LANSING, Mich. — For months, advocates and survivors of catastrophic auto accidents fought against a no-fault auto insurance reform that cut money for certain specialized rehabilitation services.
The new law took effect July 1 but advocates say the fight is long from over.
No-fault insurance reform was meant to lower car insurance costs across the state but the deal also cuts money for rehabilitation services, medical procedures and specialized programs for survivors of serious car accidents.
A new fee schedule that was part of the reform package only covers rehab services that have been assigned codes by the U.S Centers for Medicare and Medicaid Services. In hospitals, those fees are generally covered by Medicare, which means the biggest impact is on specialized rehabilitation programs, which often do not take place in hospitals.
Rehabilitation programs for accident survivors not covered by Medicare will see a 45 percent cut in reimbursement from insurance companies under the new fee schedule.
“The result is going to be patients across the state that are going to have their care disrupted and they’re going to be displaced because providers are not going to be able to maintain their payroll,” said Tom Judd, president of the Michigan Brain Injury Provider Council. “ Programs are going to start shutting down.”
Erin McDonough, the Insurance Alliance of Michigan's executive director, argues that the new fee schedule is necessary and helps prevent medical providers from overcharging insurance.
“The reasonable medical fee schedule that takes effect July 2 will rein in overcharging by medical providers, which has gone unchecked for decades and contributed to Michigan’s highest-in-the-nation auto insurance premiums,” McDonough said in a written statement. “Each long-term care case is different and takes time to resolve. We encourage families who are hearing from their medical providers that care may be ending or changing — and have yet to reach out to their case manager or auto insurance company — to do so as soon as possible.”
Advocates argue that the new fee schedule is not reasonable.
“We have provided the legislature ample evidence of insurance adjusters stating that they will not negotiate rates with medical providers,” Judd said. “So long as they take that stance...there’s nothing to really talk about. They’re going to deny any attempt to negotiate trade agreements with providers. Families and providers are going to be caught in the middle.”
In response to calls from advocates, lawmakers in Lansing advanced legislation this week to create a $25 million fund for rehabilitation services that will see significant disruption.
Support from the fund will be provided on a first-come, first-served basis, and providers will be required to provide information about charges for their services.
“The funding is for the providers to help them provide care to these families, it’s certainly not enough and it also certainly way too complicated how to get it,” said state Sen. Curtis Hertel Jr., D-East Lansing.
Hertel explained that he and his colleagues in the Senate requested the funding be increased from $10 million to $25 million so that providers have help over the summer until the legislature reconvenes in the fall. He said that his own legislation, which included a fix to the rate structure for providers so they could stay in business, didn't get enough traction.
"I think it's really unfortunate that we got past the deadline and that bill has not even had a hearing at this point and it really does show how much power the insurance companies and their lobbyists have in Lansing," Hertel said.
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