NU Online News Service, Aug. 10, 3:35 p.m. EDT

A New Jersey appeals court has ruled that state officials can go ahead and implement a controversial medical fee schedule for auto injuries that doctors charged was too low.

The decision by a three-judge panel of the New Jersey Superior Court, Appellate Division in Trenton upheld a New Jersey Department of Banking and Insurance revision of the Personal Injury Protection (PIP) medical fee schedule that was challenged in 2007 by a group of health care providers.

In ruling that the schedule could go forward, however, the court told the department it must review its use of a private provider's data base it contracted for to help it set rates.

Health care providers had argued that the data provider Ingenix was owned by medical insurer United Health Care, which has a goal of reducing physician reimbursement.

Ed Rogan, a department spokesman said the rates went into effect today. He said the department had referred providers to Ingenix as a guide to set rates that were not on a list of fees the department set for 1,000 common medical procedures.

Among insurance trade groups that backed the department's fee schedule, the decision was hailed by Richard Stokes, counsel for the Property Casualty Insurers Association of America (PCI).

"This long-awaited ruling will enable New Jersey to move forward with an important reform to the PIP reimbursement system which is expensive, inefficient and anti-consumer," he said.

Implementation of the PIP medical fee schedule, he added, is "an important component in controlling costs in New Jersey. While the state has made progress in addressing many of the conditions that contribute to higher auto insurance costs, medical care continue to be expensive. The new PIP medical fee schedule will put in place a system that is fairer and ultimately delivers cost savings."

The department began work to revise the rates for the state's no-fault auto insurance system after finding "an increasing difference between fees billed by health care providers and the fees actually accepted by them as payment for services rendered."

The Department noted that the amount charged on the Explanation of Benefits (EOB) form was "almost always higher than the payment to the provider by the health benefit carrier."

Under New Jersey's current no-fault statute, the department was mandated to develop a schedule incorporating the reasonable and prevailing fees of 75 percent of practitioners within a region.

The move to revise the rates, the court noted, provoked protests from "surgeons and emergency care physicians, who threatened to stop treating auto accident victims due to the low and, in their view, arbitrary fees for PIP services."

But the court said it could rule against the decision of the department only if it was "arbitrary, capricious, unreasonable or violated express or implied legislative policies."

The health care providers who sued to block the rates, the court, found had failed to provide enough specific data on rates in their challenge.

The panel ruled that the Department had made a considered and informed judgment in setting the schedule, adding that while "many elements of the process can be criticized, ultimately, the entire scope of the process must be assessed."

"We conclude that appellants have not met their burden of showing that the methodology for setting the PIP reimbursement rates was flawed or that the rates set violated the statutory mandate to represent the reasonable and prevailing rates of 75 percent of the practitioners in the area," the court said.

A call to the New Jersey Medical Association was not immediately returned.

New Jersey Banking and Insurance Commissioner Neil N. Jasey said in a statement his department is pleased the decision affirmed "many years of work along with many interested parties and the provider community in developing this fee schedule,"

"PIP costs have been rising dramatically, which has been a major factor pushing auto insurers to seek rate increases recently. The implementation of this fee schedule will exert downward pressure on auto insurance rates and benefit New Jersey's consumers," continued Mr. Jasey.

"The fee schedule helps contain rapidly rising health care costs by setting reasonable limits on insurer payments for medical services. It also reduces costly and time-consuming payment disputes by preventing unnecessary court and arbitration proceedings," he concluded.

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PIP Medical Fee Schedule Upheld By N.J. Appeals Court

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