Thursday, 14 May 2015 17:00

Lawmakers Take on Michigan’s No Fault Auto Insurance; Medical Providers in Opposition

Michigan drivers pay the most expensive car insurance premiums in the country due to their unlimited lifetime personal injury protection and the high number of uninsured vehicles on the road.

But--- for the third time in two years--- lawmakers are trying to revamp Michigan’s no fault auto insurance system.

The new legislation would cut premiums by $100 annually for two years.

“We’re getting to the point where many of our consumers can’t afford our product,” Peter Kuhnmuench, executive director of the Insurance Institute of Michigan said during a committee hearing, reported the Detroit Free Press. “We have to try to be more efficient with the dollars we provide for no fault.”

So, what is the catch?

The reformed version of the bill could cause those who have been disastrously injured to lose out on some of the unique care that the no fault auto insurance provides, reported the Detroit Free Press.

While the House Insurance Committee listened to three days of hearings during the week of April 22, hundreds of people, including those who have been confined to wheelchairs after crippling motor vehicle accidents, came out to Lansing to protest.

“It seems that every 20 years or so, the auto insurance industry aligns with misguided political leadership to reignite the battle field,” Oakland County Executive L. Brooks Patterson said during a committee hearing, reported the Detroit Free Press. “I fail to see any positive benefit from the destruction of the best auto insurance program that serves the recovery needs of the catastrophically injured.”

Patterson was critically injured in a car accident in 2012.This time around, lawmakers have made an effort to compromise. All costs associated with catastrophic injuries, including lifetime benefits, will remain intact. Also, a new fund will be enacted to cover care costs over $535,000. As of now, the fund covers costs over $530,000 according to the Michigan Catastrophic Claims Association website.

However, that doesn’t change the fact that the reformed plan:

  • caps the price that medical providers can charge for certain services
  • limits the amount of money that caregivers can charge to provide home health care help for the most critically injured peopleBecause victims with brain damage make up nearly half of the 36,685 claims to the MCCA, medical providers believe a blanket approach to compensating health care providers would put the industry in a bind.

According to their homepage, the MCCA is a “non-profit association whose mission is to protect the financial integrity of Michigan's auto insurance industry by providing an effective reinsurance mechanism for Personal Injury Protection (PIP) benefits.”

“If these fee schedules are put in place, we would be committing malpractice,” Joseph Richert of Special Tree Rehabilitation Services of Romulus said during a committee hearing, reported the Detroit Free Press. “There is no way we could meet the needs of the people with brain and spinal cord injuries.”

The current assessment price for each vehicle is $186, but is expected to go down to $150 later this year. Next on the agenda would be to phase out MCCA, and replace the association with a seven-person governor-appointed commission. Unlike the MCCA, the commission would be subject to the Open Meetings laws and the Freedom of Information Act. In mid-April, the bill passed out of the Senate 21-17 with only one hearing.

The House, however, sat through a total of seven hours of hearings from the insurance industry, health care providers, patients and consumers, leading to the approval of a substitute on a 9-6 vote that included some major changes from the Senate version of the bill.

The Detroit Free Press reported these modifications as:

  • A set fee schedule – 150% of rates charged for Medicare - that health care providers could charge for services to critically injured people. The Senate version didn't have a set fee schedule.
  • Rates for home health care providers would be capped at $15 per hour for family members unless they were trained health care professionals. The amount could go up if more specialized care is needed.
  • Unlike the Senate plan, the House version mandates that insurance companies reduce auto insurance rates by $100 per vehicle for two years.