Auto insurance

Surprise House hearing on Michigan auto insurance reform leads to walkout

An initial hearing Thursday on legislation responding to complaints about fee reductions for medical services for survivors of catastrophic crashes ended with seven Republicans walking out of the meeting, the bill not moving forward and the bill being withdrawn of the committee by the leadership of the House.

House members who left the House Insurance Committee meeting said the bill was not on the agenda ahead of time and that Speaker Daire Rendon, R-Lake City , had not told members in advance that the legislation would be discussed, leaving no time for lawmakers to review the bill or any accompanying analysis.

The bill, introduced by Rep. Ryan Berman, R-Commerce Township, in March, would increase penalties for insurance companies that delay payments to medical providers providing services to no-fault auto insurance customers.

Rendon’s surprise decision to hear testimony on the bill came after House Speaker Jason Wentworth, R-Farwell, said in March that there were no plans to amend the controversial law on car reform without fail and that it was “time to move on”.

Wentworth was unaware the bill would be considered in committee, spokesman Gideon D’Assandro said, a rarity in controversial legislation.

Rep. Beau LaFave, the Iron Mountain Republican who serves as vice-chairman of the House Insurance Committee, said members weren’t told about the legislation until the committee returned two other drafts. of law and had gone on vacation.

“I wasn’t notified promptly of the prompt payment bill, so I left quickly,” LaFave said Friday. “Members aren’t happy when they aren’t told what’s going on and members of the public and the committee aren’t told what’s going on.”

R-Comstock Township Rep. Matt Hall said Rendon’s office told him in advance that only two bills would be discussed in committee. By the time the third bill was introduced, Hall said he had other commitments, including preparing his tax relief plan to pass the House and Senate later that day.

A total of seven Republicans walked out of the meeting during the recess, leaving the committee without the quorum needed to send the bill back to the House floor. Later Thursday evening, the bill was removed from Rendon’s committee and referred to the House Rules and Competitiveness Committee chaired by State Rep. Jim Lilly, R-Park Township.

The transfer to Lilly’s committee happened because “they’re doing a good job,” D’Assandro said.

The Michigan Home Care and Hospice Association criticized lawmakers for “insurance walkouts.”

“We can only conclude that the members who chose to walk away from the committee meeting today were listening to legislative leaders influenced by the powerful insurance lobby and ignoring the growing catastrophic care crisis here in Michigan,” said Barry Cargill, president and CEO of the association. , in a statement Thursday.

Rendon said she held the hearing on the legislation after hearing from victims of catastrophic accidents and their medical providers affected by the July 1, 2021 fee reduction. Many medical providers still have not been paid by insurance companies for their services, she said.

“They provide them to patients who cannot move about without help and assistance, cannot perform simple personal care tasks, and they are forced to seek another service because their provider has gone out of business or will have to abandon them for non-payment,” Rendon said. “And that wasn’t part of the deal.”

One of the most controversial provisions of the landmark 2019 no-fault auto insurance reform was a July 1, 2021 reduction in what medical providers could charge insurance companies for providing care. people injured in catastrophic accidents. The rule required providers to reduce their costs to 55% of what they charged in January 2019 or, for Medicare-reimbursable services, to 200% of the Medicare rate.

No-fault auto insurance survivors and their medical providers fought the change for months, arguing the cut was too severe to maintain business operations and continue to provide the level of service their customers had received over the years. . Additionally, medical providers said insurance companies were taking advantage of the complexity of the new fee schedule to delay payments.

Berman’s bill would require the insurance provider to pay three times the amount of the overdue payment if the insurance provider delayed payment in “bad faith.”

Insurance Alliance of Michigan executive director Erin McDonough slammed the legislation as a “backdoor way” to avoid further fee reductions and prevent insurers “from investigating fraudulent claims.” The association’s member companies, McDonough said, report paying nine out of 10 claims “in a timely manner.”

“Existing law already encourages prompt payment by setting steep penalties, including 12% interest, additional monetary fines, and the ultimate penalty for an insurer to lose their license to sell insurance in Michigan,” it said. she declared. “In the remaining cases, insurers are seeing a wide range of changes to some healthcare provider billing practices intended to avoid the new medical fee schedule, including changing provider names, increasing fees from 2019 and grouping weeks of charges into one line to avoid transparency.

Origami Rehabilitation’s Tammy Hannah told lawmakers on Thursday that the company’s payment term had doubled to about 4.9 months in the year after the legislation took effect, then jumped to 6.3. months in April 2021 and had peaked at 8.1 months in December 2021.

“When the money just goes out and doesn’t come in, it’s impossible to provide care,” Hannah said.

Bob Mlynarek of 1st Call Home Healthcare told lawmakers his company had to add a second biller and the payroll had been difficult to maintain “when our reimbursement system was so erratic”. He said many of the delays were tied to a host of document discrepancies between what is required by law and what insurance companies have demanded from providers.

“It’s constant delay, delay, denial and then litigation,” Mlynarek said.

The Michigan Legislature last year created a $25 million fund for medical providers who may face a ‘systemic deficit’ due to reduced access fees, but so far none of the providers have received money from the fund.

Several medical providers said the paperwork required and lack of payments from insurance companies made it almost impossible to apply for funding.

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