Lansing — Nearly five years have passed since Diane Mills-Gutierrez suffered a spinal cord injury in a rollover crash in Saginaw County.
Since 2016, the 52-year-old Okemos woman has been getting help from her husband and agency caregivers who help her with basic tasks such as getting dressed, bathing and preparing meals.
But elements of a 2019 auto insurance reform law set to take effect July 1 could jeopardize help that was guaranteed in her insurance policy. They were included to help cut costs in a bid to make auto insurance more affordable.
“I really don’t understand how it could have come to this because it was a contract that we entered into in good faith by paying our insurance month after month, year after year,” Mills-Gutierrez said last week from her wheelchair outside the Michigan Capitol.
Mills-Gutierrez was one of hundreds of catastrophic car crash survivors and the medical providers who care for them who rallied on the Capitol lawn to raise awareness about a fee cut that takes effect July 1 under the 2019 historic auto no-fault reform law.
They were joined by current and former legislators who voted on the 2019 package and are concerned about the fee slash, which medical providers argue will make it impossible to provide adequate care. Seventy-three current and former lawmakers have signed on to an amicus brief in the state Court of Appeals seeking to halt the fee schedule changes, especially for those already receiving services.
“It is one thing to enact cost control management policies; it is quite another thing to change the terms of an insurance claim after the policy has been enacted,” said Rep. Phil Green, R-Millington.
“The auto no-fault reform bill of 2019 enacted some reforms that resulted in unacceptable consequences that must be addressed.”
But insurance providers, who are responsible for paying the lower fee, maintained confidence in the success of the law and deemed the concerns from medical providers and their clients as “scare tactics.” The Insurance Alliance of Michigan has been running ads on social media to “let reforms keep working,” and it has touted the reform as providing “lower rates, more competition, more people getting insurance.”
Drivers have saved at least $1 billion through mandated cuts to the Michigan Catastrophic Claims Association fee, which went from $220 in 2019 to $86 in 2020. IAM argues many drivers also have seen other savings as they select lower levels of insurance.
Michigan’s car insurance premiums dropped 27% from last year to an average of $2,112, but the average Michigan premium remains 48% more expensive than the national average, according to Insure.com.
“Sadly, special interests are resorting to scare tactics and using misinformation in an attempt to protect their golden goose and preserve their ability to overcharge and price-gouge Michigan consumers,” said Erin McDonough, executive director of the Insurance Alliance of Michigan. “We urge the Legislature to stay the course and let these reforms keep working.”
The fee on the chopping block July 1 covers a variety of in-home or around-the-clock services, some of which could revert to a Medicare code, becoming subjected to a 200% Medicare reimbursement. Other health care services, such as 24-hour supervision, do not have a Medicare code and would be subject to the 45% cut.
The no-fault insurance changes were approved two years ago with bipartisan support in a 34-4 Senate vote and a 94-15 House vote.
Gov. Gretchen Whitmer, who signed the bill on Mackinac Island in June 2019, has said she would be open to a narrowly tailored amendment to lessen the effects of the fee cut.
But Republican leaders have largely been mum, adopting what has amounted to a “wait-and-see” approach regarding the fee cut. Bills have been introduced in the House and Senate to adjust the fee schedule but have yet to receive a hearing.
Senate Majority Leader Mike Shirkey said in a statement that the plan is working, rates are dropping and Michigan’s auto insurance is no longer the priciest in the nation.
“We certainly must care for the most vulnerable among us, and we will look at taking up additional reforms that may be necessary when the plan goes fully into effect in July,” said Shirkey, R-Clarklake.
Impact of 45% cut debated
The historic 2019 auto no-fault law made a raft of changes to the state’s no-fault auto law to address Michigan’s highest-in-the-nation auto insurance costs. The law included required cuts to the Michigan Catastrophic Claims Association assessment as well as new lower-coverage policy choices for consumers who formerly had to buy full lifetime personal injury protection insurance.
Some of the more controversial changes include limits on the number of hours of care family members could be reimbursed for providing care to injured loved ones, as well as cuts to the fee schedule governing how much auto insurance companies can reimburse medical providers f injured crash victims.
The fee schedule is set to revert on July 1 to 55% of what medical providers were receiving in January 2019 for non-Medicare-comparable services. For services with a Medicare code, fees would be capped at 200% of the Medicare rate.
A care recipient and a brain injury rehabilitation clinic have challenged the law up to the state Court of Appeals, where it could receive a hearing in the coming months.
The Michigan Brain Injury Provider Council has heard of about 530 brain injury survivors and 1,200 front-line employees who believe they will be out of luck after July 1. The council estimates 4,800 to 6,200 patients across the state could be affected.
“There’s nothing that the providers could have done to withstand this type of reimbursement slash,” said Tom Judd, president of the board of directors for the Michigan Brain Injury Provider Council.
“It’s kind of absurd to think there would be a way to adjust your business to withstand that kind of funding hit.”
On Thursday, neuro-rehabilitation provider Hope Network said it would close its Coldwater location because of the changes. Ten of the 12 long-term clients at the home are car crash victims.
“We are devastated that it has come to this,” Hope Network Executive Vice President Margaret Kroese said in a statement. “Many of our residents and staff have been with us for a decade or more. They are like family.”
The law does not grandfather in people with decades-old injuries, meaning those who have paid into the full personal injury protection for years could now lose the benefits they paid for — a development many brain and spinal cord injury patients criticized at the Capitol rally.
Jean Bumgard has been receiving around-the-clock services required for daily living since she was left paralyzed after hitting a patch of black ice and rolling her car in Lapeer County in 1988.
“We’ve been a burden to the insurance company. I know they didn’t expect us to live this long, ever,” Bumgard said.
But if services that have allowed Bumgard to survive disappear because of the scheduled rate cut, “I don’t even know how to explain the hurt that is going to be given,” she said.
The state Department of Insurance and Financial Services, which is responsible for implementing the 2019 law, said it will not consider any appeals of the fee schedule. The department encouraged people seeking an available provider to contact their insurance company.
Under state law, insurers are required to pay for “allowable expenses consisting of reasonable charges incurred for reasonably necessary products, services and accommodations for an injured person’s care, recovery or rehabilitation,” the department said in an email.
“Access to care is important, and losing a particular health care provider can be a stressful situation,” said Laura Hall, a department spokeswoman. “A person receiving care who has been notified that their provider is going out of business should first ask for referrals or try to find an alternate provider. If they have trouble, consumers should contact their insurance company or insurance case manager for assistance.”
Proponents of the no-fault law changes have questioned the doomsday predictions tied to the July 1 fee cut, arguing medical providers have long failed to disclose their actual costs and profit margins and could survive the cut if only they tightened their belts. Other options, such as an unbundling of services and negotiations with insurance providers, are available to lessen the financial hit, they argued.
But medical providers have complained the insurance providers are the only entity that stands to benefit from the change and have no reason to negotiate because the law gives them the upper hand in demanding a 55% cap.
“Maybe that’s working with families that are providing care, but it’s not happening with providers,” the Brain Injury Provider Council’s Judd said of negotiations with insurers. “Why have this law in place if you just want to go back to the way we were doing things, which is have private companies debate to try and get paid?”
Some medical providers are attempting to dissolve and reincorporate or merge under a different name to avoid the January 2019 benchmark that would guide the 55% cap, according to documents provided to The Detroit News.
But the state Department of Insurance and Financial Services has proposed rules that would impose a separate fee schedule for companies that reincorporated or incorporated after January 2019. There are no guarantees the proposed schedule would be any better than the one being implemented on July 1.
Another option that some medical providers have adopted, according to letters from some companies, is unbundling their services so line item services would be labeled with a Medicare code and eligible for the 200% Medicare reimbursement.
But some services provided to brain or spinal injury victims of car crashes don’t qualify for a Medicare code — including services such as 24/7 supervision and help with some daily living, Judd said.
After 29 years of providing 24-hour care to car crash survivors with brain and spinal injuries, Health Partners Inc. is a “bit panicked” about what July 1 will bring, said John Prosser II, vice president and partner at the company whose main office is in Bingham Farms.
Many of the company’s 96 clients will stop receiving care from the company if the fee schedule goes into effect, he said. The company has cared for some for more than 20 years, he said.
“Nobody in this arena with the reality of these employee costs can move forward,” Prosser said.
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