No-fault reform bills propose pay raises
Legislation aims to loosen medical cost controls
Hospitals and caregivers for car crash victims in Michigan would get a pay raise under legislation introduced Tuesday to loosen controversial medical cost controls in the state’s 2019 no-fault auto insurance overhaul.
The legislation, introduced by state Sen. Mary Cavanagh, D-Redford Twp., and state Sen. Sarah Anthony, D-Lansing, follows a July decision by the Michigan Supreme Court that found the cost controls do not apply retroactively to patients whose accidents occurred prior to the overhaul.
Since the decision, which affected nearly 15,000 crash survivors, medical providers and patient advocates have called for the Democratic-controlled Legislature to make changes to the no-fault law, as the Supreme Court left the cost controls in place for patients whose accidents happened after the June 2019 cutoff date.
The legislation, Senate Bills 530 and 531, would increase reimbursement rates for medical providers who treat patients with acute injuries as well as those in long-term catastrophic care. It would still give motorists the option to choose levels of medical coverage — including opting out — besides the traditional “unlimited” option.
Specifically, the legislation would raise the reimbursement rate to medical providers for most services to 250% of whatever Medicare pays for the same service.
Under the 2019 law, providers were generally paid 200% of Medicare rates until last year, when the level dropped to 195%, and then fell to 190% of Medicare rates starting last July. (Hospitals with Level I or Level II trauma centers are paid more under the law, currently up to 135% of Medicare.)
By comparison, the average commercial insurance reimbursement to Michigan hospitals in 2020 was 203% of Medicare rates, according to a study by the government-funded Rand Corp.
The head of the Michigan Insurance Alliance, an industry group, said they are still reviewing the new legislation and its potential affect on car insurance premiums.
“Auto no-fault reforms have saved Michigan consumers more than $5 billion by cracking
down on fraud, reining in rampant overcharging by medical providers and providing consumers more choices,” Alliance Executive Director Erin McDonough said in a statement. “We urge policymakers to carefully review policy proposals with an eye toward how it impacts auto insurance costs and how it impacts Michigan families.”
For medical services without a Medicare code, which are often used by catastrophically injured crash survivors, the proposed legislation would set reimbursement rates that adjust each year with the Consumer Price Index.
For in-home attendant care provided by a business or agency, the reimbursement rate for “supervision” care would start at $32.78 per house in metro Detroit and $32.29 per hour for the rest of the state, rise to $36.57 per hour in metro Detroit ($34.97 outstate) for “basic” care, and $40.37 per hour ($38.60 outstate) for “high-tech” aide care.
If the care is provided by a registered nurse, reimbursement would be $85.56 per hour ($82.76 outstate).
Relatives providing care to a catastrophically injured person, as well as those not employed by home care agencies, would be paid less. Those rates would start at $19.67 per house in metro Detroit for “supervision” care and potentially rise to $24.22 per hour.
The legislation also eliminates the 56-hour limit on reimbursement for care provided by a family member.
Tom Judd, executive director of the Michigan Brain Injury Provider Council, said the reimbursement rates in the legislation are in line with what caregivers and medical providers were paid before the 2019 no-fault overhaul.
“What this does is just make sure that people who are making an informed decision on getting unlimited lifetime benefits have access to the care that they think they are signing up for,” he said.
The proposed reimbursement would also be enough for caregiving agencies to start accepting new no-fault patients again, he said.
Many have stopped taking new patients because the current law mandated across-theboard 45% reimbursement cuts from providers’ 2019 prices for services without a Medicare code.
“What it will allow is for those businesses who are still in business to fulfill their mission for everybody who comes through their doors,” Judd said.
In a statement, the head of the Michigan Health & Hospital Association said the legislation and new proposed provider rates “will improve access to care for auto accident survivors and patients.”
“The reforms implemented several years ago created an environment of extreme uncertainty,” CEO Brian Peters said. “This bill package is an important step toward providing better access to services and reimbursement clarity.”
“This bill package is an important step toward providing better access to services and reimbursement clarity.”
Brian Peters
Michigan Health & Hospital Association CEO