Important Information Regarding Carrier Underpayments in Personal Injury Protection Claims
The purpose of this post is to help assist healthcare providers and owners with questions they have concerning their business or relevant knowledge in the field. The Callagy Law team is knowledgeable in many law practice areas and will frequently post topics ranging from Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance. We hope to have this blog shed a light on many common questions.
Do you have the proper information regarding carrier underpayments? Everyone is generally familiar with payment denials in PIP. They are usually for some form of lack of medical necessity—IME Denial, MDR Denial, Maximum Medical Improvement has been reached—or some shortcoming on the part of the patient–Lack of Eligibility or Failure to Cooperate. But there are also many reasons why carriers might unreasonably underpay claims that are sometimes more difficult to detect. Some of these reasons are discussed below.
21-Day Notification. Medical providers must notify PIP carriers that they are treating a patient injured in a motor vehicle accident (MVA) within 21 days following the commencement of treatment. If not, the insurance carrier can apply payment reductions in the following manner:
22 to 30 days after the commencement of treatment: 10 percent reduction.
31 to 60 days after the commencement of treatment: 25 percent reduction.
61 to 120 days after the commencement of treatment: 50 percent reduction.
121 to 160 days after the commencement of treatment: 75 percent reduction.
161 or more days from the commencement of treatment: 100 percent reduction.
New Jersey Administrative Code 11:3-25.
If the services were performed in an emergency context, the carrier cannot apply these reductions. It is important to understand these regulations so that PIP carriers are not unduly penalizing your practice.
Pre-certification Penalties. These reductions are fairly common. Medical products and services are required to be pre-certified when performed on a patient injured in an MVA, and a pre-certification denial must be appealed in a timely fashion to avoid a pre-certification penalty. These requests and appeals should be done immediately and a provider needs to make sure they obtain and retain proof that pre-certifications were sent and received. If not done properly and in a timely manner, the provider might have to suffer a 50% payment penalty.
Fee Schedule Payments. Reimbursements for PIP claims in the State of New Jersey are governed by a state-mandated fee schedule. This does not mean that PIP claims paid “according to the fee schedule” are always paid at the correct amounts. First of all, not all codes are on the fee schedule, which can generate controversy as to the appropriate reimbursement amount. There are also disputes as to what codes might or might not be separately reimbursable, and under what circumstances. There are multiple procedure reductions that sometimes are misapplied. And there are flat-out mistakes, as where a carrier pays an ASC the physician rate or vice versa. Any payment which seems inconsistent with amounts set forth on the fee schedule should be closely scrutinized.
Downcoding. Another reason underpayments occur is down coding. Because there are levels of complexity with things like office visits—some visits requiring more time for effective evaluation than others—there can be debate as to the correct level of reimbursement. Downcoding occurs when the carrier believes a lower level of payment is called for than the level billed, so they will pay at the lower-level CPT Code.
This is not an exhaustive list of why underpayments can occur, but it is some of the more common ones.
We hope you have found this information helpful and interesting. Please reach out to us here with any questions or comments regarding healthcare legal matters, or if you are a medical provider that has questions regarding Medical Revenue Recovery, PIP, Workers Compensation, and Commercial Insurance.. Feel free to search us on Facebook, Twitter or LinkedIn! Additionally you can subscribe to our daily videos on YouTube.
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