What is Med Pay and How Does It Work in New York State?

Posted By Russell Friedman & Associates || 30-Mar-2018

What is Med Pay and How Does It Work in New York State?

Authored By: Erin S. Stamper

Overview

Medical Payment Coverage, also known as Med Pay, is optional automobile insurance coverage in New York State (“NYS”), which pays $5,000.00 to $10,000.00 per person, for medical, dental, and funeral expenses for both the insured driver and passengers of a motor vehicle involved in an accident, regardless of who is found to be at fault for the accident. Med Pay also covers injuries sustained by a pedestrian or bicyclist that is hit by a car, or a passenger taking public transportation.

In NYS, where $50,000.00 of No-Fault—Personal Injury Protection Benefits (“No-Fault”) is required coverage[1], Med Pay is often considered less important since, with the exception of funeral expenses, Med Pay pays only when No-Fault does not provide coverage for the accident or after No-Fault benefits, when applicable, have been exhausted.[2]

However, it is essential, even in NYS, for medical providers to understand Med Pay because, in certain situations, it may be their only means of obtaining reimbursement. Although each automobile insurance policy endorsement is different, the following are situations where Med Pay may afford coverage:

  1. No-Fault benefits are exhausted;
  2. The No-Fault insurer denies coverage based an alleged violation of the insurance policy by the eligible injured party (“EIP”):
    1. Examination Under Oath (“EUO”) no-show;
    2. Independent Medical Examination (“IME”) no-show
    3. Non-Cooperation
    4. Intoxication, as related to non-emergency health care services[3]
  3. Motorcyclists—No-Fault does not cover injuries sustained by a motorcyclist involved in a motorcycle accident. However, if the EIP purchased “motorcycle medical payments coverage” then the treatment of the motorcyclist’s own injuries will be covered, up to the policy limits.

Obtaining Reimbursement When the Patient Has Med Pay

Typically, Med Pay is handled by the Bodily Injury Claims Adjuster, not the No-Fault Claims Adjuster. Despite this, upon receipt of the medical provider’s claim for reimbursement under the No-Fault portion of the insurance policy, the automobile insurer may, either voluntarily or upon request of the medical provider, tender the Med Pay portion of the automobile insurance policy if No-Fault benefits have exhausted. However, even if the automobile insurer declines to issue payment under the Med Pay portion of the automobile policy, the medical provider has another avenue through which to obtain reimbursement: self-pay.

Unlike with No-Fault, where the medical provider assumes the EIP’s No-Fault benefits upon his/her execution of an assignment of benefits form (“AOB”), Med Pay has no similar assignment. As such, when No-Fault does not provide coverage or when the No-Fault benefits have been exhausted, the medical provider may switch the claim to self-pay and bill the patient directly. If the EIP’s automobile insurance policy includes Med Pay coverage, then said policy indemnifies the EIP for the payments he/she makes directly to the medical provider.

If exhaustion of No-Fault benefits is not discovered until the claim is in arbitration, the Firm will request a voluntary tender of Med Pay from the automobile insurer, on the medical provider’s behalf. However, the American Arbitration Association (“AAA”), which administers the arbitration of disputed No-Fault claims on behalf of the DFS, does not have jurisdiction over Med Pay. As such, to the extent that the Firm cannot obtain a voluntary tender of the Med Pay portion of the automobile insurance policy, it cannot continue with collection efforts in arbitration. In such a situation, it is recommended that the medical provider switch the claim to self-pay and bill the patient directly. At this point, the personal injury attorney, in the face of unpaid medical bills, will most likely seek payment from the automobile insurer on behalf of the patient.

Conclusion

Even though No-Fault is a required coverage endorsement in NYS, it is still important for medical providers to understand Med Pay and be aware of whether a patient has Med Pay coverage. While Med Pay pays only when No-Fault does not provide coverage for the accident or after No-Fault benefits, when applicable, have been exhausted, No-Fault coverage denials may account for significant portion of a medical provider’s outstanding accounts receivable. In recent years, NYS automobile insurers have become increasingly aggressive with their use of EUOs, IMEs, and declaratory judgment actions to disclaim No-Fault coverage. As such, it is extremely important for medical providers to understand that there sometimes exists an additional type of automobile insurance coverage through which they may be able to obtain reimbursement—Med Pay.[4]


[1] Shopping for Auto Insurance: Minimum Auto Insurance Requirements, Department of Financial Services, http://www.dfs.ny.gov/consumer/auto/auto1202.htm (Updated 06/22/2017).

[2] Shopping for Auto Insurance: Optional Auto Insurance, Department of Financial Services, http://www.dfs.ny.gov/consumer/auto/auto1203.htm (Updated 06/22/2017).

[3] In 2011, the DFS “amended Insurance Law §5103(b)(2) to prohibit a no-fault insurer from excluding from coverage necessary emergency health services rendered in a general hospital (as defined in Public Health Law § 2801(10)[2] ), including ambulance services attendant thereto and related medical screening, for any person who is injured as a result of operating a motor vehicle while in an intoxicated condition or while the person’s ability to operate the vehicle is impaired by the use of a drug within the meaning of Vehicle and Traffic Law § 1192.” See, Circular Letter No. 4 (January 12, 2011) http://www.dfs.ny.gov/insurance/circltr/2011/cl2011_04.htm. Despite this amendment, no-fault insurers are still permitted to disclaim coverage of non-emergency health services, on the basis of intoxication.

[4] Med Pay endorsements differ between automobile insurers, automobile insurance policies, and states. As such, while Med Pay is an important avenue to explore, ultimate collectability depends heavily on the particular policy endorsement and automobile insurer involved. As such, the advises contained herein are subject to modification.

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