Medicare Fee Schedules Must Be Disclosed in PIP Policies

August 8, 2013

The Florida Supreme Court recently ruled in Geico General Insurance Company v. Virtual Imaging Services, Inc. that insurance companies offering PIP policies must notify their policyholders if they plan to use Medicare-based fee schedules payment formulas.

The case arises from a September 2008 auto accident, following which the insured received medical treatments. GEICO acknowledged that the MRIs received were medically necessary, reasonably priced, billed in a timely manner, and covered by the policy. However, GEICO limited reimbursement to 80% of 200% of the Medicare fee schedule.

Justice Pariente explained that the PIP statute allows insurance companies to use the Medicare-based fee schedules to calculate payment, but it does not mandate it. The statute merely gives providers the option to use this lower payment system.

In footnote 8, the Court provides some background on a related case:

In Allstate Fire & Casualty Insurance Co. v. Perez ex rel. Jeffrey Tedder, M.D., P.A., 111 So. 3d 960, 962 (Fla. 2d DCA 2013), the Second District Court of Appeal characterized the fee schedule amendments as allowing an insurer to “either pay reasonable medical expenses as provided in subsection (5)(a)(1), or . . . limit reimbursement according to the parameters of subsection (5)(a)(2).”

Although we agree that there are two payment methodologies for satisfying the PIP statute’s coverage mandate, we emphasize that we do not conclude that limiting reimbursement pursuant to section 627.736(5)(a)2. would never satisfy this reasonable medical expenses coverage mandate. In fact, that is the very reason we rephrased the certified question in this case.

This issue was certified to the Florida Supreme Court by the Third District Court of Appeals (“3rd DCA”) after noticing that similar issues were being raised in Florida courts statewide. The initial decision by the 3rd DCA was consistent with the other districts which have already decided on such issues. The Florida Supreme Court decision affirmed the decisions of all the DCAs that PIP insurance providers must notify policyholders by an election in their policy if they plan to use Medicare-based fee schedules.

Lastly, the Florida Supreme Court noted that because the PIP statute incorporated the Medicare-fee schedules as an option for payment only in the 2008 revision of the statute, this decision applies only to policies which were in effect beginning January 1, 2008.

The majority opinion in the 5 to 2 decision was written by Justice Pariente, with Justices Quince, Lewis, Labarga, and Perry concurring. Justice Canady wrote a dissenting opinion, with Justice Polston concurring.

To read the full opinion click here: Geico General Insurance Company v. Virtual Imaging Services, Inc., No. SC12-905, dated July 3, 2013.