Fla. Appellate Court Finds State Farm Can Use Medicare Rules to Reduce Payment in PIP Claim

State Farm was within its rights when it reduced payments in a personal injury protection claim to a medical provider for multiple diagnostic scans that were performed on the same patient during the same visit, the Florida 4th District Court of Appeal ruled Wednesday.

The appellate court, based in West Palm Beach, reversed a Palm Beach County judge’s decision to grant summary judgment in favor of Stand-Up MRI of Boca Raton, which alleged it was underpaid $779.16 for three magnetic-resonance imaging scans. The court issued a separate decision reversing a similar ruling by the Broward County court in a consolidated case involving four other personal-injury protection claims.

In all five cases, the medical providers objected to State Farm’s use of the Medicare Multiple Procedure Payment Reduction to discount bills. The rule reduces the allowable charge for subsequent procedures by 50% when several procedures are performed on the same patient by the same provider on the same visit.

“We conclude that neither the PIP statute, nor State Farm’s policy, prohibit State Farm from applying the MPPR to reduce the reimbursement to an amount less than the allowable amount of the 2007 Medicare Part B fee schedule,” the 4th District panel said in its 3-0 decision.

Numerous disputes between insurers and medical providers arose after the Florida state legislature in 2012 revised the personal injury protection statute to allow insurers to use Medicare’s coding policies and payment methodologies to determine reimbursement amounts. The statute requires insurers to pay 80% of 200% of Medicare’s 2007 fee schedule for most medical services.

Medicare’s payment system provides several methods of reducing the maximum allowable amount, including MPPR. A similar rule that allows a 2% reduction in fees for chiropractic procedures also spawned numerous lawsuits.

Stand-Up MRI filed a breach-of-contract lawsuit after State Farm paid $2,551.16 for three MRIs performed on PIP claimant Mike Ramazio, which it had billed at $4,800. Stand-Up accepted a reduction in payment for the first scan to $1,258.02, but argued that the insurer could not use the MPPR to reduce the payment for the other two scans.

The diagnostic center’s lawyers argued that State Farm’s use of the MPPR violated a provision of the PIP statutes that prohibits insurers from applying “any limitation of treatments or other utilization limits” that are allowed by Medicare’s payment rules. The trial court agreed and ruled that the PIP statutes create a floor for reimbursing PIP benefits. The court ordered State Farm to pay Stand-Up $779.16 plus interest.

State Farm appealed and persuaded the 4th Circuit panel that a limit on price is not a limit on usage.

“As State Farm argues, the schedule of maximum charges is simply a base rate that may be adjusted downwards by applying Medicare coding policies and payment methodologies, such as the MPPR, to determine the appropriate amount of reimbursement,” the appellate panel said.

The appellate panel also ruled that State Farm had given adequate notice that it intended to use Medicare rules to determine appropriate reimbursement amounts. The insurer filed a policy form with the Office of Insurance Regulation stating that it would use “Medicare coding policies and payment methodologies.”

The Florida Supreme Court ruled in 2017 that a similar policy issued by Allstate gave adequate notice of the payment method that would be used for PIP claims even though it didn’t specifically mention the MPPR, the opinion says.

The panel reversed the trial court’s summary final judgment and remanded the case with instructions to enter summary final judgment in favor of State Farm.