadership on this issue and look forward to working with them on righting these wrongs," added Sherry Tomasky, Advocacy Director of the American Cancer Association.

Elisabeth Benjamin, of Health Care for All New York and Vice President of Health Initiatives at the Community Service Society of New York, stated, "HCFANY is delighted that the Department of Financial Services has conducted this important investigation of surprise out-of-network bills. For far too long, it is the patient who is snared in the inscrutable billing bureaucracy between providers and insurers. The Department’s investigation highlights this problem, and HCFANY stands ready to help come up with a real solution that works for New York’s patients.” 

The Department’s report produced the following findings:

Too many unexpected bills: DFS found many cases where a consumer does everything possible to use an in-network health care provider for non-emergency services, but nonetheless receives a bill from a specialist (often a radiologist, anesthesiologist, or lab) whom the consumer did not know or realize was out-of-network. 

One case involves a child who had open heart surgery. The child’s parents were not told an assistant surgeon would be involved in the procedure and that assistant surgeon was out-of-network. The family was forced to pay $5000 of that doctor’s $6400 bill.

Another case involves a patient who was sent an unexpected $1300 bill for what turned out to be an out-of-network anesthesiologist.

Emergency bills are too high: Too often out-of-network providers who provide emergency services -- a circumstance where consumers cannot be choosy about whether the provider is in network -- take advantage of the situation and charge fees well in excess of what Medicare or insurance would pay in network. 

In cases looked at by DFS investigators, the average emergency out-of-network bill was $7006. That is 14 times what Medicare would pay. The average out-of-network radiology charge was 33 times what Medicare pays. One neurosurgeon charged $159,000 for an emergency procedure for which Medicare pays $8500.

Insurers are paying less of the cost of out-of-network care: The investigation found that insurers are moving to a system that greatly increases how much it costs consumers when they are treated out-of-network. 

To determine what they would pay for out-of-network care, most insurers used to use what is known as the usual and customary rate (UCR), which is supposed to be an average of actual bills for a procedure in that region. But now most are using the Medicare rate, which decreases how much insurers pay by as much as half or more in some cases. 

Insurers make this change hard for consumers to understand, because some are told they are going from 80% of the usual and customary rate to 140% of Medicare, which sounds like an improvement, but is not. 

In one case, a patient was approved for a surgery using the usual and customary rate. The insurer said it would pay $31,978 of the $47,685 cost. Before the surgery could be done, the insurer changed to a Medicare Fee Schedule and the insurer would only pay $4,864.62.

Consumers can't comparison shop. Because health plans are now switching between different coverage rates for out of network doctors, consumers are left in an incredibly difficult position when they select plans. They simple can't compare apples to apples when, for example, one plan offers to cover 80 percent of UCR and another offers to cover 140 percent of the Medicare rate.

Another issue found during the investigation: even when consumers have no choice but to seek care out of network, most consumers must pay extra charges. Only consumers in HMOs are protected when they must go out of network.

Based on the findings of DFS's investigation, DFS proposed the following solutions: 

Increase disclosure from providers: In non-emergency situations, providers should disclose whether or not all services are in-network before such services are provided and how much they will charge, and insurers should disclose how much they will cover.

Increase disclosure from insurers: Insurers should enable consumers to conduct a meaningful "apples to apples" comparison regarding how much of the cost of out-of-network services will be covered when they are choosing a plan, whether the insurer uses UCR or the Medicare rate. 

Prohibit excessive fees: Out-of-network providers should be prohibited from charging excessive fees for emergency services.

Improve network protections: Improve network protections: Network adequacy protections must be improved. Consumers not in HMOs should be given the same network adequacy protections provided to consumers with HMO coverage. 

New Yorkers who have questions/complaints concerning their medical bill should visit www.dfs.ny.gov or go to http://www.dfs.ny.gov/consumer/fileacomplaint.htm.

Cuomo: 'Ensuring Financial Security is One of the Most Important Steps to Recovery'

Governor's Administration Deploys Insurance Assistance for New Yorkers Impacted by Hurricane Irene

Governor Andrew Cuomo has sent the Superintendent of the state Department of Financial Services (DFS) Benjamin Lawsky to areas hit hard by Hurricane Irene to provide insurance assistance to New Yorkers in need and to set up onsite counseling centers.

Superintendent Lawsky will be in Middleburgh today at noon at the Municipal Building, 309 Main Street, to meet with the Mayor and Town Supervisor. Lawsky will also be in Cobleskill and Schoharie later today, and on Wednesday, the Superintendent will be in Keene, NY.

Lawsky and DFS representatives will be meeting with local leaders, consumers, and businesses to listen and help with insurance issues that arose because of the storm.

DFS representatives will be available to directly assist New York residents and small businesses as they file storm-related claims. The DFS will also hold public forums in these regions to answer questions from New Yorkers about the insurance process.

"Ensuring financial security is one of the most important steps to recovery after such a devastating storm," Governor Cuomo said.

"By sending representatives from the Department of Financial Services to meet directly with those who were affected by the storm, we can most efficiently and effectively help New Yorkers during this difficult time."

"The Department of Financial Services is going to work directly with citizens and small businesses affected by the storm to help them speed their financial recovery," said Superintendent Lawsky.

"We are bringing state government resources right into the communities that need them the most so that we can best assist New Yorkers."

Representatives from the DFS will be meeting with both consumers and businesses to address any and all insurance issues they may still have in the wake of Hurricane Irene. The DFS has already issued tips for policyholders and a fraud alert, which are available on the DFS website.

Governor Cuomo and Superintendent Lawsky urge New Yorkers affected by the storm to call the Department of Financial Services Disaster Hotline (800-339-1759) or to visit the DFS website (www.ins.state.ny.us) if they have any questions.