House committee approves PIP auto-insurance changes aimed at reducing fraud; therapists and chiropractors warn of access and payment impacts

House Bill 416, presented to the House Standing Committee on Banking and Insurance by Representative Josh Burry, passed the committee as amended after a substitute and debate between insurers, a national insurance-fraud investigator, and health-care provider groups.

The substitute adopted in committee increased funeral PIP benefits to $5,000, raised the weekly-wage PIP benefit to $500, extended the deadline for submitting PIP billing from 45 days to 180 days, and included a prohibition on balance billing for consumers in certain circumstances. The substitute also directs that a workers’ compensation fee schedule be used for fee-setting of many outpatient providers for PIP claims; the committee substitute, as read aloud, included clarifying language that the bill does not adopt workers’ compensation claim-handling procedures.

Amy Phelps, a special agent assigned to Kentucky with the National Insurance Crime Bureau, told the committee she has investigated organized schemes that she described as including “medical providers, pain clinics, diagnostic centers, marketers, solicitors, attorneys, administrative billers, insureds, and violent street gangs.” Phelps said those networks can generate inflated billing, bill for services not provided, and steer prescribed narcotics into communities. “This criminal ring for fraud introduces a very dangerous component into our communities due to the large financial profit,” she said.

Insurance-industry representatives, including Dustin Miller representing State Farm and others in the room, told the committee that the current PIP statutory framework presumes charges to be reasonable, creating an environment vulnerable to abuse and fraud. They said the proposed changes are a first, targeted step to contain costs and limit incentives for organized fraud.

Opposing witnesses — including Robbie Henkebahn, a physical therapist representing APTA Kentucky, and Rachel Wendt, executive director of the Kentucky Association of Chiropractors — said the bill would not meaningfully stop fraud and would instead penalize honest outpatient providers. Henkebahn warned that applying a lower fee schedule to outpatient providers while hospital-based providers remain subject to higher hospital fee schedules “will hurt . . . rural providers that are only access for musculoskeletal care in a lot of our counties” and could strain hospitals. Wendt said the bill “discriminates between providers,” noting chiropractors cannot be hired directly in hospital settings and would be subject to different reimbursement rules for the same services.

Committee members asked whether the changes would lower premiums and whether reduced outpatient participation would shift care to hospitals. Insurer representatives said they expect potential reductions in fraud incentives but could not quantify immediate premium savings and cautioned that shifting care settings could increase costs. Sponsors and insurer witnesses said the workers’ compensation fee schedule is updated biennially through an administrative process that allows provider input.

The committee adopted the substitute and passed HB 416 on a roll call. Several members recorded a pass rather than a yes vote; others explained support as a compromise to address fraud while trying to preserve access. The chair announced the bill passed with a favorable recommendation to the House floor.

The measure will proceed to the full House, where additional debate and amendments are possible. Committee members said they intend to continue discussions with provider groups and insurers on implementation details and the fee-schedule update process.