The state is considering expanding the number of procedures subject to reimbursement limits under personal injury protection, or PIP, as a way to slow down the rise in car insurance costs, but health care providers say they've already seen reimbursements fall following earlier changes implemented by the Department of Banking and Insurance.
The new proposed fee schedule would "reduce NJM's costs significantly," according to a letter by New Jersey Manufacturers Insurance Co. CEO Bernard M. Flynn that urged policyholders and others to write DOBI to support the changes.
But some health care providers already "saw a reduction in reimbursement of over 50 percent" under the last rule changes that were implemented in 2009, said Jeffrey Shanton, chair of the advocacy and legislative affairs committee of the New Jersey Association of Ambulatory Surgery Centers.
"If as the auto insurance industry claims, PIP payments represent (overwhelmingly) their biggest outlay, one could reasonably expect a savings," Shanton said. "Those savings were, to my knowledge, never passed on to the consumer. I have not seen my personal auto policy premium go down."
But the previous reforms didn't go far enough, according to an insurance industry group. New Jersey's average PIP claim cost has risen more quickly than other states, according to the Property Casualty Insurers Association of America.
"Over the past decade, the average claim has increased 65 percent — from $9,900 per claim in 2001 to $16,400 in 2010 — compared to a 36 percent increase in other no‐fault states," the association said in a statement.
New Jersey motorists pay the second-highest PIP premiums and overall liability premiums in the nation, the association added.
"Drivers here pay, on average, 59.1 percent more for PIP coverage, and 27.3 percent more for the total liability premium, than drivers in other no‐fault states," it said.
Flynn's letter also championed a reform of arbitration rules "to control costs and attorneys' fees," including limiting insurance company payments for medical providers' legal fees "only when the provider is successful," or is awarded at least half of its demand.
But "the current system allows for attorneys to be paid according to the work they put into the case," Stanton said. "Thus, this payment varies from attorney to attorney, case to case — much to the chagrin of the carriers."