There has been a sweeping overhaul last week in the PIP coverage in New Jersey. This is an attempt to lower auto insurance costs and curb the rise in premiums. This will bring about a change in the way doctors bill the patients for the treatment that is rendered and will also restructure the entire process of appealing for a denied claim.
New Jersey is one of the most expensive states to purchase car insurance, but the rates did see a decline after the enactment of some changes brought about in 2003 by the McGreevey administration, as it spurred competition. However, in the recent years, the PIP injury costs have sent the premium rates skyrocketing. According to the Department of Banking and Insurance 97% of the increase in rates during 2010 were largely due to the rise in personal injury costs. For every dollar that was being taken in by insurance companies on PIP premiums, they were spending around $1.23 on benefits.
This was a classic recipe for escalating rates, which the regulators claim they want to fend off with new rules. However, it is important to understand what these new rules do and whom they affect.
The PIP coverage for instance, covers medical costs, loss in wages, and other expenditure if you are involved in a car accident. However, it will not pay for damages caused to your vehicle. This coverage is also known as the ‘no fault’ coverage since the insurance company will pay regardless of who caused the accident or who the ‘at fault’ driver is. There are a dozen states that include NJ, where drivers are required to have the PIP coverage.
This system has a lot of loopholes under the old rules. Doctors would charge more than what was listed in the codes and billing was done for procedures that were no present on the list. PIP coverage uses a list of common procedures and the doctors are reimbursed for the procedures based on this list.
Thomas Considine, the state’s Insurance Commissioner has stated that there were a few healthcare providers who were taking advantage of the entire system as they had found unscrupulous ways to misuse the billing system.
The new rules will add another set of 1,000 codes to the existing codes and that will make it more difficult for providers to milk the system with exorbitant billing. There would be a clamp down on multiple billings as well.
