Authorized By: Holly C. Bakke, Acting Commissioner, Department of Banking and Insurance.

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

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

Proposal Number: PRN 2002-104.

Submit comments by May 17, 2002 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:

The Department is proposing some minor amendments to the text of the Medical Fee Schedule rules to address problems that have developed in its implementation and to propose amendments to the Nursing and Allied Health Professional Health Services fee schedule. The Department will update the other fee schedules themselves in accordance with N.J.S.A. 39:6A-4.6(a) in future rulemaking.

N.J.A.C. 11:3-29.2, Definitions, is proposed to be amended to include a definition of CDT-3. The use of the term in the dental fee schedule adopted effective on March 4, 2002. (see the notice of adoption published in the March 4, 2002 New Jersey Register) should be reflected in the definitions.

N.J.A.C. 11:3-29.4(c) is being amended to delete the provision that set the rental fee for durable medical equipment at no more than 10 percent of the purchase price. This provision carried over from the old fee schedule rule when the fee schedule did not contain fees for rented equipment.

N.J.A.C. 11:3-29.4(i) is being deleted as it duplicative with the prohibition on unbundling in N.J.A.C. 11:3-29.4(g).

The American Medical Association’s Current Procedural Terminology (CPT) recognizes that there may be services or procedures performed by providers that are not found in the manual. A number of specific code numbers have been designated for reporting unlisted procedures in CPT. Examples are codes 97039, Unlisted modality or 97799, Unlisted physical medicine/rehabilitation service or procedure. Some providers have billed for unlisted codes without any explanation or justification. A new N.J.A.C. 11:3-29.4(i) is being proposed that requires where CPT codes for unlisted procedures or services are billed, the provider must submit an explanation of the procedure or service represented by the code and explain why it is medically appropriate and not duplicative of listed codes.

N.J.A.C. 11:3-29.4(m) is proposed for amendment. N.J.S.A. 39:6A-4.6(b) provides that a single fee, rather than an unbundled fee, may be established for services commonly provided together. The Department set a daily maximum fee of $90.00 for a group of CPT codes. These codes were delineated in the rule as those in the section of the CPT heading, Physical Medicine and Rehabilitation (CPT 97001-98943). No comments on the inclusion of any particular codes in the daily cap were received when the rule was proposed. However, when the rule was adopted, it became apparent that some codes in this section of CPT did not represent services commonly provided together and should not have been subject to the daily maximum. The subchapter is being amended to list the codes that are subject to the daily maximum in new N.J.A.C. 11:3-29 Appendix, Exhibit 6. This should prevent confusion about to which codes the daily maximum applies.

N.J.A.C. 11:3-29.4(m) also gives insurers the ability to waive the daily maximum under certain circumstances. The Department is amending the description of when the daily maximum may be waived to clarify its intent that waiver is appropriate when the extent or severity of injuries requires an extraordinary time and effort for effective treatment. It is not possible to state the exact circumstances when the daily maximum should be waived but examples are where physical therapy treatments are complicated by a severe brain injury or there are serious injuries to multiple body parts that necessitate treatment outside of the norm.

In the July 16, 2001 adoption of the amendments to the Medical Fee schedule (see 33 N.J.R. 2507(a)), the Department acknowledged the commenter's concerns about the proposed fee schedule for home care services and left the existing fee schedule for such services in effect. As there was no paid fee data available for these services, the Department reviewed a sample of bills submitted for payment by providers for such services and developed the proposed amendments to N.J.A.C. 11:3-29 Appendix, Exhibit 3. There was very little distinction in the fees between the fees billed in the three regions in New Jersey so only one fee schedule is being proposed. The proposed amendments update the fee schedules for nurses and home health aides to the 75^th percentile of billed fees. In response to a comment on the on the original fee schedule proposal, the Department is also proposing a fee for Medical Social Workers. Finally, the fees for home physical, speech and occupational therapy have been raised to $90.00, which is the daily maximum for these types of services in the outpatient context.

The proposed amendments to the Medical Fee Schedule affect 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 rules governing the fee schedules have been revised to correct some problems encountered in their implementation. This will have a positive social effect in reducing confusion, in particular about what fees are subject to the $90.00 daily maximum and when the daily maximum can be waived. In addition, revisions to the Home Care fee schedule updates those fees and adds fees for Medical Social Workers to the schedule. This should have a positive social effect in streamlining billing and claims payment for these services.

The elimination of some CPT codes from the daily maximum will result in increase reimbursement for some procedures that are not commonly provided together and should not have been included in the cap. The proposed amendments to the Home Care Services fee schedule will result in increased claim payments by insurers and additional income for practitioners of those services.

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

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

The proposed new rule and amendments have no impact on the agriculture industry.

The proposed new rule and amendments 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, implement the fee schedules and rules in their claims payment processes. Since the proposed new rule and amendments merely clarify how the rules are to be applied, the Department does not believe that any professional services other than those used by insurers as part of their regular claim review processes will be required.

The proposed amendments and new rule provide 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 amendments and 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.

The proposed amendment and new rule have no impact on the achievement of smart growth and implementation of the State Development and Redevelopment Plan.

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

SUBCHAPTER 29. MEDICAL FEE SCHEDULES: AUTOMOBILE INSURANCE PERSONAL INJURY PROTECTION AND MOTOR BUS MEDICAL EXPENSE INSURANCE COVERAGE

11:3-29.2 Definitions

The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

…

11:3-29.4 Application of Medical Fee Schedules

(a) - (b) (No change.)

(c) The fees set forth in the schedule for durable medical equipment, subchapter Appendix, Exhibit 5, are retail prices which may include purchase prices for both new and used equipment, and/or monthly rentals. New equipment shall be distinguished with the use of modifier-NU, used equipment with modifier-UE and rental equipment with modifier-RR.

[1. The insurer's limit of liability for monthly rental of durable medical equipment described in the schedule is 10 percent of the amount of the new equipment purchase price.]

[2.] 1. The insurer's total limit of liability for the rental of a single item of durable medical equipment set forth in the schedule is 15 times the monthly rental fee.

(d) - (h) (No change.)

(i) [When a covered injection is provided during an evaluation and management service, only the code for the substance shall be billed. The administration codes shall not be billed because the administration is included in the evaluation and management service.] CPT codes for unlisted procedures or services (example: 97139 Unlisted therapeutic procedure) are not reimbursable without documentation describing the procedure or service performed, demonstrating its medical appropriateness and indicating why it is not duplicative of a code for a listed procedure or service.

(j) – (l) (No change.)

(m) The daily maximum allowable fee shall be $90.00 for the Physical Medicine and Rehabilitation [procedures (CPT 97001 through 98943) but not including Osteopathic Manipulative Treatment actually performed by the osteopathic physician or a medical doctor (CPT 98925 through 98929)] CPT codes listed in subchapter Appendix, Exhibit 6, incorporated herein by reference, that are commonly provided together. The daily maximum applies when such services are performed for the same patient on the same date. However, an insurer is not prohibited from reimbursing providers in excess of the daily maximum where [a patient has serious traumatic injuries to more than one area of the body] the severity or extent of the injury is such that extraordinary time and effort is needed for effective treatment. Such injuries could include, but are not limited to, severe brain injury and non-soft-tissue injuries to more than one part of the body. Treatment that the provider believes should not be subject to the daily maximum shall be billed using modifier -22 as designated in CPT for unusual procedural services. Unless already provided to the insurer as part of a decision point review or precertification request, the billing shall be accompanied by documentation of why the extraordinary time for effort for treatment was needed.