The Michigan No-Fault medical fee schedule changes that take effect on July 1, 2021 will deprive our most seriously injured car accident victims of the medical care and rehabilitation they need to rebuild shattered lives. Mitch Albom got it right yesterday when he wrote that “our most vulnerable auto crash victims are about to be struck again.”
For car crash victims who need attendant care services and depend on 24/7, round-the-clock attendant care provided from family and loved ones, they will now lose 112 hours per week of No-Fault coverage come July 1, 2021.
For all car accident victims, the new Michigan No-Fault medical fee schedule imposes restrictions on reimbursement rates for medical care providers. The pricing structure will make it extremely difficult for car accident injury victims to receive necessary medical care. Already many of the state’s spinal cord and TBI rehabilitation centers are warning they will be forced to shut their doors and go out of business as a result of the new legislatively mandated 45% reduction in their fees, leaving thousands of skilled health care workers unemployed.
Accident victims will get hammered as well. The ability of accident victims’ ability to pay will be drastically undermined by the pricing structure’s slashing of reimbursement rates to 55% of what care providers charged on January 1, 2019.
This is the new vicious cycle we will find ourselves in as a result of the new car insurance law in Michigan. Car accident victims will discover that there are far fewer skilled care providers available to them because many of these facilities will be forced out of business by the slashing of reimbursement rates and other new limitations under the new Michigan No-Fault medical fee schedule. This creates more pressure on the facilities that try to remain open, further lowering the quality of care and the ability to receive necessary care. It is hard to think of many businesses that could reasonably be expected to withstand the crushing financial blow of having their per client revenue cut by half as a result of what every lawyer and expert can at least agree is very poorly drafted legislation. As of this writing, several of Michigan’s most respected and specialized TBI and spinal cord medical care providers have already indicated they will be going out of business. More will certainly follow suit.
Let’s face it – the 45% fee restriction was arbitrary. It was pushed through by mostly insurance company lobbyists and mostly Republican legislators in Lansing who used the promise of big car insurance savings (that have yet to significantly materialize) to justify artificial price controls. The effects of the new Michigan No-Fault medical fee schedule are proving to be drastic and extremely harmful. It is essential that the Legislature act swiftly on House Bill 4486 and Senate Bill 314 to correct the errors in the new fee schedule before irrevocable damage is done to victims.
Do not be fooled by the auto insurance industry’s “spin” on the new Michigan No-Fault medical fee schedule changes (although you may wonder why there was no corresponding 45% reduction in profits for Michigan’s insurance industry – which was already amongst the most profitable in the entire nation before the new fee schedule further increases these profits by slashing medical outlays).
The new rate reductions on auto insurance premiums are peanuts next to the savings the insurance industry will see from the new pricing structure, separate and apart from the devastation and havoc the new pricing structure is causing.
What is the Michigan No-Fault medical fee schedule?
The Michigan No-Fault medical fee schedule, which was created by Public Acts 21 and 22 of 2019, sets dollar-amount limits on how much doctors, hospitals, clinics, institutions and persons can be paid or reimbursed under the No-Fault insurance system for providing treatment and care to car accident victims.
For some care providers, the charges and/or reimbursements they can be paid under the Michigan No-Fault medical fee schedule will be calculated as a percentage of what is payable for the same treatment and care under Medicare’s pricing structure.
For other providers whose treatment and care is not by the Medicare pricing structure, their charges and/or reimbursement rates will be set at 55% to 52.5% of what they charged on January 1, 2019.
Prior to 2019, there was no Michigan No-Fault medical fee schedule. The amount that doctors, hospitals, clinics, rehabilitation specialists and attendant care providers were paid for caring and treating car accidents is the amount that they charged so long as it was a “reasonable amount” and was not more than they would “customarily” charge in cases that did not involve insurance. (MCL 500.3157(1))
What are the reimbursement rates under the Michigan No-Fault medical fee schedule that take effect on July 1, 2021?
The reimbursement rates under the Michigan No-Fault medical fee schedule that take effect on July 1, 2021, include: (1) 56 hours-per-week limit on in-home, family-provided attendant care; (2) 200% of Medicare rate for covered treatment; and (3) 55% of providers’ 2019 rates for non-covered treatment.
Here is more detail about the reimbursement rates under the Michigan No-Fault medical fee schedule that take effect on July 1, 2021:
- Limit on number of hours covered for in-home, family-provided attendant care: For in-home, family provided attendant care that is provided to a car accident victim after July 1, 2021, the auto insurance company is only required to pay for 56 hours per week. (MCL 500.3157(10) and (14)) That means that if a victim’s doctor recommends 24/7 attendant care, then the auto insurance company is only required to compensate the in-home, family-provided provider for 56 of the 168 hours involved. Either the provider will work for free for the other 112 hours – or the victim’s auto insurance company will have to hire an agency to provide the care or the victim will have to go without the recommended attendant care.
- Limit on reimbursement rate for care providers (whose services are covered by the Medicare pricing structure): For physicians, hospitals, clinics and other persons who provide “treatment or rehabilitative occupational training” to car accident victims, their reimbursement under the Michigan No-Fault medical fee schedule is limited 200% of the “amount payable” under the Medicare pricing structure for treatment and training provided “after July 1, 2021 and before July 2, 2022.” The following year, the percentage drops to 195%. After the July 1, 2023, the percentage is permanently set at 190%. (MCL 500.3157(2)) [Note: “Person” includes “an institution.” (MCL 500.3157(15)(h)); “Treatment” encompasses “but is not limited to, products, services, and accommodations.” (MCL 500.3157(15)(k))
- Limit on reimbursement rate for care providers – such as attendant care providers – whose services are NOT covered by the Medicare pricing structure: If the Medicare pricing schedule “does not provide an amount payable” for the “treatment or rehabilitative occupational training” provided to a car accident victim, then the reimbursement rate for the “physician, hospital, clinic, or other person” that provided it “after July 1, 2021 and before July 2, 2022” will be 55% of what he or she “charged for the treatment on January 1, 2019.” The following year, the percentage drops to 54%. For treatment rendered after July 1, 2023, the reimbursement rate drops again to 52.5% of what the provider charged at the beginning of 2019. (MCL 500.3157(7)(a)) [Note: “Person” includes “an institution.” (MCL 500.3157(15)(h)); “Treatment” encompasses “but is not limited to, products, services, and accommodations.” (MCL 500.3157(15)(k))
- DILEMMA/GAP FOR IN-HOME, FAMILY-PROVIDED ATTENDANT CARE PROVIDERS WHO WERE NOT PROVIDING CARE ON JANUARY 1, 2019: Although the law uses January 1, 2019, as the benchmark for setting reimbursement rates for services not covered by the Medicare pricing structure, the law does not address what happens when an attendant care provider was not providing care on January 1, 2019, such as in the case where the crash that necessitated the care did not occur until years later. Should the “reasonable charges” standard in MCL 500.3157(1) apply? (“[A] physician, hospital, clinic, or other person that lawfully renders treatment to an injured person for an accidental bodily injury covered by personal protection insurance, or a person that provides rehabilitative occupational training following the injury, may charge a reasonable amount for the treatment or training.”) Or are “new” AC providers to be denied all compensation in light of the language in MCL 500.3157(7)(a) that their reimbursement rate is dependent on what they were charging on January 1, 2019?
How do lawmakers want to revise the Michigan No-Fault medical fee schedule changes that take effect on July 1, 2021?
In House Bill 4486 and Senate Bill 314, lawmakers propose to amend the Michigan No-Fault medical fee schedule so that the reimbursement rates for medical treatment and care not covered by the Medicare fee schedule will be based on either a “clinic fee schedule” or a provider’s average charge in 2019.
Specifically, both HB 4486 and SB 314 propose to set the No-Fault reimbursement rate for persons or institutions that provide medical care and treatment (consisting of products, services and accommodations) that are not covered by the Medicare fee schedule at “the lesser” of either: (1) “the amount payable under the Michigan auto no-fault rehabilitation clinic fee schedule”; or (2) “the average amount charged” by the person or institution “for the treatment . . . on January 1, 2019,” assuming the treatment was being provided in 2019.
The “Michigan auto no-fault rehabilitation clinic fee schedule” is a pricing structure that was created by the “Michigan Auto No-Fault Rehabilitation Clinic Fee Schedule Project” and copyrighted in 2020 by William R. Buccalo, President and CEO, Rainbow Rehabilitation Centers, Inc. and Margaret J. Kroese, EVP & Executive Director, Hope Network Neuro Rehabilitation.
Neither HB 4486 nor SB 314 proposes any changes to the 56-hours-per-week limitation on car insurance coverage for in-home, family-provided attendant care.
House Bill 4486 was introduced on March 10, 2021, and referred to the House Insurance Committee. No action has been taken by the Committee or by the House. Senate Bill 314 was introduced on March 24, 2021, and referred to the Senate Insurance and Banking Committee. No action has been taken by the Committee or by the Senate.
Don’t buy the auto insurance industry’s spin on big savings
The savings from the new No-Fault law pale when compared to what Michigan consumers and car accident victims and medical providers have lost.
This could be the worst trade since the Vikings traded 5 players and seven draft choices for Hershel Walker, arguably the worst sports trade in history. Contrary to the spin being put on it by the auto insurance industry, the Michigan No-Fault medical fee schedule is nothing like the rate reductions on auto insurance premiums.
Here are the many ways that the two are vastly different:
- Auto insurance companies were forced to reduce premiums, but only if drivers chose less medical coverage. The more medical coverage that a driver was willing to forgo, the greater the reduction. (MCL 500.2111f(2)) In contrast, under the N-Fault pricing structure, Medical providers are required to charge less even though they are not providing less service or care. In other words, providers must still provide what they did previously, but for less money.
- Unlike the rate reductions for auto insurance premiums which expire on July 2, 2028 (MCL 500.2111f(2)), the pricing structure limitations on medical provider’s charges are permanent.
- Auto insurance companies could seek an exemption from the mandatory rate reductions. (MCL 500.2111f(7)) But there is no exemption from the pricing structure for medical providers.
- Despite the mandatory rate reductions, auto insurance companies had the authority to increase premiums “if the increase results from applying rating factors as approved under this chapter” of the Insurance Code. (MCL 500.2111f(9)) Medical providers do not have the authority to ignore the Michigan No-Fault medical fee schedule to raise their charges.
- Rate reductions only apply to a portion (No-Fault PIP at most 35% of the bill and medical is a portion of that 35%) of the premium charged. (MCL 500.2111f(2)) Pricing structure limitations apply to the total charge, not just a small percentage of the total bill.
- Rate reductions on auto insurance premiums do not apply to every “individual” driver, but instead require only an “average reduction per vehicle” based on all of the policies written by an auto insurer. (500.2111f(2)) The pricing structure limitations apply to every charge for treatment and care provided to each “injured person.” (MCL 500.3157(1) and (2))
Have a questions? Call the car accident attorneys at Michigan Auto Law
If you have questions about how the Michigan No-Fault medical fee schedule changes affect you or a loved one, you can call toll free anytime 24/7 at (800) 777-0028 for a free consultation with one of our experienced attorneys. You can also get help from an experienced wrongful death attorney by emailing [email protected] or you can use the chat feature on our website.