The Department of Banking and Insurance (DOBI) in NJ is looking at ways to revise the PIP laws in the states less than 2 years after the previous reforms made their exit. During the end of 2009, the Supreme Court had affirmed the decision made by the Superior Court’s Appellate Division in the state, that the auto insurance department’s latest PIP medical fee schedule was not arbitrary as doctors had earlier challenged.
New Jersey has witnessed a lot of battles over fee schedules in the past and now again, based on the new information gathered by DOBI with regard to the cost of providing the personal injury protection coverage, another 3,000 codes may be added on to the fee schedule.
Marshall McKnight, the spokesman for DOBI states that changes are required in order to close the existing loopholes.
Property Casualty Insurers Association of America (PCI) regional manager & counsel, Richard Stokes, states that the reforms were needed urgently, according to the new proposals.
Thomas B. Considine, who is the Insurance Commissioner, feels that the rise in PIP costs was a matter of growing concern for motorists in NJ. Stokes has stated that Considine was right in wanting to address all the underlying issues which seem to be causing a sharp rise in costs in order to offer protection to customers.
The previous fee schedule would reimburse medical providers after the patients were treated following auto accidents. This had been adopted in August 2007 before getting caught in a legal battle. Then around 1,000 new codes were added on to bring in some consistency, predictability, and efficiency to the payment system. Earlier, less than 100 codes had existed.
However, the cost of providing personal injury protection cover is continuing to rise, pushing up the auto insurance rates for motorists, states DOBI. The PIP coverage had accounted for around 97% of all the rate requests in 2010. Insurers are paying out $1.23 for every dollar that is being collected states DOBI.
McKnight states that they were aware of the fact that the previous fee schedule not ‘a panacea’ and there were some bad actors who had taken advantage by avoiding codes and instead using procedures that were not coded.
The proposals for the new PIP reforms from DOBI will not merely end by just adding codes, but the arbitration process itself could see changes in case the new laws are adopted.
The arbitration filings had spiraled out of control during 2009 states McKnight.
