Accident victims lose, drivers lose, and healthcare providers lose
The new Michigan auto insurance law, signed by Gov. Gretchen Whitmer in June, may look like a win for the pocketbook of Michigan drivers, however, it dramatically will impact auto accident victims, drivers and healthcare providers.
The new law will allow motorists to begin opting out of unlimited personal injury protection (PIP) medical coverage in their auto insurance plans beginning July 1, 2020. Motorists will have an a la carte menu of options from which to choose, including completely opting out of PIP coverage if they have a qualified health care plan that covers auto injuries.
This will reduce auto insurance premiums, but at a damaging cost for those who are in a serious auto accident. These victims will not receive the comprehensive care they need for rehabilitation and recovery. Benefits will stop because of coverage limits.
Michiganders may end up with large co-pays and exorbitant unpaid bills by their insurance companies that could impact an auto accident victim’s financial situation dramatically. This can be life-changing for auto accident survivors.
In addition, medical bill payments will shift from auto insurance companies to health insurance plans, posing a new set of challenges. Most federally regulated self-funded health insurance plans automatically exclude auto injuries, which means motorists who opt out of PIP will have no, or minimal, coverage in the event of an auto accident.
In turn, reimbursement to medical providers will be reduced significantly, forcing many physical therapy clinics and rehabilitation services to close their doors.
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 (ie, 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 provider fee schedule, which will be phased in over a two-year period beginning July 1, 2021, will settle at the following levels:
- 190 percent of Medicare for medical and rehabilitation treatment not covered in any of the categories below
- 220 percent of Medicare for providers who treat a high volume of Medicaid patients (only for care before initial discharge)
- 230 percent for Level I and Level II trauma centers (only for care before initial discharge)
- 250 percent for outlier providers treating a high volume of indigent patients
- Attendant care reimbursed according to the workers’ compensation fee schedule
What drivers need to know:
With the new law, Michigan motorists no longer are required to purchase policies with unlimited medical coverage, fewer medical costs from auto accidents will be covered by auto insurance, and, starting in July 2020, the recovery of those costs can be sought through legal action against the at-fault driver.
Before this law goes into effect in July 2020, Michigan drivers need to learn as much as possible about the new laws to ensure their medical care interests are properly protected.
Drivers should maintain adequate PIP in their insurance policies. It will cost more, but gives them the security to know they will have the care they need if they are in a serious car accident.
What hospitals, physical therapy clinics and rehabilitation centers need to know:
The new law will introduce a complex and variable fee schedule in July 2021 for hospitals, clinics and other medical providers who provide treatment to auto accident victims. The fee schedule will be phased in over two years and pay stand alone rehabilitation clinics 190 percent of Medicare rates (about what private health insurers pay). Hospitals with Level 1 trauma centers or those that see a large number of low-income patients would get paid between 220 percent to 250 percent of Medicare rates.
The legislation would impose the workers’ compensation fee schedule on hospitals, rehabilitation clinics and doctors.
Hospitals stand to lose tens of millions of dollars in annual revenue as a result of the new fee schedule imposed through the new law.
Rehabilitation clinics and physical therapy centers will experience a drastic reduction in reimbursement rates, forcing many to downsize or close.
For specialty rehabilitation clinics that treat and house the most severely injured crash survivors, including those with traumatic brain injuries, many of their services will fall under a separate billing category because they have no Medicare equivalent.
The new law will put a hard limit on how much those clinics can charge for services: 55 percent the amount each clinic billed at the start of the year, and decreasing to 52.5 percent of that amount by July 2023. This reimbursement rate may not be enough to sustain business.
What is even more important: with the new law, many physical therapy and rehabilitation centers must be CARF accredited to receive payment for treating patients of auto accidents.