Personal injury protection coverage has become a growing burden for many states, with rising medical costs leading to higher auto insurance rates and in some instances, fraud. While PIP coverage is not bad in and of itself, reforms to control costs are necessary to keep PIP costs from spiraling out of control. Recent proposals from the New Jersey Department of Banking and Insurance would implement several reforms to bring these rising medical costs under control and keep auto insurance costs down.
“The Department of Banking and Insurance has revised parts of its contentious plan to clamp down on the rising medical costs that insurance companies pay for auto accident victims.
About 25 percent of a 219-page proposal to reform the state’s rules on personal injury protection coverage has been amended in light of comments the department received, and will be reissued for another round of public input, the department said yesterday. The banking department’s initial proposal, issued last year, garnered more than 18,000 public comments and was the subject of a heated day-long hearing in the state Assembly.”
One of the central reforms of the Department of Banking and Insurance’s proposal is the implementation of fee schedules for medical procedures. Fee schedules place a ceiling on the levels of reimbursement that health care providers receive for certain treatments. These ceilings discourage physicians from charging for frivolous or unnecessary treatments, which keeps the overall price of health care down. Similar efforts to those being proposed in New Jersey are currently being considered in Michigan.
“The department’s proposal looks to cap PIP expenses, in part, by creating fee schedules for hundreds of medical procedures not covered by regulation.
Insurance companies have urged the reform, saying fraud and abuse of PIP, which covers medical expenses regardless of fault, is driving up insurance costs.
But medical providers and plaintiffs’ attorneys have fought the plan, saying the changes would be too restrictive.
The revised plan, among other things, looks to create a new fee schedule for hospital outpatient surgical facilities, delete 117 fees for spinal and neurosurgical procedures from the physician’s fee schedule and delete references to workers’ compensation managed care organizations from PIP protocols.”
The Department’s changes to its previous reform plan caps an eventful week for insurance regulators in New Jersey. According to a recent article from the Star Ledger, New Jersey Banking and Insurance Commissioner Tom Considine is set to step down next month to return to the private sector. A recent story in Out of Storm News covered this breaking news and the impact of Commissioner Considine’s time in service in greater detail.