Senate Bill 248 on No-Fault Reform

What does Senate Bill 248, proposed legislation really do?  Moving through the Senate and House Insurance Committee, the language has gone through changes. It’s important to keep in mind that the bill does not impact coverages for the insured, but designed to cut costs out of premiums because of abuse and overpricing for services. If the bill were passed as is, it would:

  • Create a Michigan Automobile Insurance Fraud Authority which would provide resources to law enforcement to aggressively pursue incidents of suspected insurance fraud (suspicious claims amount to $400 million annually).
  • Limit attendant care provided by family members to $15/hour (which amounts to over $131,000/year), adjusted for inflation. Family members who are Licensed Medical Professionals are not subject to the limit.  A medical review of the patient’s needs and care may be requested if additional care or resources are needed.
  • Transition from the existing MCCA (would become the Michigan Legacy Claims Association or MCLA) reimbursement/reinsurance mechanism to a new Michigan Catastrophic Claims Corporation (MCCC) excess insurance mechanism. An auto insurance carrier's liability would be capped at $545,000, beyond which the claim and liability would transfer to the new MCCC.
  • Medical providers would be reimbursed at 150% of Medicare rates which, according to committee comments is anywhere from 20-30% higher than most commercial reimbursement rates.
  • Require at least a $100 per vehicle rate reduction for two years.

No-Fault Facts - Cutting Costs, Protecting Benefits

Michigan’s auto insurance industry supports changes to the no-fault law that will continue to provide the BEST auto insurance coverage in the country while curbing some of the factors that drive up the cost. Common sense reforms have been proposed, however, there are misconceptions and misinformation about reform perpetrated by opponents that need to a fact check:

Not Fact: The legislation “would put a $545,000 cap on catastrophic injuries.” – Ed Bruff, President and CEO of Covenant Healthcare (Mlive 4/26/15)

FACT: Senate Bill 248 would protect the unlimited no-fault benefits as the first $545,000 of bills will be paid by the driver’s insurance company while medical needs over $545,000 will be paid directly by the new Michigan Catastrophic Claims Corporation (MCCC).

Not Fact: There will be a loss of healthcare benefits for auto accident victims.

FACT: Senate Bill 248 continues to provide all reasonable and necessary medical care for the lifetime of a person injured in an auto accident. Prohibiting medical providers from charging auto insurance companies 200 or 300 percent more for the same medical treatment, would not lessen the amount or types of health care that will be provided to the catastrophically injured – it would only affect the cost being paid for the care.

Not FACT: “…a bill that would cap, cut, alter and reassign the benefits that catastrophic victims rely on.” – Mitch Albom, Detroit Free Press (4/26/15)

FACT: Senate Bill 248 would not cap, cut, alter or reassign benefits for anyone injured in an auto accident in Michigan. It would only bring the costs in line with what is being charged to other patients for the same care.

Not FACT: “Anytime you put limits on care providing it’s going to affect patient care. It’s going to affect the services that we can offer clients (and) it’s going to affect our ability really to provide top-notch care,” – Greg Hall, Integrity Home Health & Skilled Trade on WWMT TV interview (4/28/15).

FACT: Apparently hospitals and medical providers are providing substandard care for workers’ compensation patients, Medicare patients and Medicaid patients because all of those systems have limits on care reimbursements.  Oakland County Executive L. Brooks Patterson is receiving benefits from the workers’ compensation system which operates under a fee schedule and he is not complaining about the medical treatment he is receiving.

Not FACT: “The only drivers who will save much money are drivers in Detroit, because they’re getting a special deal. The insurance companies win big, with another billion dollars of your money. “More special interest deals. And more bailouts for Detroit. We’ll pay. And pay. And pay.” – ad on MIRS by Concerned Association of Patients and Providers. (4/26/15)

FACT: The legislation guarantees a $100 rate savings per car per year for two years no matter where you live. Drivers in Traverse City are going to save the same amount as those drivers in Detroit.

Not FACT: The reform proposal is aimed at increasing the coffers of profitable insurance companies.

FACT: Auto insurance in Michigan is not profitable at all. In fact, according to a study by the National Association of Insurance Commissioners (NAIC), the return on net worth for auto insurance in Michigan was a negative 3.9 percent in 2013, compared to the national average of 4.6 percent return on net worth.  In 2013, Michigan auto insurers paid out $1.15 for every $1.00 earned, a long term losing proposition.

Not FACT: Medicaid rates would balloon in Michigan by $30 million if SB 248 is implemented.

FACT: This claim is not relevant to the discussion of SB 248 which does not cap unlimited, lifetime medical benefits.

Not FACT:  “…today it (MCCA) has about $20 billion, but the legislators can’t get to it. … The insurance companies can’t get to it, and it’s driving them crazy. And they’re doing anything they can to tear down that gate.” – L. Brooks Patterson (as quoted by Mitch Albom (Detroit Free Press (4/26/15)“This bill would do that, phasing out the entity that controls the fund and opening loopholes through which the insurance companies could refund themselves.” – Mitch Albom. Detroit Free Press (4/26/15)

FACT: Neither of these statements is true. The current MCCA would continue to function as it does today and would be used to pay for the unlimited benefits of everyone remaining in the fund for as long as they lived.