Medical Fee Schedules: Automobile Insurance Personal Injury Protection and Motor Bus Medical Expense Insurance Coverage

Dental Fee Schedule

Proposed New Rule: N.J.A.C. 11:3-29 Appendix, Exhibit 2

Authorized By: Donald Bryan, Acting Commissioner for Insurance, Department of Banking and Insurance.

Authority: N. J.S.A. 39:6A-4.6.

Calendar Reference: See Summary below for explanation of exceptions to calendar requirement.

Proposal Number: PRN 2001-417.

Submit comments by December 14, 2001 to:

Karen Garfing
Assistant Commissioner
Regulatory Affairs
New Jersey Department of Banking and Insurance
PO Box 325
Trenton, NJ 08625-0325

Fax: (609) 292-0896


The agency proposal follows:


N.J.S.A. 39:6A-4.6(a) requires the Commissioner of Insurance to promulgate medical fee schedules for the reimbursement of health care providers providing services or equipment for which reimbursement is made under the medical expense benefit of the Personal Injury Protection ("PIP") coverage and medical expense benefits by motor bus insurers.

On December 18, 2000, the Department proposed the repeal of the existing dental fee schedule (see 32 N.J.R. 4332(a)). At that time, the Department did not propose a replacement dental fee schedule based on comments made on a preliminary draft of a dental fee schedule that was circulated among interested parties including groups representing various medical providers and insurers. The Department undertook to work with dental trade organizations and others to compile a fee schedule that accurately reflects market-based billed dental fees. On January 17, 2001, the Appellate Division issued a decision on a notice of appeal filed in May, 1999 by the New Jersey Dental Association: In the Matter of the Failure of the Department of Banking and Insurance to Transmit a Proposed Dental Fee Schedule to the OAL for publication in the New Jersey Register, 336 N.J. Super 253, 269 (App. Div. 2001). In that decision, the Court urged the Department to work with its vendor and propose a new dental fee schedule.

The proposed new dental fee schedule is the result of those efforts. The proposed new dental fee schedule contains only 62 codes, significantly fewer than the repealed schedule. These codes represent the dental procedures that are performed frequently enough as a result of auto accidents to merit inclusion in a fee schedule.

The proposed new dental fee schedule is based on the 75th percentile of billed dental fees. Unlike other medical providers, most dentists do not enter into fee discounting arrangements with health payers and collect their billed fees. This satisfies the statutory requirement at N.J.S.A. 39:6A-4.6a that the fee schedules "incorporate the reasonable and prevailing fees of 75% of the practitioners within the region."

This rule proposal provides for a comment period of 60 days, and therefore, pursuant to N.J.A.C. 1:30-3.3(a)5, is not subject to the provisions of N.J.A.C. 1:30-3.1 and 3.2 governing rulemaking calendars.

Social Impact

The proposed amendment to the Medical Fee Schedule affects automobile insurers, purchasers of automobile insurance and health care providers who provide medical services and equipment to New Jersey resident insureds injured in accidents involving automobiles and/or buses.

The fee schedules have been revised and updated to include current code numbers and descriptions, thus enabling providers and insurers to streamline billing and claims paying systems. Dollar amounts appearing in the fee schedules "incorporate the reasonable and prevailing fees of 75% of the practitioners within the region" as required by N.J.S.A. 39:6A-4.6a. The standard for reimbursement in New Jersey continues to be "the providerís usual, customary and reasonable charge or the upper limit in the fee schedule, whichever is lower" as expressed in the definition of "eligible charge or expense" at N.J.A.C. 11:3-29.2.

Economic Impact

The proposed dental fee schedule and the current medical fee schedule rules are intended to establish limits on the amount of dental expenses paid by insurers on behalf of New Jersey residents who are injured in automobile or bus accidents. The level of these fees must be adjusted periodically to incorporate changes in coding and fee levels in the industry.

Health care providers are expected to charge their usual, customary and reasonable fees for the dental services and equipment they provide, subject to the ceiling amounts appearing in the fee schedules and rules.

Health care providers and insurers will incur some cost, initially, as a result of incorporating the new fee schedule and the rules into their respective billing and claims paying systems and procedures, but the overall effect of these proposed amendments is expected to reduce costs currently borne by insurers and, in turn, by insureds. The cost of contracting with a vendor to maintain the fee schedule will have an economic impact on the Department. However, the Department has budgeted for these costs.

Federal Standards Statement

A Federal standards analysis is not required because the medical fee schedules, including the proposed dental fee schedule, and rules are not subject to any Federal requirements or standards.

Jobs Impact

The Department does not anticipate the creation or loss of any jobs as a result of the new rule. The Department invites commenters to submit any data or studies regarding the jobs impact of the this new rule together with any written comments on other aspects of the proposal.

Agriculture Industry Impact

The proposed new rule has no impact on the agriculture industry.

Regulatory Flexibility Analysis

The proposed new rule will apply to "small businesses" as that term is defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. These "small businesses" include insurers authorized to write private passenger automobile insurance and/or motor bus medical expense coverage. Less than 10 of the more than 200 automobile insurers in New Jersey qualify as "small businesses."

The rules require that all automobile and motor bus insurers, including those qualifying as small businesses, will implement the new dental fee schedule in their claims payment processes. Since medical fee schedules for automobile and motor bus insurers have been utilized for many years, the Department does not believe that compliance with the new dental fee schedule will require any professional services other than those used by insurers as part of their regular claim review processes. Insurers will incur a one time cost to distribute the new fee schedules and for the training of personnel in the new rule.

The proposed new rule provides no different reporting, recordkeeping or other compliance requirements based on business size. The requirement that the maximum reimbursement for treatment of injuries sustained in automobile accidents be established by the fee schedule is set by statute. It is important that all automobile accident claims be administered in a similar manner. Accordingly, the Department does not believe that the requirements set forth in the proposed new rule impose any undue burden on insurers or that different compliance requirements are feasible. Therefore, for the reasons discussed above, and to continue to ensure consistency and uniformity in the regulation of automobile insurance, no differentiation in compliance requirements is provided based on business size.

Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]):