FAQ on New York No-Fault Insurance and Diagnosis Related Groups (DRG)

FAQ on New York No-Fault Insurance and Diagnosis Related Groups (DRG)

By: Erin S. Stamper

1. What is the Correct Method of Billing for In-Patient Hospital Treatment Related to Injuries Sustained in a Motor Vehicle Accident?

The DRG system is to be used when billing a No-Fault insurer for in-patient hospital treatment stemming from a motor vehicle accident.[1]

2. What is the DRG System?

Diagnosis-Related Groups, commonly referred to as DRGs, is a classification system used in healthcare to categorize patients into groups based on their medical conditions, diagnoses treatments, and other relevant factors. The DRG system is used for billing and reimbursement purposes. Under this payment system, a hospital is paid a fixed amount for each patient discharged within a particular treatment category.[2]

3. What are Retroactive Rate Increases and How Do They Work in No-Fault?

DRG reimbursement rates are updated by the New York State (NYS) Department of Health annually and apply retroactively to January 1^st. Once the new rates are released, No-Fault insurers are required to apply these new DRG rates retroactively and adjust the payments they have already made to hospitals.[3]

4. Following a Retroactive Rate Increase, How Much Time Does a No-Fault Insurer Have to Adjust Payments that it has Already Made to a Hospital?

Absent an adjusted bill, a No-Fault insurer is required to adjust payments in an expeditious manner. If an adjusted bill is received from a hospital, the No-Fault insurer has forty-five days within which to pay the adjusted DRG rate.[4]

5. What Happens if a Hospital Submits a Bill for In-Patient Services at the Wrong DRG Rate?

A No-Fault insurer is required to base its payment to a hospital on the actual DRG rate even if a hospital accidentally bills at a rate less than the maximum permissible DRG Rate. A hospital is entitled to receive payment in accordance with the correct DRG rate even if it does not submit an amended/corrected bill.[5]

We do All Things No Fault®, which includes helping our clients navigate current claims issues. If your hospital is experiencing inadequate reimbursement from No-Fault insurers under the DRG system, or if you’d like to explore the process of pursuing No-Fault arbitration and how our Firm can offer expert guidance throughout, please don’t hesitate to reach out to us today.