A cornerstone of President Obama's health-care plan is, as he said in his speech to Congress, "individuals will be required to carry basic insurance, just like most states require you to carry auto insurance." But the tarnished history of such laws shows that making insurance mandatory, and even making it more affordable, does not compel the uninsured to buy it.In California, the car capital of America, the injustice of mandatory insurance laws sparked one of the great voter revolts of modern history -- and that still didn't solve the uninsured motorist problem. In 1988, the people of California passed Proposition 103, which required auto insurance companies to seek permission through an elected insurance commissioner for premium increases. It created an intervener system that allows members of the public to challenge unnecessary premium hikes. The law also made auto insurance pricing fairer in various ways, including banning ZIP-code based auto insurance.The Consumer Federation of American reported in 2008 that Proposition 103 had saved Californians $62 billion on their auto insurance. The market is competitive, prices are down, and the number of uninsured motorists has decreased some from pre-Prop 103 levels. Yet in the most competitive auto insurance market in the nation, the uninsured motorist rate is still 18 percent, among the highest. That's true even after California took more punitive measures against uninsured motorists. Stiffer fines, the impounding of cars and the loss of legal rights for uninsured motorist have not significantly impacted the uninsured motorist rate.
Giving consumers more options -- public options, in fact -- seems to make more of a difference. States with extensive public transportation systems tend to have the lowest uninsured motorists rates. Massachusetts has a 1 percent uninsured motorist rate, the lowest. New York's is 5 percent, New Jersey's 8 percent, and Connecticut's 9 percent. New Hampshire, the only state in the nation without a mandatory auto insurance law, has an 11 percent uninsured motorist rate.
If the president must embrace mandatory insurance, his plan should at least include the prior approval, intervener and elected commissioner models that have made auto insurance cheaper. Every state in the nation should be required to have such regulatory components in order to lower health insurance premiums. But even that's not yet on the table in Washington.
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Saturday, November 28, 2009
Sunday, November 15, 2009
Good news for drivers! New Jersey implements PIP fee schedule
New Jersey drivers have finally caught a break. A recent decision by New Jersey's Appellate Division has ruled in favor of the New Jersey Personal Injury Protection (PIP) fee schedule, which was sitting in legal limbo for nearly two years after the Department of Banking and Insurance (DOBI) made it effective in late 2007. This decision will help keep insurance costs down for New Jersey drivers for decades to come, and may even allow New Jersey to lose the title of having the highest auto insurance rates in the country.
Originally adopted to go into effect on October 1, 2007, the PIP fee schedule was appealed by the medical community, chiropractors, and surgery centers citing that physicians wouldn't receive adequate payment for services most related to auto insurance accidents. The Appellate Division granted a "stay" and issued an injunction while they reviewed the legal challenges set forth by the appellants. On August 10, 2009, the court addressed each of the challenges and validated the methodology used by the Department of Banking and Insurance in deriving the PIP fee schedule.
Drivers should understand that New Jersey operates as a "no-fault" PIP state, which means when people are injured in a car accident their auto insurance pays for their treatment for injuries. This includes anything from chiropractor care to surgeries. When treatment is rendered, auto insurers are billed and must by law pay the medical providers for each treatment. If the treatment is listed on a set "PIP fee schedule" the rates paid are indisputable and not legally challengeable. However, if the treatment is not listed on the schedule auto insurers are obligated to pay the "usual, customary, and reasonable" rates by law. The ambiguity of what is considered "usual, customary and reasonable" has clogged up and raised costs for auto insurance for decades in New Jersey resulting in higher rates for drivers.
Neighboring no-fault PIP states like Pennsylvania and New York have over a thousand procedures listed on their fee schedule, while until recently New Jersey had less than 100 procedures on the list. As a result, certain surgery centers which were created as a low cost alternative to hospitals, routinely over-billed auto insurers for simple procedures cashing in on millions in fees. For example, a surgery center recently charged over $24,000 per procedure for three, 30 minute back manipulation procedures. However, the vast research by DOBI has yielded that this procedure should receive a prevailing cost of $190 per procedure. The costs to litigate this severely inflated claim by auto insurers results in millions of dollars annually.
In late 2007, after years of studies conducted by DOBI, in accordance with legislation passed years earlier, the list of procedures was expanded to over 1,400 of the most common procedures. The amounts paid were based upon comprehensive studies from Medicare, Medicaid and prevailing fees paid for these procedures.
Through the expanded fee schedule, reimbursement of medical costs can be controlled and the old standard of long, drawn out, expensive litigation over payments can finally come to an end. Claims will be processed more efficiently under these new guidelines. DOBI has truly been fundamental in its research of this issue and of adopting the fee schedule, enabling insurers to keep costs down.
This isn't just a victory for the auto insurance industry. Every driver in New Jersey has been impacted by the spiraling costs of surgery centers and certain abusive chiropractor practices. The expanded fee schedule finally puts auto insurers in a position to control costs and pass along savings to our policyholders.
Source
Originally adopted to go into effect on October 1, 2007, the PIP fee schedule was appealed by the medical community, chiropractors, and surgery centers citing that physicians wouldn't receive adequate payment for services most related to auto insurance accidents. The Appellate Division granted a "stay" and issued an injunction while they reviewed the legal challenges set forth by the appellants. On August 10, 2009, the court addressed each of the challenges and validated the methodology used by the Department of Banking and Insurance in deriving the PIP fee schedule.
Drivers should understand that New Jersey operates as a "no-fault" PIP state, which means when people are injured in a car accident their auto insurance pays for their treatment for injuries. This includes anything from chiropractor care to surgeries. When treatment is rendered, auto insurers are billed and must by law pay the medical providers for each treatment. If the treatment is listed on a set "PIP fee schedule" the rates paid are indisputable and not legally challengeable. However, if the treatment is not listed on the schedule auto insurers are obligated to pay the "usual, customary, and reasonable" rates by law. The ambiguity of what is considered "usual, customary and reasonable" has clogged up and raised costs for auto insurance for decades in New Jersey resulting in higher rates for drivers.
Neighboring no-fault PIP states like Pennsylvania and New York have over a thousand procedures listed on their fee schedule, while until recently New Jersey had less than 100 procedures on the list. As a result, certain surgery centers which were created as a low cost alternative to hospitals, routinely over-billed auto insurers for simple procedures cashing in on millions in fees. For example, a surgery center recently charged over $24,000 per procedure for three, 30 minute back manipulation procedures. However, the vast research by DOBI has yielded that this procedure should receive a prevailing cost of $190 per procedure. The costs to litigate this severely inflated claim by auto insurers results in millions of dollars annually.
In late 2007, after years of studies conducted by DOBI, in accordance with legislation passed years earlier, the list of procedures was expanded to over 1,400 of the most common procedures. The amounts paid were based upon comprehensive studies from Medicare, Medicaid and prevailing fees paid for these procedures.
Through the expanded fee schedule, reimbursement of medical costs can be controlled and the old standard of long, drawn out, expensive litigation over payments can finally come to an end. Claims will be processed more efficiently under these new guidelines. DOBI has truly been fundamental in its research of this issue and of adopting the fee schedule, enabling insurers to keep costs down.
This isn't just a victory for the auto insurance industry. Every driver in New Jersey has been impacted by the spiraling costs of surgery centers and certain abusive chiropractor practices. The expanded fee schedule finally puts auto insurers in a position to control costs and pass along savings to our policyholders.
Source
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