Medical Fee Schedules: Automobile Insurance Personal Injury Protection and Motor Bus Medical Expense Insurance Coverage

Adopted Amendments: N.J.A.C. 11:3-29.1, 29.2, 29.4, 29.5 and 29.6

Proposed: December 18, 2000 at 32 N.J.R. 4332(a) (see also 33 N.J.R. 226(a))

Adopted: April 24, 2001 by Karen L. Suter, Commissioner, Department of Banking and Insurance.

Filed: April 24, 2001 as R. 2001, d.158, with substantive and technical changes not requiring additional public notice and comment (see N.J.A.C. 1:30-4.3). and with proposed amendments to N.J.A.C. 11:3-29.3 and 29.4(a) and (c), proposed new rule N.J.A.C. 11:3-29 Appendix and proposed repeal of N.J.A.C. 11:3-29.6(a) and (c) through (e) not adopted at this time.

Authority: N.J.S.A. 39:6A-4.6.

Effective Date: May 21, 2001

Expiration Date: January 4, 2006

Summary of Hearing Officer Recommendations and Agency Responses:

A public hearing on the proposed rules was held on January 25, 2001 at the Departmentís offices. Thirty-two individuals testified or made written submissions to the Hearing Officer. The following sets forth a summary of the major issues and recommendations of the Hearing Report.

In accordance with N.J.S.A. 52:14B-4(g), the Hearing Officer issued a report on April 24, 2001 making recommendations to the Commissioner that call for the adoption of significant portions of the proposal. The report includes a summary of the public testimony and comments received at the hearing as well as the Hearing Officer's recommendations. The Hearing Officer's Report is incorporated herein by reference and made a part of the rulemaking file.

The Hearing Officer reviewed the record, including the testimony at the hearing and made a series of recommendations, which are synopsized in the chart below. The Hearing Officer recommended that a review of outstanding issues be completed within 60 days.







proposed amendments


Purpose & Scope

Adopted w/o change





proposed new definition


bilateral surgery

Adopted w/o change


proposed amendment to definition


Adopted w/o change

proposed amendment to definition

eligible charge or expense

Adopted w/o change

proposed new definition

emergency care

Adopted w/change

eliminated 120 hour emergency presumption

proposed amendment to definition

global service

Adopted w/o change

proposed new definition


health care provider

Adopted w/o change


proposed amendment to definition

health insurance

Adopted w/o change

proposed new definition


medically necessary

Adopted w/change


proposed amendment to definition

PIP coverage

Adopted w/o change

proposed deletion



Adopted w/o change


proposed new definition


3-digit zip code

Adopted w/o change


proposed amendments



Not Adopted



Application of Medical Fee Schedules

proposed amendments


Reference to new schedules in Appendix

Not Adopted

not amended in proposal


region where service performed


proposed amendments


refences to durable medical equipment schedule

Not Adopted

not amended in proposal


out of state treatment


proposed amendments


Insurer's limit of liability

Adopted w/o change


proposed amendments


multiple & bilateral procedures

Adopted w/o change

proposed amendments


prohibits unbundling

Adopted w/change

recodified non-reimbursement for hot/cold packs to rule text

proposed amendments


follow-up care

Adopted w/o change


proposed amendments


separate procedures

Adopted w/o change


proposed new cite


covered injections

Adopted w/o change


proposed recodification and amendment


assistant surgeon expenses

Adopted w/o change

proposed new cite


two physician surgeons

Adopted w/o change


proposed new cite


professional component of global charges

Adopted w/o change

proposed new cite


$90 daily maximum allowable fees

Adopted w/change

Added medical doctors to DO's excluded from daily maximum

proposed new cite


limit on reimbursement of unspecified time increments

Adopted w/o change

proposed new cite


limits on follow-up evaluation and management

Adopted w/change

proposed amendments


Balance billing prohibited

Adopted w/o change



Fee Schedules


proposed repeal of existing cite


Physicians fee schedule

Not Adopted

proposed repeal of existing cite


Dental Fee Schedule

Adopted Repeal

proposed repeal of existing cite


Nursing & Allied Professions fee schedule

Not Adopted

proposed repeal of existing cite


Ambulance Fee schedule

Not Adopted

proposed repeal of existing cite


Durable Medical Equipment fee schedule

Not Adopted




proposed new

Exhibit 1

Physician's Fee Schedule

Not Adopted

proposed new

Exhibit 2

Dental Fee Schedule Ė Reserved

Adopted - Reserved

proposed new

Exhibit 3

Home Health Care Services fee schedule

Not Adopted

proposed new

Exhibit 4

Ambulance Services fee schedule

Not Adopted

proposed new

Exhibit 5

Durable Medical Equipment fee schedule

Not Adopted


Thus, the hearing officer recommended that the majority of the proposal should be adopted and made the following observations:

1. The definition of "emergency care" should be clarified by deleting the last sentence, which creates a presumption of emergency care when the care is performed within 120 hours of the accident. Testimony at the hearing indicated that this provision is confusing and does not serve to clarify the term.

2. The adoption should clarify that the application of hot and cold packs is not separately reimbursable because it is part of other procedures.

3. The dental fee schedule should be repealed because it was the subject of recent litigation and requires revision. Since dental costs are a small fraction of PIP costs, it is consistent with the legislative mandate to repeal the schedule at this time.

4. The $90.00 daily cap on physical medicine and rehabilitation procedures should be adopted for chiropractors and physical therapists. However, the exclusion of osteopathic manipulation treatment from the $90.00 cap for physical medicine and rehabilitation procedures should be amended to include medical doctors as well as osteopaths. Contrary to the manner in which this treatment is provided by chiropractors and physical therapists, testimony and documentation provided at the hearing indicate that this is a stand-alone treatment when performed by medical doctors and osteopaths, and thus should be treated differently.

5. The fee schedules for physicians, home care services, ambulance services, and durable medical equipment and prosthetic devices found in Exhibits 1 through 5 in the Appendix should not be adopted at this time so that further study can occur to address the comments regarding specific fee amounts, disparity in reimbursement by regions, and the types of data used by the vendor for developing the fees.

6. The Hearing Officer recommended that the following issues should be monitored, although not part of the adoption:

The Department should complete its review of the issues outstanding within 60 days of the date of the Hearing Officer's Report and Recommendations.

The Commissioner has accepted the recommendations of the Hearing Officer and has incorporated them into the changes made in the rule upon adoption.

Copies of the Report are available from the Department upon the payment of the fee as calculated pursuant to N.J.A.C. 11:1-32.4(b)7. Persons wishing to obtain a copy of the Report should write to: Karen Garfing, Hearing Officer, P. O. Box 325, Trenton, New Jersey 08626-0325.

Summary of Public Comments and Agency Responses

The Department received 70 timely comments to the rule as follows:

Russell I. Abrams, MD

Howard Adelman, PhD.

Michael Alberts, CV Products, Inc.

Keith Alexander, PhD.

Joseph Armeni, CGU New Jersey

L. F. DíAmelio, Capital Area Regional Trauma Center

Andrew S. Blackstone, DO, New Jersey Association of Osteopathic Physicians & Surgeons

Estelle B. Breines, New Jersey Occupational Therapy Association

Norman Brettler, Brunswick Imaging

Charles Calabrese, New Jersey Chiropractic Forum

Richard P. Cevasco, Ed.D.

John M. Charuk, PhD.

George H. Cisneros

Donald S. Cleasby, National Association of Independent Insurers

Donald C. DeFabio, DC

Betty Jeane Dunn

Nathaniel N. Dunn

John Kerry Dyke, New Jersey Auto Agents Alliance

Annmaire Ferrante-Seyffart, Professional Association of Health Care Office Managers

Phyllis Forsyth, First Trenton Companies

Louis J. Fusco, Material Damage Adjustment Corp.

Frances Gallo

Susan Gartland, New Jersey State Board of Physical Therapy

Philip Getson, D.O.

Gail Gresch, Brait, Partnow, Margolin & Sharetts, MD, PA

Joseph A. Bryson, Bryson Chiropractic Center

Thomas Campana, DC

Gino Grosso, MD

Osha Haller, PhD, New Jersey Psychological Association

Jeffrey Hammond, New Jersey Trauma Center Council

Raymond F. Hanbury, Jr., PhD.

Jeffrey S. Harris, MD

Ellen Klein, RN

John W. Komorowski

Lenny Kruglyak, Health Plus Chiropractic Center

Jack B. Kushnick, American Physical Therapy Association

Liberty Supply, LLC

Stephan M. Lomazow, The Neurological Association of New Jersey

Maria Lopez

Karen Mancill, AIG Insurance Company

Helen Mate, NJ Podiatric Medical Society

Mary Ann Miceli

Michael J. Moore, Healthcare Business Resources

Arthur Meisel, New Jersey Dental Association

Irvin Moss, MD, New Jersey State Society of Anesthesiologists

William C. Murphy, DO, PT, Springfield Rehabilitation Associates, LLC

Victor J. Nitti, PhD.

Thomas Panam, Char Kem Medical Diagnostic, Testing & Rehab Co., P.C.

Robert Pasahow, PhD., Affiliates in Psychotherapy, P.A.

Alexander M. Pendino, DO, Hamilton Neurology

Elsie Pugliese

Timothy T. Raymond, Insure Solutions, LLC

Gregory J. Rokosz, President, State Board of Medical Examiners

Patricia Ross, RN, Midlantic Medical Review

Steven E. Ross, MD, University of Medicine and Dentistry of New Jersey, Robert Wood Johnson Medical School at Camden

Marvin Ruderman, MD, The Neurological Association of New Jersey

Angie Rush, CSG, Inc.

Ronald F. Saltiel, Coalition for Quality Health Care

Jill A. Samo, PhD.

Dennis M. Scardigli, MD

Samuel Schrecker, MD

William G. Schroeder, DC, Central Jersey Chiropractic Society

Carol Seymour

Patricia M. Sheehan, BSN, RN, CCM, CRRN, Hanover Insurance Company

Robert L. Simmons, Allstate New Jersey Insurance Company

Donna Singer, American Physical Therapy Association of New Jersey

Rosemarie Soclaro Moser, PhD

Charles D. Vogel, State Farm Insurance Company

Deborah Wean, New Jersey Manufacturers Insurance Group

Mark Weinstein, DC


Comment: Several commenters stated that they support the goal of the Automobile Insurance Cost Reduction Act ("AICRA") to control the cost of what auto insurance pays for by elimination of fraud and abuse. Some of these commenters further stated that the new fee schedule with maximum daily charges for physical medicine procedures and revision of the multiple procedures reduction formula will go a long way towards eliminating abusive billing practices. Commenters further stated that the fees for physical therapy procedures appear to be consistent with what is being paid in the rest of the marketplace. Another commenter supported most of the changes in the fee schedule proposal including the per office visit for physiotherapy services.

RESPONSE: The Department appreciates the support for the proposal. As noted in the Hearing Report, the Department believes that the partial adoption at this time of the maximum daily fee and other provisions of the rules will be beneficial while it completes work on the schedules themselves in the proposed Appendix.

COMMENT The commenter expressed the opinion that the proposed fee schedule will reduce unnecessary arbitration and litigation expenses of insurers who have contested improper billing. In addition, the proposed new fee schedule will reduce the expenses paid by insurers to vendors who utilize third party contracts to reduce a providerís fee.

RESPONSE The Department appreciates the support for the proposal.

COMMENT: Several commenters expressed support of the proposal, complemented the Departmentís efforts to improve this area of auto insurance and urged adoption of the rule as soon as possible.

RESPONSE: The Department appreciates the support for the proposal. As noted in the Hearing Report and above, the Department decided to move forward with this partial adoption at this time for the reasons expressed by the commenter.

COMMENT: One commenter expressed concern that the rule proposal was published on December 18, 2000 during the holiday season and that most providers were unaware of the proposal until after the New Year. The commenter requested that the Department extend the comment period.

RESPONSE: The Department does not agree with the commenter that the comment period should be further extended. Although the proposal appeared in the New Jersey Register on December 18, 2000, the Department put the proposal on its web site on December 1, 2000. In addition, the comment period was extended until January 25, 2001 when a public hearing on the proposal was held. The Department believes that it has provided interested parties with sufficient time to comment on the proposal.

COMMENT: Many commenters stated that basing the proposed fee schedule on accepted rather than charged fees was not in accordance with the terms of N.J.S.A. 39:6A-4.6, which requires the fees to be based on "reasonable and prevailing fees of 75 percent of the practitioners within the region." The commenters interpreted this language to mean the billed charges, not the fees actually paid to the provider. One commenter stated that the Appellate Division in Cobo v. Market Transition Facility, 293 N.J. Super. 374 (App. Div. 1996), "concluded that the formula refers to the reasonable and customary charges as opposed to receipts of collections of the providers." These commenters also stated that they would specifically object to the use by the Departmentís vender of Medicare, Medicaid, and HMO reimbursement data to develop the fee schedule.

Some commenters pointed out that the Legislature had considered but rejected a proposal to calculate the fee schedule at 120 percent of Medicare and that therefore the Department was prohibited from considering Medicare data in calculating the fee schedule. Another commenter stated that it is common knowledge that the usual, reasonable and customary ("UCR") fees of a provider are in the range of +35 percent to +55 percent of Medicare and the fees developed by the Departmentís vendor are lower than that level. Another commenter stated that the proposed fee schedule is comparable to HMO fees and does not provide a fair level of reimbursement, which the commenter believes is a 12 percent reduction from billed.

Concerning Medicaid fees, many commenters stated that New Jerseyís Medicaid reimbursement rate is one of the lowest in the country and should not be used in developing the fee schedule.

Concerning using data on payments allowed by managed care entities to develop the fee schedule, many commenters stated that providers cannot negotiate rates and must accept managed care fees or lose all their patients. Some of these commenters stated that they accepted the lower level of managed care reimbursement in return for a guaranteed supply of patients and that this did not apply to PIP. Other commenters noted that the administrative costs of utilization review recently mandated for PIP claims plus the time and money spent to collect fees from auto insurers would result in reimbursement being lower than the cost of providing the service.

RESPONSE: The Department disagrees that N.J.S.A. 39:6A-4.6 requires development of a fee schedule based solely on charges billed by providers. The Appellate Division case referenced by the commenters did not decide the question of whether fee schedules must be based on billed rather than charged fees. As more fully set forth in the Summary to the proposal, the Department interprets N.J.S.A. 39:6A-4.6 to direct it to adopt rules including a fee schedule of "reasonable and prevailing fees," that is, fees that are market based and consider the amounts actually accepted by providers as compensation for their services. In so interpreting the statute, the Department notes the important statutory purpose of containing the cost of insurance claims and thus the premiums paid by policyholders. Reimbursement of provider fees for those injured in automobile accidents should not be greater than the reasonable and prevailing fees paid to the provider for the same procedure or treatment when the injury is from some other source.

As set forth in the Summary and Hearing Report, the Department has determined to proceed to adopt the amendments to N.J.A.C. 11:3-29.1, 29.2, 29.4 (except paragraphs (a) and (c)) and 29.5 while it continues to address many of the technical issues that relate to specific fees or groups of fees set forth in the proposed Appendix to this subchapter. Necessarily, this partial adoption does not include the amendments to N.J.A.C. 11:3-29.3, which was proposed to be amended to set forth the new regional definitions and amendments to paragraphs (a) and (c) of N.J.A.C. 11:3-29.4, which relate to the new fees set forth in the proposed new Appendix. Therefore, the portions of the above comment that relate to the fees set forth in the Appendix will not be addressed at this time, but rather when the Appendix is adopted.

COMMENT: Several commenters stated that the proposed fee schedule should be rejected because by lowering the reimbursement amounts, fewer providers will be willing to treat accident victims and the public will suffer in consequence.

RESPONSE: The Department disagrees that these commentersí prediction will result from promulgation of a fee schedule that provides a similar level of reimbursement for treatment of injuries sustained in auto accidents as from other causes. This prediction was also made when the Department proposed its original fee schedule, and the result never occurred. Other states with fee schedules for auto insurance PIP medical expenses have similarly not experienced a dearth of providers willing to treat accident victims, nor a decline in the quality of care.

The Department notes that the statute requires the fee schedule to be updated at least every two years, and its contract with the current vendor contemplates annual revision to update CPT codes and revise fees based on more current information. These periodic adjustments should help ensure that the quality of care will not be diminished.

COMMENT: One commenter recommended the use of electronic billing for PIP reimbursement stating that it would be an additional means to lower costs as has been done in the health care industry.

RESPONSE: The comment is outside the scope of the proposal. However, the Department recognizes that the advances in electronic billing in the health insurance field will provide a basis for the development of electronic billing for auto insurance among providers.

COMMENT: One commenter urged the Department to promulgate fee schedules for acute care hospitals, trauma centers, rehabilitation facilities, other specialized hospitals and nursing homes. The commenter also requested that fee schedules be established for services provided in Ambulatory Service Centers and for dental care. The commenter stated that the lack of fee schedules in these areas results in disputes about what constitutes reasonable and customary fees and PIP arbitrations.

RESPONSE: This comment is similarly beyond the scope of the present proposal, since it urges that the Department adopt further schedules of fees for other providers. The focus of the Departmentís efforts has been on the medical fee schedules. Once this rule is adopted, the Department will continue work on developing the other fee schedules permitted by N.J.S.A. 39:6A-4.6. With regard to a dental fee schedule, as noted in the Summary to these rules when proposed, the Department expects to propose this schedule after obtaining further data on dental fees.

COMMENT: One commenter stated that the definition of "eligible charge" in N.J.A.C. 11:3-29.2 as the, "providerís usual, customary and reasonable ("UCR") charge or the upper limit of the fee schedule, whichever is lower," is problematic. The commenter did not believe that the Departmentís intent was that a carrier pay the providerís usual charge if it is not customary and reasonable. The commenter recommended eliminating the word "providerís" from the definition. The commenter further recommended clarifying the definition to state that the usual, reasonable and customary fee is an industry standard, not a standard determined solely by an individual provider. One commenter recommended that the Department include in its rule the definition of UCR found in N.J.A.C. 11:4-16.8 of the Minimum standards for Individual Health Insurance Policies. The commenter also recommended that the proposal be amended upon adoption to include the following language, "Whenever a carrierís UCR determination results in payment of benefits at a level less than the submitted Ďusualí fee, the carrier shall disclose the specific criteria and methodology that was used in making its determination, including but not limited to specific geographic area, percentile, and currentness of data. In no event may a carrier utilize a UCR limit that does not incorporate the most recent Ďusualí fees of at least 75% of similarly trained providers."

Another commenter noted that there was no guidance on how to calculate the UCR fee. The commenter suggested that to be UCR, a fee must meet all three of the following criteria:

(1) usual, meaning the same charge that the provider has been charging and collecting for this service from auto and non-auto payers; (2) customary, meaning a fee that is within the 75th percentile of the fees that most physicians in the same geographical area charge for the same service; and (3) reasonable, meaning a fee that is within the expected range of usual and customary fees for the similar service and any difference being justified by objective documentation of the reasons therefor.

RESPONSE: The Department notes that since a definition of "UCR" was not included in the original proposal, it could not add it upon adoption since it was not subject to public comment. While the Department does not disagree with the commenterís proposed definition, it is aware that there may be other equally valid definitions and therefore declines to accept this suggestion at this time. It will, however, consider whether to add a definition of this term when making future revisions to these rules.

With regard to the commentersí concern that "UCR" requires consideration of factors besides a providerís "usual" charge, the Department agrees and notes that the terms "customary" and "reasonable" are likewise to be considered in determining the proper reimbursement for a particular service.

COMMENT: Concerning the provision at N.J.A.C. 11:3-29.4(a), which states that the schedule shall not apply to services provided by physicians in emergency care as defined in the rule, a commenter believed that the Departmentís intention, based on language in the Summary, was that the exemption should be restricted to trauma centers and not acute care hospitals, which do not have the same higher cost structure.

RESPONSE: The Department agrees with the commenter. The Summary to the proposal stated that, "The physicians fee schedule will not apply to services rendered as emergency care at acute care hospitals. The Department recognizes that the medical specialists who staff New Jerseyís system of trauma centers around the clock have a higher cost basis than outpatient and regularly scheduled surgery." The Department did not appreciate the difference in terminology and will clarify the rule upon adoption to provide the exemption to emergency room care in Level I and Level II trauma centers, rather than to emergency room care in acute care hospitals. The Department notes, however, that this provision appears in subsection (a) of N.J.A.C. 11:3-29.4 which is not being adopted at this time. The change will be made upon adoption of the rest of the proposal.

COMMENT: A commenter representing a New Jersey trauma hospital applauded the Department for excluding services rendered as "emergency care" from the fee schedule. The commenter expressed the concern that the result would be many individual separate negotiations with insurance carriers. The commenter recommended that for services rendered as "emergency care" the old fee schedule should remain in effect. The commenter believed that this reimbursement standard has been accepted by both providers and insurers. Another commenter, while acknowledging the higher cost basis of emergency care at acute care hospitals, nevertheless stated that a fee schedule at the higher rate for such services should be developed. Another commenter stated that there was no reason reimbursement for the care of automobile accident victims in emergency rooms should be different than that for non-auto related emergencies where the physicians accept Medicare, Medicaid and managed care reimbursement levels.

RESPONSE: The Department does not believe that it is necessary to try to develop a second fee schedule for physiciansí services rendered at trauma hospitals. Those providers should be able to demonstrate their usual, reasonable and customary fee for a service. Concerning the fact that providers accept Medicare and managed care fees for emergency care, the Department notes that a large proportion of cases in trauma hospitals are the result of automobile accidents. In addition, the cases that are treated at trauma centers are the most serious injuries. For this reason, the Department believes that it is appropriate not to have such treatment subject to the proposed physicians and surgeons fee schedule, which does not reflect the higher cost basis to these physicians.

Comment: One commenter questioned whether the provider who was not subject to the fee schedule could balance bill the insured or the PIP carrier if the fee received by the provider for such a service was below the old fee schedule that previously applied to the provider. The commenter questioned whether fees for emergency transportation would be excluded pursuant to this section. In addition, the commenter asked whether the CPT codes for emergency care at 99281-99285 were inconsistent with N.J.A.C. 11:3-29.4(a). Another commenter stated that the "120 hour" exclusion from the fee schedule for emergency care could create a disincentive for appropriate care since some tests might be ordered too early to be useful in order not to be subject to the fee schedule. Another commenter was concerned that the 120 hour window was not appropriate in the context of this rule and may invite abuse. The commenter recommended that this time period be shortened to 24 hours after the accident. Another commenter requested a clarification in the rule to state that once a patient had been transferred to a rehabilitation hospital or office follow-up care at a hospital, but after a patient had been released, would be subject to the fee schedule.

RESPONSE: The statutory prohibition on balance billing, which has been included in the rules since their original adoption in 1990 for completeness, applies to fees that are subject to the fee schedule rules. Even prior to the current proposal, some CPT codes were not on the fee schedule. Concerning emergency transportation, the exclusion is for treatment in Level I and Level II trauma centers and recognizes the fact that such centers must be staffed with trauma specialists 24 hours a day. Emergency transportation does not meet this definition. The commenters have referenced the 120 hour provision incorrectly. This provision was taken from N.J.A.C. 11:3-4 and classifies any treatment sought at an emergency room within 120 hours of the accident as emergency care to which the decision point review and precertification requirements did not apply. The fee schedule will not apply to care rendered in trauma centers from the time the patient is admitted until determined to be stable by the attending physician regardless of whether that is 120 hours or longer. Because only the most severely injured patients are taken to the trauma centers, it is unlikely that the 120 hour provision would have any application and the Department will delete it upon adoption to avoid confusion. Finally, as noted above, the exemption from the physicianís fee schedule will only apply to emergency treatment in Level I and Level II trauma centers and not rehabilitation hospitals or any outpatient care.

COMMENT: Several commenters stated that repealing the dental fee schedule and exempting services provided in emergency care in trauma hospitals from the fee schedule discriminated against the other types of medical providers who were subject to the fee schedule.

RESPONSE: The Department believes that the Summary to the proposal, the Hearing Report, and the responses to other comments in this notice adequately explain why it has chosen to repeal the current dental fee schedule and to exempt emergency care in trauma hospitals from the physicianís fee schedule.

COMMENT: A commenter questioned whether "provider" as defined in the rule included acupuncturists.

RESPONSE: The definition of "provider" is as provided in N.J.A.C. 11:3-4. Acupuncturists are not presently included on that list. The Department notes that none of the proposed CPT codes appears to reference acupuncture procedures.

COMMENT: One commenter inquired whether there would be a gap between the repeal of the current dental fee schedule and the adoption of a new one. If so, the commenter inquired what should insurers use as the standard for payment during that period. Another commenter asked if the current dental fee schedule would remain in effect until a new one is proposed and adopted.

RESPONSE: The current dental fee schedule is repealed on the effective date of this adoption. There will be a gap between the repeal of the old schedule and the adoption of a new one. During that time, dental services should be reimbursed based on their UCR fees as provided at N.J.A.C. 11:3-29.4(e).

COMMENT: Concerning the multiple and bilateral procedure reduction formula at N.J.A.C. 11:3-29.4(f)1 and 2, a commenter stated that a reduction in fees for dental surgery performed on both sides of the head, which is defined as one body region, is unfair in the case of bilateral temporomandibular ("TMJ") surgery where separate incisions are required and there is no less time and intensity required for one operative session than for performing the two procedures separately. The commenter urged the Department not to impose a rigid application of this formula.

RESPONSE: While the Department does not disagree, the commenter proposed no language to carry out its suggestion, nor any alternative formula or method of determining reasonable fees in this instance. The Department expects to confer with representatives of the dentistry profession concerning a revised dental fee schedule, and may attempt to develop and propose any appropriate clarifying language at that time.

COMMENT: Concerning N.J.A.C. 11:3-29.4(f), many commenters requested clarification on the deletion of the word "treatment" from the first sentence. These commenters believe that the elimination of "treatment" could mean that the daily maximum or multiple procedures reduction formula could be applied to Evaluation and Management services or diagnostic testing.

RESPONSE: It was not the Departmentís intent in eliminating the word "treatment" to make separate and distinct testing procedures subject to the multiple procedures reduction formula.

COMMENT: One insurer-commenter requested that TMJ be addressed in the dental fee schedule because excessive bills were being received for treatment of this condition.

RESPONSE: As noted in the proposal Summary and in response to a previous comment, the Department is working on a new dental fee schedule.

COMMENT: Concerning N.J.A.C. 11:3-29.4(g), which addresses prohibited "unbundling," one commenter noted that a standard was lacking and recommended using the Correct Coding Initiative ("CCI") developed by the Health Care Financing Administration ("HCFA") or the definition of global services by the American Academy of Orthopedic Surgeons. The commenter did not provide the language for its suggested standard.

RESPONSE: The Department will review those references, and if further clarification of the rule is warranted as suggested, will propose further amendments to the rule in the future.

COMMENT: Concerning N.J.A.C. 11:3-29.4(h), a commenter asked if Medicareís allowances would be used to determine the number of post-operative visits allowed or the number of days follow-up care would be included in the operative procedure fee. In addition, the commenter asked who or what would establish the criteria for what codes can and cannot be included in a billed procedure.

RESPONSE: The Department notes that N.J.A.C. 11:3-29(h) references "established practice," and states that the existence of a code does not per se imply the right to receive separate compensation for a procedure. Reimbursement of provider fees for services to those injured in auto accidents should not be greater than the fees paid for the same procedure when the injury is from some other source.

The commenter chose not to further describe its suggested standard, nor to provide any data about whether the Medicare standard represents established practice for treatment of traumatic injuries, nor to suggest any language for the Department to evaluate. While the comment is thus too vague to warrant a more direct response at this time, the Department will seek to locate those standards and, if appropriate, consider including them with any future proposed amendments.

COMMENT: One commenter questioned how N.J.A.C. 11:3-29.4(i) will operate. The commenter questioned whether the provider would be able to recoup the actual cost of the medicine injected since some injections are more costly than others.

RESPONSE: The commenterís concern is unclear. The proposed fee schedules do not set forth rates of reimbursement for specific drugs.

COMMENT: One commenter stated that N.J.A.C. 11:3-29.4(k) would make the presence of a second physician in major surgeries so uneconomical that care may be compromised. The commenter suggested that decisions about the use of a second surgeon not be dictated by insurance companies or influenced by disincentives.

RESPONSE: The Department notes that the level of reimbursement for a medically necessary assisting surgeon (20 percent of the primary physicianís allowable fee) was not changed by the proposal, and thus is beyond the scope of the adoption. Also, the commenter did not suggest an alternate standard for the Departmentís consideration, and so it cannot evaluate the desirability of proposing a change in the future.

COMMENT: One commenter believed that the criteria for reimbursable follow-up charges set forth in N.J.A.C. 11:3-29.4(o) is inflexible and does not take into account the uniqueness of each patient judged against the diagnosed medical conditions and ongoing symptoms. Another commenter stated that the most common rationale for performing a follow-up re-examination, to assess the patientís progress, had been omitted from the rule. The commenter believed that the limitation of reimbursement for two re-evaluations per month, applying one of the four criteria outlined, restricts the flexibility of the treating physician and may harm consumers.

RESPONSE: The Department disagrees, and notes that the commenter failed to suggest a different standard. The rule attempts to incorporate an appropriate standard consistent both with established practice and the legislative intent to control the cost of PIP medical expenses. It notes that providers routinely assess a patientís progress during treatment sessions, and that the rule is intended only to address circumstances when separate reimbursement is appropriate.

COMMENT: Several commenters asserted that the daily cap on physical medicine treatment of $90.00 set forth in N.J.A.C. 11:3-29.4(m) discriminates against chiropractors because it excludes osteopathic manipulative treatment. Some of these commenters recommended that several chiropractic manipulative codes be excluded from the cap because such services are no different than those provided by osteopaths. One commenter stated that chiropractors had tremendously more training and expertise in manipulation and ought to be reimbursed more than osteopaths for such services. Another commenter stated that singling out chiropractic treatment for inclusion in the daily cap was discrimination against chiropractors versus other medical providers and was only designed to direct patients away from chiropractic care.

RESPONSE: The Department disagrees that the daily maximum allowable fee of $90.00 for physical medicine and rehabilitation procedures at N.J.A.C. 11:3-29.4(m) improperly discriminates against chiropractors because it does not include osteopathic manipulative treatment. As set forth in the Summary when the rules were proposed, the maximum daily fee implements N.J.S.A. 39:6A-4.6b, which provides for a single fee when a group of services are commonly provided together. Chiropractic manipulative treatment is often provided together in the same treatment session with other physical therapy modalities. The $90.00 daily cap is reasonable in comparison to fees developed using the multiple procedures reduction formula. For example, when the multiple procedures reduction formula is applied to four commonly billed physical medicine procedures in New Jersey (CPT 97014, 97035, 97110 and 97112), the results are fees of $77.18, $79.54, and $72.08 in Regions 1 through 3, respectively. The multiple procedures reduction formula was also applied to a group of codes representing a common chiropractic treatment session (CPT 98941, 97112, 97530) resulting in fees of $71.20, $80.10 and $70.06 in Regions 1 through 3 respectively. Finally, a $90.00 fee is further supported by comparison with two other states, Connecticut and Washington, which use a daily cap of $90.00 and $91.00, respectively, for physical medicine services in their workerís compensation fee schedules. Osteopathic manipulative codes were included in the proposal at the suggestion of osteopathic provider groups, which stated that they bill these manipulative treatments under a different set of CPT codes than those used for chiropractic manipulative treatment. Information provided by an osteopathic group, as well as additional information submitted at the public hearing on these rules, appears to indicate that osteopathic manipulative treatment is often provided separately from other physical therapy procedures. Should the Department determine that osteopathic manipulative treatment is commonly provided together with physical therapy modalities, it will revisit this issue.

The comment that chiropractorsí additional training and expertise in manipulation warrants greater reimbursement than osteopaths for similar services will be appropriately addressed in the subsequent adoption of the Appendix, with regard to N.J.A.C. 11:3-29.4(m), based upon the available data. Finally, the Department finds no merit in the comment that the intent of this rule was to "direct patients away from chiropractic care." It notes that persons injured in automobile accidents whose medical expenses will be reimbursed through the automobile PIP coverage would not generally be motivated to seek or avoid care by providers in any specific discipline based on the Departmentís rules and the reimbursement levels to those providers.

COMMENT: A commenter stated that some medical doctors perform manipulative treatments and bill under the same CPT code used by osteopathic physicians. It suggested that the Department amend the rule to recognize this practice.

RESPONSE: The Department agrees and has made the change to N.J.A.C. 11:3-29(m) upon adoption.

COMMENT: One commenter questioned whether osteopathic manipulation will continue to be paid using the multiple reduction formula.

RESPONSE: Yes, osteopathic manipulation will continue to be subject to the multiple treatment reduction formula when it is combined with other procedures as provided at N.J.A.C. 11:3-29.4(f).

COMMENT: One commenter requested clarification that the $90.00 maximum allowable charge for physiotherapy services in N.J.A.C. 11:3-29.4(m) is a ceiling and that if the fee for treatment is less than $90.00, the lesser amount is reimbursable. Another commenter asked if the physical medicine codes billed were less than the daily maximum, whether the multiple procedures reduction formula apply. Another commenter requested clarification that the $90.00 maximum applies regardless of the number of providers who performed services on the patient in one day. Another commenter suggested that treatment by all providers in an office be subject to the daily maximum. Another commenter stated that the daily maximum for rehabilitation services was inappropriate for persons with severe injuries and that it was best to evaluate these injuries on a case by case basis.

RESPONSE: The commenter is correct that the $90.00 maximum daily charge for physical medicine and rehabilitation procedures (CPT 97001 through 98943, excluding osteopathic manipulative treatment actually performed by an osteopathic physician or medical doctor) is a maximum; if the fee for the treatments provided in a session is less than $90.00, then the lesser amount is to be reimbursed. The multiple procedures reduction formula is not intended to apply to reimbursement for services subject to the daily maximum. The total reimbursement should not exceed the total allowed (for example, a $40.00 procedure and a $35.00 procedure when performed on the same day should be reimbursed at a maximum of $75.00, not $90.00). Further, the $90.00 per day maximum applies regardless of the number of providers who performed services on the patient in a single day, and regardless of whether they are in a single office or maintain separate practices. The Department notes that the medical fees on the schedule represent a per service limit on an auto insurerís liability for reimbursement under the terms of the insurance contract. This maximum liability of an insurer is not unlike other policy limits, such as the policy limits on liability coverages.

Finally, with regard to the comment that the daily maximum would be inappropriate for persons with severe injuries, the Department notes that N.J.A.C. 11:3-29.4(m) includes a provision which permits insurers to reimburse providers in excess of the daily maximum where the patient has serious traumatic injuries to more than one area of the body. (This provision is addressed further in another comment below.)

The Department does not believe that any changes to the rules are necessary to clarify the language further, and none of the commenters made any specific suggestions for doing so.

COMMENT: Several commenters questioned why the individual fees for physiotherapy services are included in the fee schedule when there is a per visit fee. One commenter also noted that the per visit fee can be abused where patients with multiple injuries (for example, neck and ankle) may be required to attend physical therapy on separate days so that the services can be billed separately. One commenter supported a time-base/per visit fee. However, if the fee is for service, the commenter recommended that billing for multiple body parts should only be permitted for therapist-attended procedures.

RESPONSE: Although this comment seems to relate more to the individual fees set forth in the proposed Appendix which will be adopted in the future, the Department notes that a particular physiotherapy service may be provided separately and the specific fee as set forth on the fee schedule is appropriate in this circumstance. The Department agrees with the commenter that per visit fees can be abused where patients with multiple injuries are directed by their treating provider to return on separate days in order to maximize the providerís fee. The Department notes that N.J.A.C. 11:3-4 sets guidelines for evaluation of the medical necessity for the number of days of treatment of neck and back injuries, and that N.J.A.C. 11:3-29.4(g) prohibits artificially separating or partitioning what is inherently one total procedure into subparts ("unbundling"). N.J.A.C. 11:3-29.4(f)2 (addressing treatment to multiple body parts) is to be used only in billings for operative and surgical procedures, not others.

COMMENT: Concerning the provision for reimbursements in excess of the daily maximum in N.J.A.C. 11:3-29.4(m), one commenter noted that "serious traumatic injury" was not defined by the proposal and recommended using the definition for an injury that meets the limitation on lawsuit threshold. The commenter also questioned whether the language in the proposal gives the insurer discretion to pay above the daily maximum or mandates such payment. The commenter recommended that the language be clarified to give the insurer the discretion to pay above the daily maximum. Another commenter supported the extended visit concept but recommended that insurers develop appropriate guidelines for this to limit abuse and inconvenience to the patient.

RESPONSE: The provision for reimbursement in excess of the daily maximum was included in the proposal at the suggestion of representatives of a provider group, which described circumstances where physical and rehabilitation therapy of severely injured patients (for example, a patient that has multiple broken limbs and perhaps additional internal injuries or other complicating conditions) require substantial additional time and difficulty in a treatment session. AICRA's verbal threshold definition would be inappropriate here, since, for example, a single displaced fracture may qualify the injured person for tort compensation under the verbal threshold. Adopting the verbal threshold standard may thus lead to abuse of this exception.

The Department intends that the daily maximum fee apply in all but the most exceptional cases. It recognizes that under these special circumstances, the rule would otherwise be inflexible, and has included language so as to permit some flexibility in very limited circumstances when appropriate. It does not intend that these rules be construed to limit the payment of an otherwise reasonable fee that is higher than the daily maximum when both the provider and insurer agree that it is appropriate.

With regard to the comment that further guidelines about use of this provision be provided in the rule, the commenter provided no suggested language. The Department will continue to monitor application of this rule to determine whether further clarifying language can be developed. It notes, however, that the purpose of the rule is to provide some limited flexibility under unusual circumstances that would be difficult to set forth in a rule.

COMMENT: One commenter noted that many times physical therapy modalities are not administered by licensed physical therapists. To limit abuse, the commenter recommended that a physical therapistís license number should accompany the bill and the initial evaluation should state specific goals and time frames.

RESPONSE: The substance of this comment would be addressed more appropriately in the protocols rules, N.J.A.C. 11:3-4. The Department will consider adding an amendment that permits insurers to require a physical therapistís license number before reimbursing for treatment.

COMMENT: One commenter objected to the determination that the administration of hot/cold packs had no value by the elimination of reimbursement for this modality under CPT code 97010. The commenter noted that applications of heat and ice is well known to be an extremely effective modality and since it has beneficial effects, it should be a reimbursable expense.

Other commenters supported the elimination of reimbursement for hot and cold packs in the proposed fee schedule.

RESPONSE: The elimination of reimbursement for this CPT code does not indicate that the administration of hot/cold packs has no value. The Department has followed the determination of Medicare that the administration of hot/cold packs is usually a precursor to other treatments and thus should be included or "bundled" with those other treatment modalities. In addition, Medicare found that hot/cold packs are easily self administered and require the minimum of professional involvement. To clarify that the determination not to reimburse for hot/cold packs is based on the prohibition against unbundling services normally performed together and does not relate to the efficacy of the modality, the Department is amending the rule upon adoption to include the prohibition in N.J.A.C. 11:3-29.4(g). When Appendix 1 is adopted, it will also indicate that the reimbursement for CPT 97010 is $0.

Summary of Agency-Initiated Changes:

The adopted rules includes a minor editorial correction at N.J.A.C. 11:3-29.4(o).

Federal Standards Statement

A Federal standards analysis is not required because the medical fee schedules and rules are not subject to any Federal requirements or standards.

Agency Note: The following represents a partial adoption of the proposal published December 18, 2000 at 32 N.J.R. 4332(a). In accordance with the conclusions of the Report, it includes adoption of textual amendments to N.J.A.C. 11:3-29.1, 29.2, 29.4 and 29.5 and adoption of the repeal of N.J.A.C. 11:3-29.6(b). Adoption of the remaining portions of the rule (two paragraphs of N.J.A.C. 11:3-29.4; N.J.A.C. 11:3-29.3; the Appendix to N.J.A.C. 11:3-29; and the repeal of the rest of N.J.A.C. 11:3-29.6) will follow promptly upon completion of the review and any revisions as directed by the Report.

The following guidance is provided for those to whom the rule applies. As noted above the textual amendments to the rule have been completed as set forth below and take effect immediately. These include establishment of a maximum daily fee for certain Physical Medicine and Rehabilitation procedures; a new definition of "medically necessary" or "medical necessity;" clarification regarding the application of the multiple procedures reduction formula, evaluation and management services and proper billing procedures for assistant and second surgeons.

Except for the schedule of dental fees, the existing fee schedules set forth at N.J.A.C. 11:3-29.6 for physiciansí services, nursing and allied professional health services, ambulance services and durable medical equipment and prosthetic devices remain in effect pending adoption of the rest of the proposal. The textual changes in the adopted rules should be applied to those fees for reimbursement determinations in the interim.

Full text of the adoption follows (additions to proposal indicated in boldface with asterisks *thus*; deletions from proposal indicated in brackets with asterisks *[thus]*):








11:3-29.1 Purpose and scope

(a) This subchapter implements the provisions of N.J.S.A. 39:6A-4.6 to establish medical fee schedules on a regional basis for the reimbursement of health care providers providing services or equipment for medical expense benefits for which payment is required to be made by automobile insurers under PIP coverage and by motor bus insurers under medical expense benefits coverage.

(b) - (c) (No change.)

11:3-29.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

. . .

"Bilateral surgery" means identical procedures (requiring use of the same CPT code) performed on the same anatomic site but on opposite sides of the body. Furthermore, each procedure is performed through its own separate incision.

"CPT" means the American Medical Associationís Current Procedural Terminology, Fourth Edition, coding system.

"Eligible charge or expense" means the providerís usual, customary and reasonable charge or the upper limit in the fee schedule, whichever is lower.

"Emergency care" means all medically necessary treatment of a traumatic injury or a medical condition manifesting itself by acute symptoms of sufficient severity such that absence of immediate attention could reasonably be expected to result in: death; serious impairment to bodily functions; or serious dysfunction of a bodily organ or part. Such emergency care shall include all medically necessary care immediately following an automobile accident, including, but not limited to, immediate pre-hospitalization care, transportation to a hospital or trauma center, emergency room care, surgery, critical and acute care. Emergency care extends during the period of initial hospitalization until the patient is discharged from acute care by the attending physician. *[Emergency care shall be presumed when medical care is initiated at a hospital within 120 hours of the accident.]*

"Global service" means the sum of the technical and professional components.

. . .

"Health care provider" or "provider" is as defined in N.J.A.C. 11:3-4.

"Health insurance" means a contract or agreement whereby an insurer is obligated to pay or allow a benefit of pecuniary value with respect to the bodily injury, disability, sickness, death by accident or accidental means of a human being, or because of any expense relating thereto, or because of any expense incurred in prevention of sickness, and includes every risk pertaining to any of the enumerated risks. As used in this subchapter, health insurance includes workersí compensation coverage but does not include any PIP coverage.

. . .

"Medically necessary" or "medical necessity" means that:

1. The medical treatment or diagnostic test is consistent with the clinically supported symptoms, diagnosis or indications of the injured person;

2. The treatment is the most appropriate level of service that is in accordance with the standards of good practice and the provisions of N.J.A.C. 11:3-4, as applicable;

3. The treatment is not primarily for the convenience of the injured person or provider;

4. The treatment is not unnecessary; and

5. The treatment does not include unnecessary testing.

. . .

"PIP coverage" means personal injury protection coverage described in N.J.S.A. 39:6A-3.1(a), 39:6A-4a and 39:6A-10 as amended.

. . .

"Three-digit zip code" refers to the first three digits of the U.S. postal code.

11:3-29.4 Application of Medical Fee Schedules

(a) Ė (d) (No change.)

(e) The insurerís limit of liability for any medical expense benefit for any service or equipment not set forth in or not covered by the fee schedules shall be a reasonable amount considering the fee schedule amount for similar services or equipment in the region where the service or equipment was provided or, in the case of elective services or equipment provided outside the State, the region in which the insured resides. Where the fee schedule does not contain a reference to similar services or equipment as set forth in the preceding sentence, the insurerís limit of liability for any medical expense benefit for any service or equipment not set forth in the fee schedules shall not exceed the usual, customary and reasonable fee.

(f) Except as provided in (m) below, the following shall apply to multiple and bilateral procedures:

1. When multiple or bilateral procedures are performed on the same patient by the same provider at the same time or during the same visit, it is virtually never appropriate for the fee to be the sum of the fees for each procedure. The primary procedure at a single session shall be paid at 100 percent of the eligible charge, the second procedure at no more than 50 percent of the upper limit in the fee schedule for that particular procedure, and if performed, any additional procedures at no more than 25 percent of the upper limits in the fee schedule for those particular procedures.

2. Procedure codes denoted as "each additional" are valued as listed and are not subject to the multiple and bilateral procedures guidelines.

3. If two or more providers in different specialties perform procedures or if one provider performs multiple procedures on different body parts or regions, each individual provider, or each individual body region or body part procedure may be reimbursed separately. For purposes of such billing, the body shall be divided into: head (including skull and brain); face; neck; chest; abdomen; back; and pelvic regions. In addition, the extremities shall be subdivided into right and left: upper arm, elbow, forearm, wrist and hand; and thigh, knee, lower leg, ankle and foot. This reference to specific body parts or regions is included as a guideline to be used in billings for operative and surgical procedures. It is not intended to apply to nor should it be used in connection with billings submitted for non-surgical services provided during the same visit except as a means of describing the treatment rendered.

4. (No change in text.)

(g) Artificially separating or partitioning what is inherently one total procedure into subparts that are integral to the whole for the purpose of increasing medical fees is prohibited. Such practice is commonly referred to as "unbundling" or "fragmented" billing. *CPT 97010 (application of hot/cold packs) is bundled into the payment for other services and shall not be reimbursed separately.*

(h) For surgery and many other procedures, it is established practice to include follow-up care and visits as part of the basic procedure charge. Such charges shall not be subject to additional billings. The existence of a CPT code, per se, does not imply the right to receive separate compensation for the procedure/sub-procedure so described. If a procedure is judged to be part of the primary procedure, only the charges for the primary procedure are eligible. As identified in CPT, separate procedures are commonly carried out as an integral part of another procedure. They shall not be billed in conjunction with the other procedure, but may be billed when performed independently of the other procedure.

(i) When a covered injection is provided during an evaluation and management service, only the code for the substance shall be billed. The administration codes shall not be billed because the administration is included in the evaluation and management service.

(j) The insurerís limit of liability for medically necessary assistant surgeon expenses shall be 20 percent of the primary physicianís allowable fee determined pursuant to the fee schedule and rules. Assistant surgeon expenses shall be reported using modifier -80, -81 or -82 as designated in CPT. When the assistant surgeon is someone other than a physician surgeon, the reimbursement shall not exceed 85 percent of the amount that would have been reimbursed had a physician surgeon provided the service. These services shall be reported using modifier -AS as designated in HCPCS.

(k) When two physician surgeons are required for a specific surgical procedure, the separate services claimed by each surgeon shall be reported using the modifier -62 as designated in CPT. Total eligible expense shall equal 150 percent of a single practitionerís eligible expense amount for the surgical procedure performed, to be divided equally between the two surgeons.

(l) The professional component of global service charges shall be reported using modifier -26 as designated in CPT. Services with professional component amounts of zero in the fee schedule are considered to be 100 percent technical. The technical component is the difference between the global service and the professional component amounts listed in the fee schedule.

(m) The daily maximum allowable fee shall be $90.00 for Physical Medicine and Rehabilitation procedures (CPT 97001 through 98943) but not including Osteopathic Manipulative Treatment actually performed by the osteopathic physician *or a medical doctor* (CPT 98925 through 98929). The daily maximum applies when such services are performed for the same patient on the same date. However, an insurer is not prohibited from reimbursing providers in excess of the daily maximum where a patient has serious traumatic injuries to more than one area of the body.

(n) Supervised modalities and those therapeutic procedures that do not list a specific time increment in their description shall be limited to one unit per day.

(o) Follow-up evaluation and management services for the re-examination of an established patient shall be reimbursed in addition to physical medicine and rehabilitation procedures only when any of the circumstances set forth in (o)1 through 4 below is present and not more than twice in any 30 day period. Modifier -25 shall be added to an evaluation and management service when a significant separately identifiable evaluation and management service is provided and documented as medically necessary*[.]* *as follows:*

1. There is a definite measurable change in the patientís condition requiring significant change in the treatment plan;

2. The patient fails to respond to treatment, requiring a change in the treatment plan;

3. The patientís condition becomes permanent and stationary, or the patient is ready for discharge; or

4. It is medically necessary to provide evaluation services over and above those normally provided during the therapeutic services.

11:3-29.5 Balance billing prohibited

No health care provider may demand or request any payment from any person in excess of those permitted by the medical fee schedules and this subchapter, nor shall any person be liable to any health care provider for any amount of money that results from the charging of fees

in excess of those permitted by the medical fee schedules and this subchapter.

11:3-29.6 Medical Fee Schedule

(a) (No change.)

*(b) (Reserved)*

(c) Ė (e) (No change.)