Insurers Critical of New Jersey Senate Bill

December 18, 2008

The Property Casualty Insurers Association of America (PCI) said it strongly opposes a bill recently passed by New Jersey Senate that allows physicians to make self-referrals to their ambulatory surgical centers.

PCI said the legislation, known as Senate Bill 787, threatens the fight against insurance fraud and will drive up auto insurance costs and jeopardize patients’ best interests.

“While on the surface, S787 appears to be an attempt to reform the practice of self referral by medical practitioners, the fact is it would allow doctors to pocket millions of dollars from improperly filed insurance claims,” said Richard Stokes, PCI regional manager.

The bill would change language related to ambulatory surgical centers to allow medical providers to refer patients to facilities in which they have a financial interest. Critics argue that lifting the restrictions on self-referral will invite more insurance fraud into the New Jersey marketplace, thereby driving up insurance costs.

PCI also said the proposed legislation includes a clause that provides a retroactive “carve out” which exempts current violators — meaning that doctors and medical practitioners who engaged in deceptive billing practices would still be able to collect on illegally submitted insurance claims.

“Doctors who knowingly engaged in deceptive billing practices and blatant conflicts of interest should not be rewarded for their indiscretions,” said Stokes. “If these illegally submitted claims were paid, it would be financially devastating to New Jersey motorists who pay for auto insurance and to those companies that insure them.”

New Jersey has the largest number of ambulatory surgery centers per capita than surrounding states. While ambulatory surgical centers were originally created as low-cost providers of certain treatments outside of hospitals, in some cases treatment cost in these facilities can be 300 to 500 percent higher than in nearby hospitals.

The bill will be considered in the Assembly in January.

Source: PCI

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