N.Y. High Court Denies Facility Fees for Office Surgery

New York State surgeons who operate in their offices took a hit on March 31, when that state’s highest court upheld a ruling that no-fault insurance companies are not required to pay a facility fee—only the professional fee.  And that’s the case even when the office is formally licensed as an office-based surgery (OBS) center.  In order for a facility fee to apply, the surgery must be performed in a licensed hospital or ambulatory surgery center (ASC).

The issue came up when GEICO paid a surgeon’s professional fees but rejected his claims for approximately $1.3 million in facility fees.  GEICO sued for declaratory judgment, relying on the fact that the state insurance code doesn’t require payment of facility fees, except for hospitals and ASCs.  The surgeon relied on the code’s general requirement of reimbursement for “basic economic loss,” including “all necessary expenses incurred for … surgical … services.”

The trial court denied GEICO’s motion for summary judgment, but the Second Department reversed and granted the motion.  On March 31 the state’s highest court unanimously upheld the grant of GEICO’s motion, relying on the code provision specifically authorizing facility fees for hospitals and ASCs while omitting mention of OBSs.

So the payer won this battle in the war between providers and payers over when facility fees are covered and when they aren’t.

The case is GEICO v. Avanguard Med. Group, No. APL-2015-00130 (N.Y. Mar. 31, 2016). 

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