Governor Signs Bill Making Sweeping Changes to Auto No-fault Law
Posted on May 30, 2019
Gov. Gretchen Whitmer signed a bill making sweeping changes to Michigan’s auto no-fault insurance law May 30, during the Detroit Regional Chamber’s Mackinac Policy Conference. The action came after the Legislature held a rare Friday session May 24 to approve Senate Bill (SB) 1, capping days of intense negotiations between legislative leaders and the Whitmer administration. Negotiations were further complicated by Detroit billionaire Dan Gilbert’s decision to pursue a ballot campaign encompassing elements from past no-fault efforts that failed to garner the support needed for passage in the Legislature.
While the final version of SB 1 approved by the Legislature is a vast improvement compared to earlier versions of auto no-fault proposals fast-tracked in both the House and Senate weeks ago, the MHA remains concerned about the future impact of the change on accident survivors who may be left with inadequate coverage to care for their needs, particularly those with the most severe injuries.
Effective July 2020, Michigan drivers will be provided with the following personal injury protection (PIP) coverage options, which could result in inadequate coverage for those catastrophically injured in an auto accident:
- Individuals on Medicare may opt of out PIP entirely.
- Individuals with private health insurance that covers their entire household, covers treatment for injuries caused by auto accidents, and has a deductible less than $6,000 per person (i.e., not a “high-deductible” plan) may opt out of PIP entirely.
- Medicaid beneficiaries may purchase as little as $50,000 in PIP.
- All other drivers must choose among PIP options of $250,000, $500,000 or lifetime benefit levels of coverage.
In addition, the MHA is concerned with the provider fee schedule outlined in the legislation and how it could impact hospitals’ abilities to serve their communities and all patients, not just those injured in car accidents. The fee schedule for providers, which will be phased in over a two-year period beginning July 1, 2021, will settle at the following levels:
- 190% of Medicare for medical and rehabilitation treatment not covered in any of the categories below.
- 220% of Medicare for providers who treat a high volume of Medicaid patients (only for care before initial discharge). A listing of the hospitals that meet this criterion was sent to members.
- 230% for Level I and Level II trauma centers (only for care before initial discharge).
- 250% for outlier providers treating a high volume of indigent patients.
- Attendant care will be reimbursed according to the workers’ compensation fee schedule.
In a positive move for consumers, the proposal prohibits insurers from using certain nondriving factors in setting auto insurance rates, including gender, marital status, home ownership, credit score, educational level, occupation and ZIP code. However, insurers may use territories in rate setting. The legislation also resolves issues emanating from the Covenant v. State Farm case, a favorable development for hospitals and other healthcare providers. Additionally, the new law requires insurers to produce savings to drivers as follows:
- A 100% reduction in the PIP portion of insurance premiums for those who opt out entirely.
- A 45% reduction in the PIP portion of insurance premiums for Medicaid beneficiaries who purchase $50,000 in PIP.
- A 35% reduction in the PIP portion of insurance premiums for those who purchase $250,000 in PIP.
- A 20% reduction in the PIP portion of insurance premiums for those who purchase $500,000 in PIP.
- A 10% reduction in the PIP portion of insurance premiums for those who purchase an unlimited medical benefit option similar to what is offered now under the no-fault system.
Now that the governor has signed the bill, the MHA will shift its attention to closely monitoring the implementation of the law and will be working closely with legislators and those in the regulatory and legal realms to hold insurers accountable, help drivers understand the benefits of maintaining adequate PIP in their insurance policies, and ultimately protect access to high-quality, affordable care for drivers and all Michiganders.
The MHA extends special thanks to members for the time and energy they devoted to advocacy on this issue. The MHA Board of Trustees, in particular, was heavily engaged in discussions with elected officials during legislative negotiations and helped express the MHA’s willingness to accept certain provisions that were very similar to measures included in the final version of SB 1. The MHA also encourages members to reach out to the governor and thank her for fighting to better protect patients and providers in this complex and divisive debate, which led to much-needed improvements in the new law. Members with questions may contact Chris Mitchell at the MHA.
Posted in: Issues in Healthcare, Top Issues - Healthcare