A New Jersey auto insurer said it is asking policyholders to lobby against legislation that the firm says would repeal controls on the cost of treating auto accident injuries.
West Trenton, N.J.-based New Jersey Manufacturers Insurance Company, the state's largest auto insurer, said it made the request in a letter to its nearly 400,000 personal auto policyholders.
At issue are companion bills in the Assembly and State Senate (A-3703/S-2402) that would revoke a fee schedule formula set by regulators.
The measure was introduced in the Assembly by Neil Cohen, D-Union, the chairman of the Assembly Financial Institutions and Insurance Committee. It requires that any treatment or service not on the medical fee schedule be reimbursed at the health care provider's usual, customary and reasonable rate and reverts to a medical fee schedules adopted in 2002.
It would also establish a new advisory panel to examine fraud and abusive practices in connection with health care treatment or services provided to people injured in automobile accidents and the reimbursement of health care provides fees.
In addition, it would create a new processing schedule for paying precertified claims to health care providers and provide enhanced penalties for automobile insurers that "wrongfully delay, withhold, or deny payment of precertified health care provider claims."
The companion measure in the Senate was introduced by Sen. Nicholas P. Scutari, D- Linden. The Assembly Bill was voted out of Assemblyman Cohen's committee in February and is awaiting action on the Assembly floor. In the Senate it remains in the Commerce Committee where it is due for a hearing Dec.3.
According to NJM, some charges that insurers regularly receive are severely inflated, particularly concerning "facility fees" when surgery is performed in a nonhospital setting. These surgical center facility fees, it said, typically range from 500 percent to 800 percent of the amounts paid for exactly the same services by Medicare, the federal government's health insurance program for senior citizens.
At times, the insurer said, facility fees are even 1,000 percent of the amount that Medicare would pay, or higher.
The company noted that the New Jersey Department of Banking and Insurance's recently adopted Personal Injury Protection (PIP) Medical Fee Schedule caps these fees for surgical centers at three times the Medicare rate, which it said "is more than reasonable compensation while keeping costs under control for policyholders."
The PIP Medical Fee Schedule, said NJM, also adds a measure of predictability to the amount auto insurers will pay for approximately 1,500 procedures.
These reimbursement levels, the insurer said, should be considered more than adequate by medical practitioners–approximately 100 percent higher than the fees paid for the same services by Medicare. By contrast, private medical plans on average pay about 20 percent to 25 percent higher than Medicare.
A repeal of the fee schedule, the company said, would leave auto insurers–and their policyholders–without the benefit of reasonable controls on "ever-increasing" PIP medical costs.
"Unchecked increases in medical costs erode the value of a policyholder's PIP coverage limit, and they force responsible insurance companies to litigate if they want to challenge excessive bills," said Anthony G. Dickson, NJM's president and chief executive officer.
"While we believe PIP charges should be more in line with those paid by private health insurers, the fee schedule is a good start toward maintaining prudent stewardship of policyholders' resources," he added.
NJM's letter encouraged policyholders to contact legislative leaders, "while special interests are trying to push through A-3703/S-2402 during the final weeks before a new Legislature is seated in January."
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.