Workers’ Compensation Fees Would Cost New York Drivers, Insurers Warn

November 10, 2010

Proposed 30 percent increases in what medical providers in New York are paid for treating workers’ compensation injuries could have unintended consequences for the state’s motorists, an industry group has warned

In a letter to the New York State Workers Compensation Board, the Property Casualty Insurers Association of America (PCI) expressed concern that the changes to the workers compensation medical, podiatry and chiropractic fee schedule could result in higher costs for the state’s auto insurance policyholders because the workers compensation fee schedule is applicable to services provided under no-fault auto coverage.

The proposed fee changes include increases of 30 percent for evaluation and management fees and between 30 to 42 percent for chiropractic services.

The fees will not only raise auto insurance costs but could also increase fraud in the system, PCI warned.

“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.”

Baldwin said 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, according to her letter.

“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.”

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