New Yorkers Like Acupuncture Too Much For Insurance Group
January 04 2011 - 9:34AM
Dow Jones News
Four out of every 10 people who submit medical claims to auto
insurers after car crashes in the New York City area visit an
acupuncturist for treatment, according to a new study. Upstate,
only three out of 50 such claimants submit bills for
acupuncture.
Downstate New York claimants are also more likely to file claims
for chiropractor visits (nearly five out of 10, versus two in 10
upstate). And in the New York City area, 44% eventually visit four
or more health-care providers, according to the study by the
Insurance Research Council, compared with 14% upstate. The council
is a nonprofit organization funded by insurance companies.
The study, to be formally released this week, illustrates one of
the primary reasons why car insurance is more expensive in New York
than in most other states--and why it costs more in the city than
it does upstate.
And, to the council, the disparity suggests widespread fraud in
New York City and its suburbs. Each of the medical claims examined
in the study were paid by the insurers, but the authors of the
study argue that only part of the difference can be explained by
"the availability of different types of treatment downstate
compared to the more rural areas of the state."
That assertion of fraud matches claims from both industry
experts and state regulators, who have said organized groups are
increasingly using minor crashes, or entirely fictional incidents,
as pretexts to drastically overbill auto insurers for medical costs
under the state's no-fault law.
"While not all of those cases are fraud, the likelihood is that
many of them are," said Kristina Baldwin of the Property Casualty
Insurers Association of America, a trade group for insurers.
The study looked at 4,500 instances in which New Yorkers
submitted medical claims to their auto insurers over a two-week
period last year. Insurance Research Council Vice President David
Corum said the study didn't attempt to quantify how often people
who are in accidents are injured, but said a large majority of
people in car crashes don't end up filing medical claims.
New York's no-fault system, instituted in 1974, allows someone
injured in a crash to file up to $50,000 worth of claims for
medical costs or lost wages with their own insurer no matter who is
to blame for the accident. The system was designed to speed payment
for medical treatment by eliminating disputes between insurance
companies over who was at fault.
The no-fault portion of a driver's coverage, called personal
injury protection, cost $754 in the Bronx in 2009 on average,
compared with a statewide average of $202, according to the
Property Casualty Insurers Association of America.
Insurance companies aren't alone in worrying about fraud: The
state insurance department has been working for more than a year on
a revision of the state's no-fault insurance regulation. The
state's Insurance Fraud Bureau reports no-fault fraud increased
from 10,117 instances in 2006 to 13,433 in 2009.
"Fraud is pervasive under no-fault, unfortunately," said Steven
Nachman, the New York insurance department's deputy superintendent
for fraud. "The bad guys have figured out how to game the
system."
Insurers hope the insurance department's changes make it easier
for them to deny fraudulent claims, but consumer advocates worry
legitimate expenses will be more likely to be turned down as well.
J. Robert Hunter, the director of insurance for the Consumer
Federation of America, said regulators must remember that insurers
have been caught cheating their customers as well.
"You have to fight the fraud," he said. "But that goes both
ways."
-By Erik Holm, Dow Jones Newswires; 212-416-2892;
erik.holm@dowjones.com
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