The Michigan House approved legislation Thursday aimed at addressing concerns over an impending change to how much health care providers are reimbursed when treating auto-related injuries, although an industry group argued the proposal as written wouldn’t go far enough.
Under an amended version of Senate Bill 28 that passed the House 95-13 late Thursday evening, a $10 million fund would be created for post-acute brain and spinal injury facilities and attendant care providers seeing structural losses as a result of the pending changes.
Payments would be provided on a first-come, first-serve basis, and providers could only get the funds if they provide information about the charges for their services when treating both auto and non-auto related injuries and can prove that they’re facing a “systematic deficit” caused by changes to the state’s no-fault system.
Related: Crash victims, health providers cry foul over impending change to auto injury medical fees
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.
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.
House Speaker Jason Wentworth, R-Farwell, said Thursday that the fund could help lawmakers determine any issues with the current policy and what to do moving forward, according to Gongwer News Service.
In a statement following the vote, Michigan Brain Injury Provider Council President Tom Judd said the proposal was a good-faith effort that recognizes the issue facing many health providers who treat auto accident victims, but said the $10 million allocation and the timeframe in which the funds would be distributed might not be enough to save some businesses.
“We appreciate the intentions of this lifeline — but unfortunately, the rope isn’t long enough to get everyone safely to shore,” Judd said. “This program does not offer enough relief in a timely fashion, or to the degree necessary to allow many providers the opportunity to maintain operations, especially small businesses, due to the impending losses they face after July 1 – resulting in the imminent disruption of care and displacement of accident victims throughout the state.”
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.
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.
Related coverage:
Michigan average car insurance rates drop significantly, but still among highest in U.S.
Michigan’s new auto insurance law brings excitement, concern
What to consider when buying auto insurance in Michigan
Why it’s hard to predict individual savings under new auto insurance law
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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