Survey: Auto insurance fee cut resulted in 1,500 patients discharged, 3,000 jobs lost

Beth LeBlanc
The Detroit News

A fall survey of more than 300 medical providers for catastrophic auto crash survivors found a July 1 cut to insurance reimbursements to those providers led to the discharge of more than 1,500 patients and the loss of about 3,000 jobs. 

The survey, released by the Brain Injury Association of Michigan Tuesday, was conducted in part after lawmakers said they would need to assess data related to 2019's auto insurance reform law to determine if changes needed to be made to the law. 

Medical providers have been sounding the alarm on the law's implementation, specifically, a provision that went into effect in July that capped insurance reimbursements to medical providers at 55% of what they were charging for services in 2019 or 200% of Medicare reimbursements for services with a Medicare code. 

The group has two other provider surveys planned for 2022 "to document this fluid situation."

"These results are additional proof that Michigan is facing a growing humanitarian crisis — one that won’t end until there is a legislative fix to the new auto insurance law,” said Tom Constand, president and CEO of the Brain Injury Association of Michigan. “At a time when hospitals are already at capacity due to an ongoing pandemic, we are seeing brain injury survivors being dropped off at emergency rooms because they’ve lost their care providers and have nowhere else to go. Ending this crisis must be a priority for the Michigan Legislature in 2022.” 

In response to the survey, the Michigan Department of Insurance and Financial Services noted that, since July, it has taken 649 calls and emails with inquiries or complaints related to access to care concerns in light of the auto insurance law changes. 

Of those, 102 resulted in formal complaints and 86 of those 102 have been closed because the insurer presented a plan for appropriate care in compliance with state law and the insurance policy, according to state data.

Linda St. Amant holds a sign as she supports her son, David (not pictured), both of Dansville,on Nov. 10, 2021, who was involved in a vehicle accident on May 30, 2003, which resulted in a traumatic brain injury. A fall survey of more than 300 medical providers for catastrophic auto crash survivors found a July 1 cut to insurance reimbursements to those providers led to the discharge of more than 1,500 patients and the loss of about 3,000 jobs.

"The Michigan Department of Insurance and Financial Services is committed to ensuring that auto insurers take responsibility for assisting survivors with securing appropriate care," said Laura Hall, a spokesman for the department.

The survey, distributed by the nonprofit Michigan Public Health Institute between Sept. 29 and Oct. 20, included the participation of 349 providers that represented roughly 273 organizations. 

The survey found that at least 3,049 jobs were eliminated among the 140 organizations that provided employment data and 1,548 patients were discharged among the 208 organizations that provided patient discharge information.  

The study also found 51% of the organizations had to reduce services, 35% stopped accepting new patients with auto insurance funding, 11% had to discharge some patients and 8% had to close their doors. 

“Our analysis demonstrates that the fee schedule structure under Michigan’s new auto insurance law has caused a contraction of the state’s brain injury provider industry, leading to job loss and patient discharge," said Clare Tanner, director of MPHI's Center for Data Management and Translational Research. "This report captures only the initial impact — additional surveys will be needed to measure the long-term effects.” 

Those additional surveys will add questions focused on the 200% Medicare rate cap and the insurance companies' utilization review process.

The Michigan Public Health Institute said its target population for the questionnaire were providers who served auto crash survivors but the institute lacked a mailing list of those providers. Instead, a link to the survey was distributed through Brain Injury Association of Michigan networks.

"Although the networks are extensive, there is no way to know whether the survey invitation reached all target providers, and whether the respondents are representative of the target population," the report said. 

The Michigan Legislature last year set aside $25 million for a relief fund that medical providers could tap if they were suffering the effects of the 45% fee cut. The program, if used, would provide up to $500,000 to each approved applicant and provide data to state leaders regarding what changes, if any, would be warranted.

As of Tuesday, only one home health care company had applied for the program but was denied because of incomplete information on the application. 

Medical providers have argued that they need a receipt in hand to seek money from the fund and they're having a hard time getting insurance companies to pay anything, let alone 55% of the fee owed for their services. Guidance from the department has since sought to address and stop those delays from insurance companies.

The 2019 bipartisan law spurring the issues made several changes to address Michigan's highest-in-the-nation auto insurance costs, including required cuts to the Michigan Catastrophic Claims Association assessment as well as new lower-coverage policy choices for consumers.

Some of the more controversial changes included limits on the number of hours of care for which family members could be reimbursed, as well as cuts to the fee schedule governing how much auto insurance companies can reimburse medical providers for the care of injured crash victims.