A New York workers' compensation measure, that would have increased the threshold for prior authorization of certain medical and diagnostic services, was vetoed last night by Republican Gov. George Pataki.

An insurers trade group praised the governor's rejection of A. 8713 sponsored by Assemblyman Herman D. Farrell Jr., D-Manhattan, which would have raised the ceiling on treatment without prior approval from $500 to $1,200.

Kristina Baldwin, regional manager and counsel for the Property Casualty Insurers Association of America (PCI) said today that New York has the second highest cost level for comp claims in the nation and the bill would have limited one of the few measures available to limit costs.

“Governor Pataki has been a leader in workers' compensation reform and approving this legislation as a stand alone measure would have been contrary to the governor's efforts and progress in this regard,” Ms. Baldwin said.

Earlier this year the governor introduced a comprehensive comp reform bill as part of his budget, but it failed to survive negotiations with the legislature over the final budget package.

Ms. Baldwin said that comp reform has failed to move because of labor objections. There is speculation, she said, that labor is delaying action on a comp measure until a new governor is elected in November. Mr. Pataki is not seeking reelection and the Democratic gubernatorial candidate, New York Attorney General Eliot Spitzer, is heavily favored.

“New York currently has the second highest workers' compensation claims costs in the nation and such costs are having an extreme negative impact on the state's economy and its workers' compensation insurance,” Ms. Baldwin stated. “The existing $500 prior authorization threshold is one of the few tools which insurers currently have to assist in containing claims costs.”

In addition, she said, the prior authorization threshold allows insurers to review “a proposed diagnostic service before the patient obtains the service, thereby allowing the insurer to ensure that the treatment is necessary and that it is not fraudulent.”

Ms. Baldwin said many insurers have contractual arrangements with radiology networks allowing insurers to obtain magnetic resonance imaging (MRI) and other diagnostic services at discounts of up to 40-45 percent less than the fee schedule.

By increasing the approval threshold, she said the bill would have eliminated this savings because instead of obtaining an MRI at a networked radiology facility at a discount rate, many workers would end up at non-contracted radiology sites where no discounts are available.

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