The Fourth District in Progressive Select Insurance Company V. In House Diagnostic Services, Inc., a/a/o Darryl Frazier (“In House Diagnostic”) No. 4D21-2581 (April 26, 2023) has ruled the correct reimbursement rate of the 2007 Medicare Part B fee schedule is the non-facility participating price and not the 2007 Medicare Part B non-facility limiting charge.

In so holding, the Fourth District found Allstate Fire & Casualty Insurance Co. v. Jeffrey L. Katzell, M.D., P.A. , 323 So. 3d 191 (Fla. 4th DCA 2021) was incorrectly decided and receded from the decision, and certified conflict with Priority Medical Centers, LLC v. Allstate Insurance Co., 319 So. 3d 724 (Fla. 3d DCA 2021).

The Fourth District’s decision is premised upon two findings:

1. Priority Medical and Katzell incorrectly interpreted the 2012 statutory amendment to § 627.736; and
2. The Limiting Charge is not a fee schedule.

A. Statutory Interpretation of the 2012 Amendment to § 627.736

Prior to 2012, the Third District had held that the 2007 reimbursement rate was the participating physicians fee schedule and not the limiting charge. See Millennium Diagnostic Imaging Center., Inc. v. Security National Insurance Co., 882 So. 2d 1027, 1029-30 (Fla. 3d DCA 2004), and Advanced Diagnostics Testing v. Allstate Insurance Co., 888 So. 2d 663, 663-64 (Fla. 3d DCA 2004).

In 2012, the Florida Legislature amended former sections 627.736(5)(a)2. and 3., to what are now sections 627.736(5)(a)1. (“subparagraph 1”) and 2. (“subparagraph 2”). Below is a side-by-side comparison of the former version and the 2012 amendment:

As a result of this amendment, subparagraph 1 now listed three different fee schedules (participating physicians fee schedule of Medicare Part B; ambulatory surgical centers and clinical laboratories fee schedule; and the Durable Medical Equipment fee schedule) rather than only the participating physicians fee schedule of Medicare Part B. In order to address the three fee schedules, the Legislature amended subparagraph 2 to replace “participating physicians” with “applicable.” Therefore, although “participating physicians” was removed, the applicable schedule of Medicare Part B for 2007 remained the participating physicians fee schedule

In Priority Medical, the Third District improperly focused on the changes to subparagraph 2. in isolation, instead of evaluating the changes to the overall statutory scheme affected by the 2012 amendments to both subparagraphs 1. and 2. Priority Medical determined that the Legislature’s deletion of the phrase “participating physicians” from subparagraph 2 in favor of the modifier “applicable,” meant that the statute was to have a different meaning from that accorded to it before the amendment. The Third District held that “giving effect to the 2012 legislative amendment . . . the proper reimbursement rate is the higher 2007 non-facility limiting charge, not the lower 2007 non-facility participating price.”

Katzell simply adopted the reasoning in Priority Medical.

The Fourth District in In House Diagnostic disagreed with this statutory interpretation for the above going reasons. The court additionally noted that Priority Medical and Katzell “discounted the importance of the Legislature retaining the phrase ‘participating physician fee schedule’ in subparagraph 1.f.(I) and overlooked the fact that nowhere in the relevant statutory provision is the phrase “limiting charge” even mentioned.”

B. The Limiting Charge is a payment limitation and not a fee schedule

The Fourth District in In House Diagnostic Services explained that Priority Medical also did not properly consider the nature of a limiting charge under the Medicare program.

Medicare defines the Limiting Charge as the limit that a nonparticipating provider can legally charge on an unassigned claim to Medicare beneficiaries. See 42 U.S.C. § 1395w-4(g)(1)(A). in other words, the Limiting Charge is a cap on what a nonparticipating physician can charge a Medicare beneficiary when the Medicare beneficiary is paying from their own pocket. Thus, the limiting charge is a payment limitation and not a fee schedule.

Because the limiting charge is not a fee schedule, it can never be the applicable schedule of Medicare Part B for 2007.

The Fourth District further held that even if the limiting charge could be used in calculating the reimbursement rate for imaging services in PIP cases, the PIP statute does not distinguish between participating and nonparticipating physicians, thereby rendering the limiting charge’s purpose unnecessary in Florida’s PIP context.

The Fourth District continued that simply because the limiting charge is reflected on CMS’ website did not mean it should be considered as a payment method under the PIP Statute. Because Medicare did not create its online search tool for use in the context of Florida’s PIP statute, and because Florida’s PIP statute does not mention the search tool in discussing available reimbursement rates, the limiting charge reflected on the website for a given medical service should be ignored in determining the appropriate reimbursement rate for PIP services.

Notably, the rationale of this decision also establishes that OPPS is not the correct payment method under § 627.736, as OPPS is not a fee schedule, is not mentioned in the PIP Statute, and its inclusion on CMS’s website is irrelevant to determining reimbursement under the PIP Statute.