By Bill Buccalo, President & CEO and Lynn Brouwers, MS, CRC, CBIST
Rainbow Rehabilitation Centers
Michigan’s new auto insurance law was signed by Governor Whitmer on May 30, 2019, and subsequently enrolled as Public Act 21 of 2019 on June 11, 2019. Public Act 21 (PA 21) made sweeping changes to Michigan’s longstanding auto insurance system. Many of these changes will not only have significant impacts on consumers, insurers and attorneys, but also patients, their families, and the providers of health care services reimbursed under the law.
For the last four and a half decades, Michigan drivers, passengers, and pedestrians enjoyed the comfort of knowing that, in the event of an auto accident, reasonable claims for their care, recovery, and rehabilitation would be covered without the benefit limitations seen in other forms of health care and without the litigation seen in other forms of auto insurance. Injured persons could use their Personal Injury Protection (PIP) benefits, knowing that the cost of care related to their injury would be covered. There was no prior authorization requirement. There were no co-pays, deductibles or excluded “custodial” services.
With Public Act 21, this has now all changed. There is a false assumption that, for people who already have insurance like an employer plan or Medicare, there is no reason to be “double insured”. But not all health care coverage is created equal when looking at the long-term rehabilitation and care needs of seriously injured people. This change comes with the hope of lowering the state’s high auto insurance premiums, but it will come at a cost to seriously injured people, their families, and providers.
HOW WILL PA 21 IMPACT INJURED PEOPLE AND THEIR PROVIDERS?
Anytime a new law is adopted, the language and intent of the law can be confusing, unclear, or have unintended consequences. This is especially true for PA 21, which was voted into law with little time for the law’s language to be reviewed by law makers or advocates. While elements of the law will likely be challenged for years, a timely legislative fix for the unintended impact of the “55% Exception Fee Schedule” on neurological rehabilitation clinics and the people they serve will be needed as soon as possible.
PA 21 lists when changes to the auto law go into effect. Sweeping changes to the auto insurance law fall into three main categories. The first changes to the law had an immediate effect (June 11, 2019), the second group of changes are effective July 2020, and the third are effective July 2021. What follows is a high-level summary of just a few of the significant changes and when each change will go into effect.
In this article, we focus on impacts to patients and families who need the types of services Rainbow provides. We will try to forecast how the new law will impact people who were injured before PA 21, people injured after PA 21 went into effect, and health care providers who serve both groups.
HOW THE NEW LAW IMPACTS PEOPLE INJURED BEFORE PA 21 WENT INTO EFFECT
People injured before PA 21 will retain benefits for their care, recovery, and rehabilitation without fear of running out of benefits. They may, however, face insurance limits placed on the services they use. Here are a few examples:
Effective July 2, 2020, services that are prescribed by the patient’s doctor may be subject to a Utilization Review. The State Department of Insurance and Financial Services (DIFS) is to establish criteria and standards for insurance companies to conduct a Utilization Review of patients’ medical services. Providers will be required to give insurance companies information upon request and answer questions regarding: Products, services, or accommodations that are not usually associated with, are longer in duration, are more frequent, or extend over a greater number of days than usually required for the diagnosis or condition.
Effective July 2, 2021, patients will be subject to attendant care limitations. Family provided attendant care will be limited to 56 hours per week, as is the standard under the Michigan Workers’ Compensation law. The insurance company can pay for more hours but is not required to do so. Family members are defined as a relative of the patient, someone who lives with the patient, or anyone who had a business or social relationship with the patient before the injury.
Effective July 2, 2021, a patient’s health care providers will be paid based on a Fee Schedule. Doctor visits, lab procedures, physical therapy, occupational therapy, and speech therapy visits, hospital inpatient stays and many other services will be paid based on a percentage related to what Medicare pays. The percentage can be different based on the setting, and the amount providers are paid declines over the first few years.
Now here is the most worrisome element of the change for people injured before PA 21: Effective July 2, 2021, services not covered by Medicare, (for example many services offered by neurological rehabilitation clinics: residential rehabilitation, home health care, transportation, recreational therapy, vocational rehabilitation) are currently scheduled to be reimbursed at 55 percent of what a provider charged as of January of 2019. For example, let’s say that an hour of home health care at neurological rehabilitation clinic has a charge of $28. If the insurer were to pay the clinic $15 per hour, the clinic would not be able to pay its staff, provide benefits, insurance, training, and all other costs associated with running the business. We are advocating for a change to this “55% Exception Fee Schedule” as we believe the impact on these services was an unintended consequence. More information can be found in the President’s Corner section at the front of the magazine.
PEOPLE INJURED AFTER PA 21 WENT INTO EFFECT
Effective June 11, 2019, people not covered by a personal or household car insurance policy who were injured in or by cars will have a dollar cap of $250,000 for their lifetime care. This includes certain passengers, pedestrians, and bicyclists.
Effective June 11, 2019, insurers may begin to sell you Managed Care Policies, giving the insurance company the right to monitor and adjust a person’s care, use preferred providers and networks of doctors and clinics, among other options. Consumers could purchase these policies and get a discount in return for giving up certain rights.
In general, motorcyclists continue to draw benefits from the vehicle involved. However, beginning July 2, 2020, if the vehicle involved has a limited PIP policy, the motorcyclist is limited to that policy’s limit even if the motorcyclist purchased Unlimited PIP for their own household. If no coverage is available from the vehicle involved, the motorcyclist will go to the Assigned Claims Plan with $250K capped coverage.
Historically, out-of-state residents injured in Michigan were generally covered by a PIP policy. Under the new law, out-of-state residents are prohibited from accessing any PIP Benefits unless they are the owner of a vehicle registered and insured in Michigan, which is highly unlikely. Out-of-state residents now need to make a liability claim against the at-fault driver, but only if they sustained a threshold injury (serious impairment of body function) and were less than 50 percent at-fault. Out-ofstate residents involved in accidents in Michigan, such as college students enrolled at a Michigan university or a visitor walking down Woodward Avenue, will be excluded from any PIP Coverage and in certain situations will be left without any remedy at all.
Effective July 2, 2020, Michigan residents will have the option of purchasing less than lifetime benefits. Optional Coverage Levels will include Lifetime/Unlimited, $500,000, or $250,000. In addition, if the individual is covered by Medicaid, they can choose $50,000 of Personal Injury Protection (PIP) Coverage. For individuals covered by Medicare or certain types of health insurance plans, they can opt-out of PIP entirely.
People sustaining injuries will retain the right to sue the at fault driver under certain situations. In fact, PA 21 increases the required liability coverage from $20K per person/$40K per accident to $50K/$100K. Unfortunately, lawsuits are costly, time consuming. Lifetime care is expensive. Awards from lawsuits are unlikely to make up for the loss of benefits under PA 21.
We anticipate a large increase in the number of people and their families who experience financial changes to their lifestyle because of their injury. Bankruptcies due to high medical bills are common for people with catastrophic illnesses and injuries. Long-term care and support is most often paid for by Medicaid. Medicaid eligibility includes having no financial resources other than a home, a car and a maximum of $2000 in savings.
THE IMPACT ON POST-ACUTE REHABILITATION AND CARE PROVIDERS
Most of the changes to car insurance listed above will impact providers along with patients. Fee schedules will limit what a provider can be paid. Utilization Review decisions may impact a provider’s ability to provide the care recommended by the patient’s doctor. Managed care agreements could limit a patient’s choice to use a preferred provider.
Michigan’s former auto no-fault system was relatively simple for the post-acute health provider. Providers did not need to know the details of the individual car insurance plan, how much hospital charges are expected to be, or have contractual relationships with the insurance company. Providers will now need to consider contractual relationships with no-fault managed care products and look at other commercial health plans to serve people who chose less car insurance. Providers and patients will also need to grapple with prioritizing outcome objectives considering reduced benefits available, among many other new dynamics.
The biggest change we anticipate will be the volume of patients who have auto insurance benefits for longterm post-acute care (this assumes the legislature fixes the unintended consequence associated with the 55% Exception). The Michigan Catastrophic Claim Association (MCCA) is adding more than 2,000 new catastrophic claims per year. Further, the number of claims occurring between $580,000 and the new lower PIP limits available of $250,000 (or less for Medicaid and full opt-out) will mean even more than 2,000 accidents per year could be without adequate coverage depending on buying decisions. With 50 percent or more of drivers expected to buy lower levels of coverage, and to the extent proceeds from new found litigation doesn’t cover catastrophic costs, many accident victims will spend down personal assets to qualify for Medicaid.
Providers will be called upon to help patients and families understand how to qualify, apply, and live with the help of government programs. Conservatively, some 1,000 new catastrophic cases per year will shift from MCCA reimbursement to state taxpayer paid Medicaid. Medicare and Medicaid will be the payer source for most persons injured in car accidents who have long-term care and support needs. More families will be called upon to support their injured family member at home.
PA 21 states that a person or clinic that provides postacute brain and spinal rehabilitation care is defined as a “neurological rehabilitation clinic.” Further, neurological rehabilitation clinics must be accredited by the Commission on Accreditation of Rehabilitation Facilities (CARF) or a similar organization to collect payments under no-fault (or be in the process of obtaining accreditation). Michigan currently has twelve non-hospital providers that are CARF accredited in brain injury rehabilitation, including Rainbow Rehabilitation Centers.
WHAT CAN YOU PERSONALLY DO TO ADVOCATE FOR QUALITY CARE AND QUALITY OF LIFE FOR INJURED PEOPLE GOING FORWARD?
1. Choose your own level of car insurance PIP wisely. Maintaining full life-time benefits is the safest choice. Consider whether or not you wish to participate in a Managed Care plan where your insurance company has the right to pick your providers. Accidents happen to even the most careful people. Be prepared for your own catastrophic injury.
2. Nourish a relationship with your state representative and state senator. Attend a coffee hour and volunteer with a campaign. They make our laws and can fix them when they have unintended consequences.
3. Advocate for each injured person you serve like they were your own family member. Expect denials for needed services. Learn the insurance appeals process and teach patients/families how to use it.
4. Learn more about the public support system and connect patients/families. In addition to Medicaid and Medicare, the Department of Health and Human Services has special programs for people who become disabled before age 22. Learn about non-profit programs that might help with housing assistance and meals.
5. Connect patients and families with advocacy organizations like the Brain Injury Association of Michigan (BIAMI) or Paralyzed Veterans Association. Alert Michigan Protection and Advocacy Services (MPAS) if you see trends in erosion of rights.
6. Be an advocate and share your knowledge and experience.
A Brief History of Michigan’s Auto No-Fault – and its impact on care and treatment for people with chronic conditions such as traumatic brain injury and spinal cord injury
In 1973, the Michigan Legislature shifted away from a “Tort” or litigation-based system of compensation for injuries sustained in auto accidents in favor of the then newer “No-Fault” system. The goal was that no-fault would have three favorable objectives. It would decrease the cost of auto insurance, decrease expensive litigation, and increase the speed and access to care and lost wages through a nononsense process that didn’t require determination of fault or lengthy litigation.
Many states implemented no-fault insurance systems during the 1970s with varying forms of coverage and rules for when someone could sue for serious injuries. Michigan opted for comprehensive lifetime benefits (Personal Injury Protection/ PIP) under the no-fault benefits and, in return, established a verbal threshold requiring serious impairment of bodily function before one could sue for non-economic injuries.
For many years, the no-fault system generally delivered on these objectives. Citizens enjoyed the best protections in the nation in the event of serious auto accidents with unparalleled access to specialty care. Litigation was tamed by the inherent trade off no-fault provides. State-wide costs, while higher than average, were not out of line with other large industrial states.
Over the past four and a half decades, the nation’s largest concentration of brain injury and spinal cord injury experts developed in Michigan and exists today to address the needs of this population of patients. With well over a thousand catastrophic injuries resulting from auto accidents each year and requiring extensive treatment and potentially longterm care, there was now demand for hospitals, physicians, specialty brain injury rehabilitation clinics, neuro-experts, and other specialty care providers to fill those needs. It should be noted that this concentration of expertise didn’t develop due to demand from health insurance and Medicare. Those systems generally don’t cover the post-acute long-term rehabilitation and direct care needs of people in catastrophic accidents.
For decades, Michigan’s developing rehabilitation community and the benefits of lifetime care for those catastrophically injured were lauded as an asset to the state. People understood the benefits and were willing to pay a little extra. However this began to change as a little extra became a lot extra in many cases.
Over time, the affordability of auto insurance again became the focus for the citizens and the legislature. Public pressure to do something about the rising costs, especially in urban centers like Detroit where premiums are outrageous, increased to a fever pitch. The focus on quality of care and access to care following an accident was pushed aside in favor of finding a means to reduce the premiums, period. The resulting changes to the law are not a case of fine tuning or minor tweaks. Rather they represent significant changes to most all elements of the system, some untested or fully developed, in hopes of reducing costs.
Time will tell how the new law changes will impact the original promise of lower costs, less litigation, and swift access to care.