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Insurers warn of hikes in auto insurance premiums under proposed no-fault rules

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Insurers warn of hikes in auto insurance premiums under proposed no-fault rules

Insurers expect premiums to rise across the state if Congress approves changes to Michigan’s no-fault auto insurance law that would loosen price regulations for medical services.

Recently introduced legislation calls for increased no-fault insurance reimbursement levels for health care providers, such as hospitals, clinics, and home care agencies, that treat patients with acute and long-term injuries from motor vehicle accidents.

But some auto insurance companies believe the bill will protect the small number of people who were fatally injured in accidents that occurred after the June 2019 full medical reimbursement deadline established by a recent Michigan Supreme Court ruling. It claims to go far beyond its professed purpose of helping.

Instead, they argue that much of the bill is an attempt at large-scale medical profiteering, especially by hospitals and clinics.

The bill is scheduled for a hearing Wednesday in the state Senate’s Finance, Insurance and Consumer Protection Committee.

Insurers argue that the law would increase the no-fault payment rate for hospitals and clinics to 250% of what Medicare pays for the same service or procedure, from the current prevailing payment rate of 190%. It originates from.

This proposed rate is higher than the average commercial health insurance reimbursement for Michigan hospitals in 2020 (203% of the Medicare rate) found in a government-funded Rand Corporation study.

One outspoken critic of the law is the CEO of Cure Auto Insurance, which began operating in Michigan after the 2019 no-fault overhaul law that introduced price controls. CURE is also perhaps one of the only auto insurance companies in the state that does not use a credit score-like metric known as an “insurance score” when setting customer rates.

more: Proposed no-fault reimbursement reforms would increase wages for hospital and care workers

more: No-Fault Auto Insurance in Michigan: How to Choose the Cheapest Option

CURE CEO Eric Poe said in an interview this week that if the bill passes as written, the medical benefit portion of customers’ bills, known as “personal injury protection” (PIP), would likely increase by 35% to 40%. He said it would be necessary to increase the percentage. or at least $225 per customer per year.

“People will be devastated if (cost controls) are rolled back,” Poe said.

And he pointed out that Medicaid recipients, who by definition are low-income, cannot opt ​​out of purchasing medical benefits through no-fault insurance, as can people with Medicare or comprehensive commercial health insurance. did. Therefore, if this bill is passed, these people will be hit hard.

“When people who want to pass legislation to line the pockets of hospitals and lawyers think about raising the no-fault tax rate by 35% to 40%, they’re thinking about people on Medicaid. “Is that so?” asked Mr. Poe.

Auto insurers also note that the medical services covered by the law’s 250% increase in Medicare payments are far more common than those covered by separate price controls also introduced in the 2019 no-fault review. It also states that it is true.

Its cost controls, which affect the long-term care of survivors of serious injuries in traffic accidents, resulted in an across-the-board 45% reduction in reimbursements. It is specific to medical services that lack an applicable Medicare billing code, such as extended home care or stays in specialized rehabilitation facilities.

This 45% cut has led to some providers closing, cutting back on patients, or threatening to cut back on patients.

The Michigan Supreme Court ruled in July that cost controls in 2019 no-fault overhauls do not apply retroactively to businesses whose accidents occurred before the law was passed.

The ruling was welcome news for 14,872 catastrophe survivors whose accidents occurred before June 2019, according to statistics from the Michigan Catastrophic Claims Association. However, it did not apply to the survivors of the recent crash disaster, which numbered 1,811 as of September 2022.

lansing rally

Hundreds of people, including a wheelchair-bound crash survivor, took part in a rally in front of the Capitol building in Lansing on Tuesday, urging lawmakers to pass a new bill.

The bill would eliminate the 45% cut for non-coded medical services and replace it with flat payments to caregivers and other non-fault health care providers that are adjusted annually according to the Consumer Price Index. will be established.

Among those in attendance was former Red Wings defenseman Vladimir Konstantinov, who suffered a fatal brain injury in a 1997 limousine crash and had his caregiver’s salary restored by a Supreme Court ruling this summer. was also included.

The crowd also included recent accident victims who are not the subject of sentencing, such as 5-year-old Annabel Marsh of Midland, who suffered a spinal cord injury in February 2021 and requires a ventilator to breathe. It was She lives in her home with her mother, Brandi Marsh, and receives 24/7 care through her agency.

Brandi Marsh said Annabelle’s care is provided by AdvisaCare Home Health & Hospice, which continues to keep Annabelle as a client despite a 45% cut in reimbursement due to no-fault laws. He said he was there. But she is concerned about the future of Annabelle’s care if current cost controls are maintained.

“We all matter,” Brandi Marsh told the crowd at the rally. “It doesn’t matter what year the accident happened.”

Several speakers at the rally said the bill was a “last minute solution” to the 45% cut situation.

However, the insurance industry strongly disputes this characterization, and the actual bill would not only address the 2019 no-fault “loophole” that impacts catastrophic patients, but also address health care providers’ business It is claimed that it will bring great benefits to many people.

Erin McDonough, executive director of the Michigan Insurance Alliance, a lobbying group, said Tuesday that “containing health care costs that were spiraling out of control was an important part of the reform that led to lower health care costs.” He said the proposed bill would “take us back to the era of massive overcharging by hospitals and health care providers.”

Where did 250% come from?

According to the Michigan Health and Hospital Association, the proposed increase in no-fault payments for coded medical services (increasing the Medicare payment rate from 190% to 250%) would not only increase labor and other costs; This reflects the complex nature of traffic accident injury treatment. Hospitals have been faced with this since the COVID-19 pandemic. Price controls under the No-Fault Overhaul Act of 2019 were in place before the pandemic.

Specifically, the 250% rate is comparable to the national average payment rate for private health insurance that previous Rand Corporation research has found, said Laura Appel, executive vice president of the association. Ta.

He said the national average is higher than Rand’s Michigan figure (203% for Medicare) because Blue Cross Blue Shield of Michigan’s strong bargaining power has resulted in below-average hospital payment rates. He said it was appropriate for no-fault payments.

“I think Michigan’s averages reflect a single dominant payer that can command and negotiate a very forward-looking payment structure in the state,” she said. “As part of those negotiations, they could also offer something like 80% of the commercial (health insurance) market. Auto no-fault represents a much smaller portion of the market.”

Information about whether hospitals are losing money under the existing no-fault payment rate, typically 190% of Medicare, was not immediately available Tuesday.

But Appel pointed out how current law gives higher payment rates to a small number of hospitals with Level 1 or Level 2 trauma centers, or a small number of hospitals with large numbers of indigent patients.

She said the proposed bill would provide “parity” to all hospitals treating car accident victims by establishing a single payment rate of 250% of Medicare.

“I don’t think we’re asking for something excessive. I think we’re asking for something reasonable,” she said. We need clear and consistent reimbursement. ”

Contact JC Reindl: 313-378-5460 or jcreindl@freepress.com. Follow him on Twitter @jekraindol.

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