Appeals court approves, N.J. implements controversial PIP fee schedule

New Jersey insurance regulators implemented a controversial medical fee schedule for reimbursing doctors who treat auto injuries, after an appeals court ruled it legal.
A three-judge panel upheld the use of the fee schedule, but ordered state insurance regulators to review their use of the Ingenix database, owned by UnitedHealth Group, for setting rates.
The New Jersey Superior Court, Appellate Division, in Trenton, agreed on the database’s use with a group of health care providers who appealed the New Jersey Department of Banking and Insurance’s revision to the Personal Injury Protection (PIP) medical fee schedule in 2007.
The alliance of medical providers argued that the Ingenix database is designed, because it is operated for health insurance companies, to reduce reimbursement rates paid to doctors, thus causing its use in determining PIP rates to cut fees paid for service.
The court said forcing a departmental review of the use of the Ingenix database was preferable to the other two options: allowing use of a “flawed database” or acting in a way that “might eliminate a valid, but untested, resource for the use of the insurer,” according to the 50-page ruling.
But the court, ruling seven months after a court hearing on the matter, sided with regulators on the regulators’ effort to change rates, saying the health care providers who filed the appeal failed to “provide any documentation to support their claims,” according to the ruling.
“Given the lack of documentation and being mindful that the burden remains with appellants challenging an agency determination,” the judges ruled, “we are unable to conclude that PIP reimbursement rates do not reflect the reasonable and prevailing fees of 75% of the providers in the region.”
The department argued that the “reasonable and prevailing rates” were derived from reliable data, including the Ingenix database of what is actually paid for coverage, and the Consolidated Services Group, a vendor hired by insurers to evaluate and approve certain treatment and care paths for PIP patients prior to services being provided.
The court ruled that the department set the schedule using considered and informed judgment, but added that while “many elements of the process can be criticized, ultimately, the entire scope of the process must be assessed.”
New Jersey officials say these PIP fee schedule changes – first proposed in 2005, then modified based on comments and concerns in 2006 – are critical to reining in higher insurance costs.
New Jersey has the highest auto insurance costs in the nation. The first PIP fee schedule was put into place in New Jersey in 1991, but more serious reform efforts, seeking to stem years of fast-rising premiums for vehicle owners, were undertaken over the last six years.


Source