Fraud Makes NYC’s Insurance Rates Among Nation’s Highest

New York motorists have one more headache: legalized medical-bill rip-offs, which are turbocharging auto-insurance premiums.

While outright medical fraud gets the most attention and contributes to the sky-high price of no-fault auto insurance in New York, the much less publicized crisis of aggressive billing on medical care by providers is similarly driving up costs.

New Yorkers on average pay the fourth-highest rates for no-fault auto insurance in the US. That’s thanks in good measure to fraud and aggressive medical billing on top of local variables that can drive rates through the garage roof.

For instance, Bronx and upper Manhattan residents have the dubious distinction of paying the highest premiums in New York City, $919.57, versus a statewide average of $211.19.

“It’s a crisis,” said Michael McKeon, a spokesman for Fraud Costs New York, a coalition of consumers, businesses, elected officials, insurance trade associations and others battling auto insurance fraud in New York state. McKeon said the crisis needs to be addressed head on. “We need regulatory action,” he told The Post. “We need legislative action. We need real reform right here in New York.”

Despite Gov. Cuomo’s recent vow to clamp down on fraud by unethical doctors and medical mills costing New Yorkers hundreds of millions of dollars in insurance costs, the shadow medical billing jacks up rates unhindered.

The New York state Senate just passed three measures including one to make no-fault fraud a felony. The measures now move to the state Assembly for a vote.

“We are talking about billing practices that are unfair,” said Stephen Applebaum, senior analyst at Aite Group, who just published a major study on how “medical cost shifting” upends property and casualty insurance. “I don’t think it is even intentional overbilling. I just think it is a practice that’s leading to waste – and costing consumers money in their auto-insurance premiums. We’re talking billions of dollars of unnecessary expense.”

Applebaum said that 25 percent of auto-insurance premiums can be attributed to fraudulent and exaggerated claims, which roughly equates to an eyebrow-raising $35 billion annually in the US. That’s about $250 annually on average per vehicle-insurance policy.

Then there’s overbilling. “Nobody is accusing the health-care industry, primarily hospitals, in this case, of malicious intent,” Applebaum says.

He has highlighted instead something “more complicated and insidious.” It’s complicated partly because policyholders often have multiple insurance coverages, including auto. That coverage has to be coordinated in arcane back-office procedures.

The factors in this unfair and aggressive billing, according to Applebaum:

* Sophisticated manipulation of medical diagnostic and treatment coding systems for inflating billings.

* A lack of economic consequences for insurance carriers not invested in a closer scrutiny of medical-bill coding abuses.

* The lack of cost-effective software solutions in property and claims insurance.

One of Applebaum’s biggest gripes: There are now hundreds of thousands of billing codes used by hospital administrators, many of them applied at the mere judgment of a clerk.

Crash course

New Yorkers are paying the fourth-highest auto insurance rates in the nation, with many NYC drivers paying $919.57 versus a statewide average of $211.19.

* 25 percent of auto insurance premiums are the result of fraudulent and exaggerated claims.

* $35 billion Total fraudulent and exaggerated claims annually.

* Costing $250 annually on average per vehicle insurance policy.

{NY Post/Matzav.com Newscenter}