The Standard of Reimbursement for Medical Providers Under the New Jersey PIP Laws

The following is a summary of reimbursement standards for medical treatment provided to a patient who was injured in a motor vehicle accident in New Jersey.  Let’s say you are an orthopedic surgeon who practices in north New Jersey, and a patient’s primary doctor has requested an orthopedic consultation for an assessment as to whether surgery may be needed for a knee injured in a motor vehicle accident.  The patient presents to you, and you conduct a comprehensive evaluation and examination, and make your recommendation.  You billed for the consultation under CPT Code 99245, but the PIP insurer reimbursed you only $252.93, which is less than the amount you billed.  You contact the insurer and they insist the amount is proper. As it turns out, the insurer is correct.  The New Jersey Department of Banking and Insurance (“DOBI”) has enacted various medical fee schedules, and indeed a fee schedule exists for Physicians and the amount for the CPT Code at issue is what the insurer paid.


What if a medical provider renders a service, but there is no corresponding amount on a medical fee schedule?  For example, what if a physician provides treatment and the applicable CPT Code does not appear on the physician fee schedule?  In this instance, the physician is entitled to reimbursement at the “usual, customary and reasonable” amount.  But how is this amount, often coined the “UCR amount” determined?


The current regulations governing New Jersey PIP provide the standard for analysis to determine this amount.  N.J.A.C. 11:3-29.4 (e)(1) provides,


“For the purposes of this subchapter, determination of the usual, reasonable and customary fee means that the provider submits to the insurer his or her usual and customary fee by means of explanations of benefits from payors showing the provider’s billed and paid fee(s).  The insurer determines the reasonableness of the provider’s fee by comparison of its experience with that provider and with other providers in the region. National databases of fees, such as those published by FAIR Health ( or Wasserman (, for example, are evidence of the reasonableness of fees for the provider’s geographic region or ZIP code. The use of national databases of fees is not limited to the above examples. When using a database as evidence of the reasonableness of a fee, the insurer shall identify the database used, the edition date, the geozip and the percentile.”


It is important to recognize the provider has the initial burden of proof that is, the provider must prove the “usual and customary” fee.  Here, you should be able to prove you bill the consistent amount to different insurers.  You should also organize the explanations of benefits you receive from different insurers, to be able to show what insurers have paid you for the treatment.  The insurer is then permitted to introduce data as to the “reasonableness” of the rates.  You can do this by showing your experiences with payments from other carriers, as well as introducing data from national databases.