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

Adopted Amendments: N.J.A.C. 11:3-29.3 and 29.4

Adopted Repeal: N.J.A.C. 11:3-29.6

Adopted New Rules: N.J.A.C. 11:3-29 Appendix, Exhibits 1, 3, 4 and 5

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

Adopted: June 22, 2001 by Karen L. Suter, Commissioner, Department of Banking and Insurance.

Filed: June 22, 2001 as R. 2001 d. 253, with substantive and technical changes not requiring additional public notice and comment (see N.J.A.C. 1:30-6.3).

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

Effective Date: July 16, 2001

Expiration Date: January 4, 2006.

The Department is adopting the final portion of the medical fee schedule rule proposed on December 18, 2000 (see 32 N.J.R. 4332(a)). The physiciansífees adopted cover the CPT codes that are the most commonly used for treatment of auto accident injuries and represent approximately 85 percent of all codes billed for PIP reimbursement. For those CPT codes that are no longer on the fee schedule, the insurerís limit of liability is the providers usual, reasonable and customary fee as provided at N.J.A.C. 11:3-29.4(e).

The Department has reviewed the frequency that individual CPT codes are billed for PIP reimbursement and has determined that by adoption of a physiciansí fee schedule at this time that contains the 92 most commonly used CPT codes, the Department is minimizing the regulatory burden while carrying out the the cost containment objectives of the Automobile Insurance Cost Reduction Act of 1998 ("AICRA").

The Department thereafter expects to review these and other CPT codes on a continuing basis and update them periodically as required by N.J.S.A. 39:6A-4.6.

The changes made in this adoption are summarized in this chart.

Summary of Hearing Officer Recommendations and Agency Responses:

See the Summary of Hearing Officer Recommendations and Agency Responses on the partial adoption of the proposal at 33 N.J.R. 1590(a), 1590-1592.

Summary of Public Comments and Agency Responses

Note: The list of persons who commented on the proposal can be found in the partial adoption of the proposal at 33 N.J.R.1590(a), 1592.

Comment: Several commenters were concerned that the proposed fee schedule for home health care eliminated the hourly fees for this service and replaced them with a "per visit" fee. One commenter states that there is no distinction in the proposal between a care giver who makes a limited care visit to change a dressing or do an evaluation versus the eight hour shift care giver needed for catastrophic injuries or elderly patients and designed to make admission to an acute care facility unnecessary. One commenter noted that the majority of care provided by home health aides is for periods of from two to eight hours on average but can extend to 10 to12 hours or even "live in." This and other commenters requested a clarification as to how long a "visit" should be if the proposed per visit fees were retained. Another commenter stated that it did not believe that it could retain a home health aide for the longer hours necessary in a per-visit fee environment and urged the Department to retain the hourly and overnight rate. Another commenter asked whether facilities that provided home care services had to certified to be defined as a PIP provider. Another commenter stated that the proposed fees of $125.00 to $130.00 per day for registered nurses is excessive. The commenter also believed that the increase in fees for visits by physical therapists, occupational therapists and speech therapists appears to be too high and the proposal does not include fees for medical social workers who consult with visiting nurses. Finally the commenter requested the addition of fees for live in attendants and for 24-hour private duty nursing coverage, which were not included in the proposal.

Response: The Department agrees with the commenters that the fees proposed for Home Care Services need revision. In particular, the change from hourly fees to per visit fees without a clear definition of the term "visit" is problematic. The proposed home care fee schedule will not be adopted and a new schedule will be reproposed in future rulemaking. Meanwhile, the Department will not adopt the proposed repeal of the existing fees in N.J.A.C. 11:3-29.6(c). The current fee schedule for Nursing and Allied Professional Health Services will be recodified as Appendix, Exhibit 3, with no change in text.

Comment: One commenter recommended the inclusion of fees for disposable and reusable TENS machine electrodes, non-ambulance medical transportation, such as cars or vans, and acupuncture treatment.

Response: The Department will review whether it is appropriate to add these fees to the schedule in a future proposal.

Comment: An association of occupational therapists requested that references in the rule to "physical therapy and rehabilitation" be clarified to include occupational therapy. The commenter was concerned that absent such clarification there might be confusion about whether such services were covered under PIP.

Response: The fee schedule rule only lists the maximum fees that an insurer can reimburse for the listed CPT codes. It should not be used to determine what are covered services. Covered services are those that are found to be medically necessary as that term is defined in N.J.S.A. 39:6A-4. If the fee schedule rule does not include a specific CPT code, then the usual and customary ("UCR") fee for that service is the limit of the insurerís liability to reimburse. The proposal referred to "Physical Medicine and Rehabilitation Procedures" to describe a group of CPT codes that are subject to the daily cap. The term came from the CPT Manual where it was used to designate a group of CPT codes. If occupational therapists provide the procedures included in these codes, the daily cap would apply.

Comment: The commenter objected to the elimination of the LPN and live-in attendants as covered services. The commenter noted that these paraprofessionals made it possible for persons with severe disabilities to live at home instead of a more expensive institution.

Response: As noted in the response to the previous comments, the fee schedule rule does not determine what are covered services. The Departmentís vendor determined that home health care services were more often performed by RNís than LPNís and recommended fees for RNís. However, that does not mean that use of LPNís is prohibited under PIP if such services are medically necessary. However, as noted above, the Department has determined not to adopt the proposed Home Care Services fee schedule.

Comment: One commenter raised the question as to whether there were CPT codes to be used for home physical therapy and whether the provision at N.J.A.C. 11:3-29.4(m), which permits insurers to reimburse at higher than the fee schedule amount for injured persons with traumatic injuries to different parts of the body, applies to home physical therapy.

Response: The commenter did not supply any information about the CPT codes that are used by home physical therapists. If home physical therapists use the CPT codes that are subject to the $90.00 daily maximum, then the daily maximum and related rule provisions would apply.

Comment: Several commenters noted that the prices for used equipment in the proposed fee schedule for durable medical equipment were greater than that for new equipment.

Response: In the proposal, the fees for new and used equipment were reversed. The error has been corrected in the adoption.

Comment: Several suppliers of durable medical equipment stated that basing the proposed fees on Medicare fees was not in accordance with N.J.S.A. 39:6A-4.6. One commenter believed that the schedule should be the 75th percentile of charged fees because once Medicare has certified equipment, payment is remitted within 18 to 21 days while insurers delay payment under PIP forcing the provider to initiate litigation or compromise the amount due. The commenter believed that if the proposed schedule is adopted, it will not be financially possible to supply durable medical goods to PIP patients.

Response: The prior fee schedule for durable medical equipment was based on 1993 Medicare fees. As Medicare is the largest provider of this type of equipment, it is appropriate to continue the use of durable medical equipment fees based on those of Medicare since virtually all DME providers accept Medicare fees as reimbursement. 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 fees reflect appropriate levels of reimbursement.

Comment: Many commenters objected to the use of Medicaid data in establishing the physiciansí fee schedule. These commenters noted that New Jersey Medicaid reimbursement is among the lowest in the nation and that providers accept reimbursement for government sponsored programs as a public service.

Response: The Department has confirmed with its vendor that no data identified as Medicaid was included in the database used to develop the fee schedule. Medicaid was mentioned in the Summary to the proposal merely as an example of the use of fee schedules by payers.

Comment: Many commenters noted that the proposed physiciansí fee schedule contained many CPT codes in which the fee for Region 1, comprising southern New Jersey, was higher than the fee for the same service in Region 3, comprising northern New Jersey. The commenters believed that fees in Region 1 should not be higher than those in Region 3 because the cost of living is generally higher in northern New Jersey than in the southern regions. The commenters attributed the disparity to the inclusion of Medicare, Medicaid and managed care fee information in the database.

Response: First, as noted above in response to a previous comment, the database used to develop the fees does not contain any Medicare or specifically identified Medicaid fees. Therefore, the higher fees in Region 3 are not the result of Medicare or Medicaid reimbursement.

Second, the fees were developed from Ingenixís allowed fee database comprised of information reported by group health payers. Since the fees in this database are what providers are actually receiving for the services, they are not further adjusted for cost of living. The commenters suggested that the fees in Region 1 were higher than those in Regions 3 because of a higher penetration of HMOís and PPOís in Region 3. The Department asked its vendor, Ingenix, to review the percentage of HMO and PPO fees in the database in order to determine whether a disproportionate percentage of HMO or PPO fees in one region had distorted the result. Ingenix did not find that there was any major difference between the percentage of HMO and PPO fees between Region 1 and Region 3.

Summary of Agency-Initiated Changes:

As discussed above, the Department will adopt 92 CPT codes on the physicianís fee schedule. In addition, as discussed in the partial adoption in May (see 33 N.J.R. 1594), the Department has amended N.J.A.C. 11:3-29.4(a) upon adoption to clarify that the exemption from the physiciansí fee schedule is restricted to emergency care in Level I and Level II trauma hospitals.

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 concludes the adoption of the proposal published December 18, 2000 at 32 N.J.R. 4332(a). The Department previously adopted textual amendments to N.J.A.C. 11:3-29.1, 29.2, 29.4 and 29.5 and adopted the repeal of N.J.A.C. 11:3-29.6(b) (See 33 N.J.R.1590(b). This notice of adoption addresses the adoption of the remaining portions of the proposal: 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. See the chart above in this notice for a summary of the provisions of this adoption. As noted above, the remaining textual amendments to the rule have been adopted and take effect immediately. These include the designation of the three regions of the State by zip code. It should be noted that the new regions comprise different areas than the old regions defined by county.

Except for the schedule of nursing and allied professional health services, which remains in effect as Appendix, Exhibit 3, the existing fee schedules set forth at N.J.A.C. 11:3-29.6 for physiciansí services, ambulance services and durable medical equipment and prosthetic devices have been repealed and replaced by the schedules found in the Appendix, Exhibits 1, 4, and 5. These fees and the new regions are effective for treatment rendered on or after the effective date of this rule.

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




11:3-29.3 (No change from proposal.)

11:3-29.4 Application of Medical Fee Schedules

(a) Every policy of automobile insurance and motor bus insurance issued in this State shall provide that the automobile insurerís limit of liability for medically necessary expenses payable under PIP coverage, and the motor bus insurerís limit of liability for medically necessary expenses payable under medical expense benefits coverage, is the fee set forth in this subchapter. Nothing in this subchapter shall, however, compel the PIP insurer or a motor bus insurer to pay more for any service or equipment than the providerís usual, customary and reasonable fee, even if such fee is well below the automobile insurerís or motor bus insurerís limit of liability as set forth in the fee schedules. The fee schedules set forth at N.J.A.C. 11:3-29 Appendix, Exhibits 1 through 5, incorporated herein by reference, shall not apply to inpatient services provided by acute care hospitals, trauma centers, rehabilitation facilities, other specialized hospitals, residential alcohol treatment facilities and nursing homes, reimbursement of which shall be limited to the providerís usual, customary and reasonable fees. The physiciansí fee schedule at Subchapter Appendix, Exhibit 1 shall not apply to services provided in emergency care *at Level I and Level II trauma hospitals*. Insurers will not be required to pay for services or equipment that are not medically necessary.

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

(d) - (o) (No change.)

11:3-29.6 Medical Fee Schedule

(c) Recodified as Appendix, Exhibit 3 with no change in text.

(Agency Note: As the adopted Exhibit 1 consists of 92 of the CPTs proposed, in the interest of clarity of presentation, the proposed Exhibit 1 is not adopted, and a new Exhibit 1 consisting of the adopted CPTís is set forth below. Also in the interest of clarity of presentation, as proposed Exhibit 5 contains a number of CPTs for which the new and used amounts were inadvertently reversed, as discussed in the comment above. Exhibit 5 below is adopted as a new Exhibit with correction of those errors included.)