OGC Op. No. 09-02-05

The Office of General Counsel issued the following opinion on February 18, 2009 representing the position of the New York State Insurance Department.

Re: Health Insurance, Submission of Claims

Question Presented:

Did the Insurance Department’s Office of General Counsel (“OGC”) err in concluding that Insurance Law § 3224-b(a) does not preclude an insurer from “bundling” separate CPT Codes in a single Code in the evaluation and payment of a claim?


No. Upon additional and careful review of the Inquirer’s specific and further concerns, OGC believes that the conclusions set forth in the May 20, 2008 letter need not be modified.


OGC’s opinion was generated in response to a complaint that a medical special society (“Society”) had sent to the Attorney General of the State of New York, as well as several legislators. In a May 20, 2008 letter to an Assemblyman, OGC concluded that an insurer does not run afoul of Insurance Law § 3224-b(a) if it aggregates, for processing purposes, several CPT codes in a claim form submitted by a health care practitioner. The opinion noted that the Department’s interpretation of the statute is consistent with the American Medical Association (“AMA”) guidelines, as well as interpretations of both insurance trade associations and another specialty society.

The Society asserts that the May 20, 2008 opinion misinterpreted or failed to take account of applicable legislation, as well as the AMA’s guidelines regarding CPT codes, and asks that OGC reconsider its position. Specifically, the Society believes that OGC failed to address the full provisions of the statute and the AMA guidelines, and did not consider inconsistent treatment by insurers of “experimental” procedures.


The starting point of the inquiry is Insurance Law § 3224-b(a), which reads in pertinent part as follows:

Processing of health care claims. This subsection is intended to provide uniformity and consistency in the reporting of medical services and procedures as they relate to the processing of health care claims and is not intended to dictate reimbursement policy.

(1) For purposes of this section, a "health plan" shall be defined as an insurer that is licensed to write accident and health insurance, or that is licensed pursuant to article forty-three of this chapter or is certified pursuant to article forty-four of the public health law.

(2) Subject to the provisions of paragraph three of this subsection, a health plan shall accept and initiate the processing of all health care claims submitted by a physician pursuant to and consistent with the current version of the American medical association's current procedural terminology (CPT) codes, reporting guidelines and conventions . . . .

(3) Nothing in this section shall preclude a health plan from determining that any such claim is not eligible for payment, in full or in part, based on a determination that: (i) the claim is not complete . . . ;(ii) the service provided is not a covered benefit under the contract or agreement, including but not limited to, a determination that such service is not medically necessary or is experimental or investigational; (iii) the insured did not obtain a referral, pre-certification or satisfy any other condition precedent to receive covered benefits from the physician; (iv) the covered benefit exceeds the benefit limits of the contract or agreement; (v) the person is not eligible for coverage or is otherwise not compliant with the terms and conditions of his or her contract; (vi) another insurer, corporation or organization is liable for all or part of the claim; or (vii) the plan has a reasonable suspicion of fraud or abuse. In addition, nothing in this section shall be deemed to require a health plan to pay or reimburse a claim, in full or in part, or dictate the amount of a claim to be paid by a health plan to a physician. (Emphasis supplied.)

In the May 20, 2008 opinion, OGC opined that so long as the insurer commences evaluation of the submission that contains the CPT™ codes, the insurer acts in compliance with the statute. The Society asserts that in using the term “commence” rather than the statutory term “accept and initiate,” OGC erred:

In essence, your letter states that as long as the insurer ‘‘commences evaluation of the submission that contains the CPT code, the insurer is in compliance with the statutory requirement” and the law “does not preclude an insurer from “bundling” several CPT codes into one global code in the evaluation and payment of a claim”.

First, the key terms are “accept and initiate” and not commence. Accept and initiate means just what it says, accept and recognize all codes provided on the claim form as separate and distinct and begin processing. Then in-house policy may be applied. Bundling them is not recognizing them as separate and distinct services, which leads to our next and second position.

We still feel that the Department does not address the full provision of the law, which states that the insurer must “accept and initiate the processing of all health care claims submitted by a physician pursuant to and consistent with the current version of the American Medical Association’s Current Procedural Terminology (CPT) codes, reporting guidelines and conventions and the Centers for Medicare and Medicaid services healthcare common procedure coding system (HCPCS).”

According to Webster’s Ninth New Collegiate Dictionary (1991), “accept” is defined as “to receive favorably something offered.” Similarly, “initiate” is defined as “to cause or facilitate the beginning of a program.” Id. While it might have been more precise for the May 20, 2008 opinion to have parroted the statutory phrase “accept and initiate”, the opinion’s use of “commence” was intended to convey the functional equivalent of “accept and initiate.”

The Society next asserts that the May 20, 2008 opinion is contrary to a guideline established by the AMA with regard to Evaluation and Management Services (E&M). Those terms are not defined by the AMA, but according to Webster’s Ninth New Collegiate Dictionary, “evaluation” is “a diagnosis or diagnostic study of a physical or mental condition”, and “management” is “the act or process of managing [a physical or mental condition].” Id.

In pertinent part, the AMA guidelines provide that “the actual performance and/or interpretation of diagnostic tests/studies ordered during a patient encounter are not included in the levels of E/M services. Physician performance of diagnostic test/studies for which specific CPT codes are available may be reported separately, in addition to the appropriate E/M code.” According to the Society:

The guideline here says that they [i.e., other services] are not included (or bundled) in the levels of E&M service so how can an insurer still be allowed to combine or bundled [sic] services in with an E&M service? This reporting guideline and convention is being ignored.

. . .

[Y]ou cite the AMA’s long standing position that “Inclusion or exclusion of a procedure code does not imply any health insurance coverage or reimbursement policy”. We are not disputing this as we are not asking that an insurer pay for each service as a matter of reimbursement policy, just that this code be evaluated as a separate and distinct submission then allowed or denied per their policy.

Nowhere do the AMA guidelines prohibit bundling. To the contrary, in using the word “may,” the guidelines suggest that such decision is left to the code users’ discretion. Accordingly, the Department will not modify the May 20, 2008 opinion on this ground.

Finally, the inquirer asserts:

[O]ur concern is that when the diagnostic test is performed on the same day as an exam, it is considered at one time to be (1) part of the exam and the implication is that it is viable while, (2) when billed alone, it is considered experimental and denied. Which is it to be?

In this respect the inquirer may raise a valid question, but the inquirer has not furnished the Department with any example where an insurer has treated the same procedure in an inconsistent fashion, or has failed to consider all services that have been bundled. If it has such information, the inquirer was directed to provide it to the Department’s Consumer Services Bureau for further handling and investigation.

In sum, while the Department appreciates the Society’s concerns, the Department intends to adhere to the May 20, 2008 opinion because the Society has not demonstrated at this time that the Department overlooked or failed to apprehend any information that compels a different conclusion.

For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.