The “reasonableness” standard meant to contain the costs medical providers can charge for treating injuries sustained during an auto accident has proven to be ineffective. Instead, the state could create specific fee schedules for procedures in statute or otherwise provide a streamlined statutory third-party process for review of medical bills. Similar fee schedules are used for Medicaid and Medicare coverages and these existing fee schedules could be used as the baseline for an auto insurer fee schedule.

While most auto insurers currently use third-party reviewers to determine “reasonableness” of medical provider chargers, there is no obligation for medical providers to consider the findings of these reviews. The statutes could be amended to specifically require providers to present proof that a third-party review of the charges is not reasonable.

Another strategy that could work in conjunction with a fee schedule is to allow auto insurance companies to negotiate rates directly with medical providers. Insurers and providers could negotiate their own rates that differ from the fee schedule, but then must use the fee schedule for all non-negotiated services. Such agreements already exist between some providers and insurers but are relatively uncommon, because insurers have very little bargaining power with medical providers in such deals. There could be a mechanism that requires providers and insurers to negotiate reasonable fee containment and if they cannot agree then they must revert to the fee schedule or be bound by a third-party review.