Car accident victims and the companies that provide their care are protesting an impending change to how much health care providers are reimbursed when treating auto-related injuries, calling for legislative tweaks to the policy before it takes effect next month.
In 2019, the Republican-led Legislature and Gov. Gretchen Whitmer agreed to an overhaul of Michigan’s no-fault auto insurance system, aimed at lowering the state’s highest-in-the-nation costs, signing into law bills that passed with wide bipartisan support.
Related: Michigan average car insurance rates drop significantly, but still among highest in U.S.
Part of that change was giving drivers the option to choose their desired level of personal injury protection (PIP) coverage, which went into effect last summer — but another big piece of the deal was setting up a fee schedule for how much health providers can bill insurance companies when treating auto-related injuries.
Come July, reimbursement from insurance companies for health care services provided to auto accident survivors not covered by Medicare will see a 45% cut under the fee schedule laid out in the 2019 law. That change, many current post-acute care providers say, will either put them out of business or require them to stop providing services to auto accident patients. And car accident victims fear they’ll lose access to high-quality care.
In the run-up to the effective date, providers and car accident victims have hosted virtual and in-person press conferences supporting changes to the law. Last month, activists organized a “virtual protest,” where thousands of accident survivors, family members and providers shared their stories via email and urged lawmakers to take up bills changing the policy.
Related: Michigan’s new auto insurance law brings excitement, concern
Amber Marcy, an auto accident survivor who lives in Saugatuck, said during a May press conference that she’s been able to work full time, volunteer and stay active in her community, thanks to the attendant care she’s received from no-fault insurance. She fears that independence will be taken away from her under the new law.
“Yes, the new law reads that we have lifetime benefits, but we really won’t have benefits when there’s no providers,” Marcy said. “In the end, people like me and others injured and auto accidents are going to lose their independence and their overall health. We’ll be living in nursing homes. We won’t really be living.”
Supporters of the change say the law’s changes to reimbursement fees are a key part of the equation when it comes to lowering auto insurance rates. The Insurance Alliance of Michigan estimates Michigan drivers have saved more than $1 billion from reductions to the Michigan Catastrophic Claims Association’s per-vehicle fee alone, not counting any individual savings drivers might have seen from choosing different levels of PIP coverage.
Changing medical fee schedules approved in the law would result in an increase to MCCA fees and cause rates to creep back up, the group argues.
“We applaud the Legislature for passing these historic reforms, which are making great strides in cracking down on fraud and abuse, reining in overcharging by medical providers and giving consumers a choice in the level of medical coverage included with their car insurance policy,” Insurance Alliance of Michigan Executive Director Erin McDonough said in a recent press release.
Anita Fox, director of Michigan’s Department of Insurance and Financial Services, said drivers are entitled, up to the limit of their insurance policy, to any services that are deemed necessary for their medical care. Individuals should contact their insurance provider if they’re having difficulties securing care, and the department is available to help answer consumer questions if people are having issues accessing care or other concerns, Fox said.
Related: What to consider when buying auto insurance in Michigan
But it’s up to the Legislature to decide whether changes to the law’s fee structure are necessary, she said.
“We as a department are going to be involved, to the extent we can, in looking at those issues, because access to care is important,” Fox said.
Many legislative Democrats and a handful of Republicans have indicated support for changing the law. House Bill 4486, sponsored by Rep. Doug Wozniak, R-Shelby Township, and Senate Bill 314, sponsored by Sen. Curtis Hertel, Jr., D-East Lansing, would cap reimbursements for impacted providers at their 2019 rates. Another bill, House Bill 4992, was introduced by Commerce Township Republican Ryan Berman this month and would implement a market average set each year by the Department of Insurance and Financial Services.
None of the proposals have come up for a hearing in the Legislature, and there’s been no indication legislative Republican leaders are interested in taking them up.
Both House Speaker Jason Wentworth, R-Clare, and Senate Majority Leader Mike Shirkey, R-Clarklake, were closely involved in the legislation’s initial passage. Shirkey has said he’d like to see the 2019 law implemented fully before looking at making changes.
Several providers and industry groups have said waiting until the law goes into effect will be too late to save many businesses.
Neuro rehabilitation provider Hope Network announced last week that it is closing its Coldwater location due to the pending law change, noting that 10 of the 12 residents in the facility are car crash survivors
“I am at a loss for where to find services for all the people across the state that will be impacted after July 1,” Hope Network Executive Vice President Margaret Kroese said in a statement.
Wozniak said he believes there’s broad support for his bill in the Legislature if leadership is willing to take it up.
“I think there’s a big concern that there won’t be care available. We put together a great industry, but we can’t keep it,” he said.
Whitmer, in a letter addressed to legislative leadership this week, wrote that “the clock is ticking” on coming up with a solution to make sure vulnerable residents continue to have access to care.
“As the July 1st deadline for implementation of new fee schedules approaches and long-term healthcare providers express concerns about potential financial impacts, time is running short to make any necessary changes to ensure that our most vulnerable have access to care,” Whitmer wrote. “I am confident that we can review any issues we may face and address them together with a sustainable, collaborative solution.”
Michigan Brain Injury Provider Council President Tom Judd said in a statement he hopes the formal acknowledgment from Whitmer will lead to a resolution.
“We urge Gov. Whitmer, Senate Majority Leader Shirkey and House Speaker Wentworth to sit down at the table with auto insurance representatives and those of us who provide care to victims of catastrophic auto accidents,” he said in a statement. “We have a chance to collectively find a solution that would prevent a second traumatic event from being inflicted on survivors.”
Average car insurance rates have declined substantially since the first phase of Michigan’s auto insurance law went into effect, but it’s still one of the most expensive places in the country to insure a car.
The Zebra, a national auto insurance comparison site, found in February that Michigan’s car insurance rates dropped 18% statewide and 19% in Detroit, where drivers have historically paid some of the highest auto insurance costs in the country. Michigan’s statewide average — $2,535 per year — still clocked in far higher than the national average of $1,483 per year, and with an average of $5,072 per year, Detroit still posted the highest average car insurance rates in the U.S.
A more recent analysis from Insure.com released in May found Michigan’s auto insurance premiums dropped by 27% in 2020 compared to the previous year, and estimated Michigan’s average premium of $2,112 per year dropped it from first to second place in the ranking of states with the highest auto insurance premiums.
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Michigan auto insurers see ‘coronavirus windfall’ as driving, crashes decrease
Gov. Whitmer signs bill overhauling Michigan auto insurance
Michigan orders auto insurance refunds due to ‘extreme reductions in driving’
Michiganders to see another drop in auto insurance fee in 2021
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