BILL NUMBER:S3540

TITLE OF BILL:  An act to amend the insurance law, in relation to cover-
age 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  ate 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  otter
$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. 1 he Department of Financial Services
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.5064-A of 2011-12

FISCAL IMPLICATIONS: None to State.

EFFECTIVE DATE: Immediately