PCI Raises Concerns that Work Comp Fee Schedule Changes Could Lead to Higher Costs for Auto Insurance

ALBANY, N.Y., Nov. 8 — The Property Casualty Insurers Association of America issued the following news release:

In a letter to the New York State Workers Compensation Board, the Property Casualty Insurers Association of America (PCI) expressed concern that proposed changes to the workers compensation medical, podiatry and chiropractic fee schedule could have unintended negative consequences for the state’s no-fault automobile system.

New York’s workers compensation fee schedule is applicable to services rendered under no-fault coverage. As result, the proposed fee schedule changes, which carry increases for certain services such as a 30 percent increase in Evaluation & Management fees and changes to the way chiropractic services are billed which will result in increases of between 30-42 percent, would impact auto insurance rates.

“Although some updating of the workers compensation fee schedule may be warranted, the proposed changes could lead to significant cost increases for motorists,” said Kristina Baldwin, assistant vice president for PCI. “In addition to potentially increasing auto insurance costs, increasing fees required to be paid to medical care providers may make New York’s no-fault system even more attractive as a target for fraud, thereby exacerbating the problems plaguing the system. The no-fault system is already fraught with fraud and abuse, much of which is perpetrated by medical providers. Against this backdrop, an increase in certain medical provider fees raises great concern.”

In the letter to the Workers Compensation Board, Baldwin highlights how medical claim costs have skyrocketed for auto insurance. Since the end of 2004, the average amount paid for medical claims related to auto accidents in New York rose by 60.4 percent, 31.2 points faster that the 29.2 growth rate of all other no-fault states and nearly 42 points faster than the 18.6 percent growth rate in the consumer price index cost of medical goods and services found in the region.

“We attribute much of the disparity in no-fault medical costs to fraud,” said Baldwin. “Related to the fraud problem is our concern that the no-fault system does not have the variety of cost containment tools found in the workers compensation system to guard against overutilization, which is a highly prevalent problem in the no-fault system. We are urging the board to take into consideration that the dramatic increases in the workers compensation fee schedule may have a real impact on no-fault costs.”