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|Statement on Appellate Court's Decision|
On August 10, 2009 the Appellate Division lifted a stay that had been granted to appellant provider groups and upheld the Department’s 2007 amendments to the Personal Injury Protection (“PIP”) Medical Fee Schedule used to reimburse providers who treat insureds injured in automobile accidents. Pursuant to this ruling, insurers must now utilize the fee schedule contained in the regulation when reimbursing providers for treatments rendered on or after the day of the decision. The court enjoined one minor provision of the rule regarding a database that insurers could use to help them determine usual, reasonable and customary fees for the limited number of services not specified on the fee schedule. The court remanded that portion of the regulation to the Department for further review of the database.
Thus, the court decision rewards the extensive work the Department has been doing for several years to contain PIP costs, which historically have been a major cause of automobile insurance rate increases (over the past several years insurers have spent approximately $1.20 on medical care related expenses for every $1.00 received in PIP premiums). Implementation of the Department’s schedule will put downward pressure on auto insurance rates because it sets reasonable limits on insurer payments for medical services, increases cost predictability for all parties, and is designed to reduce costly and time consuming payment disputes. With fees delineated in the schedule covering more than 1,000 distinct medical services, many disputes and arbitration proceedings that took place prior to these fees being established will no longer be needed.
The Appellate Division found that the Department engaged in extensive consultation with provider groups, conducted a detailed review of multiple sources of fee data, and made “considered and informed judgments” in developing its rules and comprehensive fee schedules. As noted by the court, the schedules reflect the amounts actually paid to providers by auto insurers, plus an additional amount in recognition of provider concerns about the administrative costs of filing PIP claims. Moreover, the court reiterated its prior holding that using the paid versus billed amount was entirely proper.
Consequently, one of the Department’s primary goals was to decrease the number of procedures in this unlisted procedure category and thereby reduce the number of provider/payer disputes and anomalously high provider reimbursement payments. By setting forth a fee schedule for more than 1,000 districts medical services and thereby remove these procedures from the “unlisted” category, the Department was able to accomplish this goal. The adoption of this comprehensive fee schedule is one of the final pieces of the auto insurance reform efforts over the past several years.
|Updated: September 1, 2009|
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