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The following Advisory Opinion is
to advise the reader of the current position of the Kentucky
Department of Insurance ("the Department") on the specified issue.
The Advisory Opinion is not legally binding on the Department or the
reader.
Kentucky Department of
Insurance
Advisory Opinion 99-2
In Re: Use of Fee Schedules for
Payment of Medical Expenses in
Basic and Added Reparation Benefits
Coverage
It is the Department's understanding
that some carriers providing coverage under the Motor Vehicle
Reparations Act, KRS 304.39 ["reparation obligors"], are using
various computer programs to identify usual and customary medical
charges for certain services, in essence creating a fee
schedule. It is the Department's opinion that these fee schedules
are not directly prohibited under KRS 304.39.
Recently-enacted KRS 304.39-245 allows
a reparation obligor to request or negotiate a reduction or
modification of charges from a provider. It prohibits a provider who
agrees to such a reduction or modification from billing the secured
person for the amount of such reduction or modification.
However, the provisions of KRS
304.39-020(5)(a) remain unchanged. That statute creates the
presumption that any medical bill submitted is reasonable. The
burden remains on the reparation obligor to establish both that the
original fee is not reasonable, and the amount the reparation
obligor proposes in payment is reasonable.
The Department strongly believes
secured persons must not be unjustly affected by any dispute between
reparation obligors and providers. The reparation obligor must
protect the secured person during any period of dispute to avoid any
detrimental effects the insured/claimant may experience, which may
include collection efforts by the provider, adverse credit
references or denial of care. If during the period of dispute the
insured/claimant might experience any such detrimental effects, it
may become necessary for the reparation obligor to pay the full
amount pending resolution of the dispute.
Questions regarding this Advisory
Opinion may be directed to Lawrence W. Cook, Counsel for the
Department, at (502)-564-6032.
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George Nichols III
Commissioner
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Date
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