Getting Familiar With the PIP Reform Bill

For once, we just wish we could have an honest debate about changes to Michigan’s Auto No-Fault Insurance Law.  That is certainly not the case this go around!   You have probably seen the TV ads and heard the radio spots that address the current discussion about reforms to no-fault.  Phrases such as this is a “Detroit Bailout,” and “accident victims will lose their benefits” couldn’t be further from the truth. The opposition to reforms are not holding back.   The medical care lobby has publically stated that this proposal will take $1 billion out of the health care system.  They finally said it!  They have been overcharging auto insurance carriers to the tune of $1 billion per year.  It’s time to make no fault more affordable for all. Senate Bill 248 proposes changes to Michigan’s Auto Insurance Law that will help to reduce the trend toward higher and higher premiums while protecting consumers benefits and providing continued care for those catastrophically injured in automobile accidents.    Senate Bill 248, sponsored by Senate Insurance Chairman, Joe Hune, was approved by the Senate 21 – 17.  The bill has passed the House Insurance Committee and is awaiting action on the House floor.  The bill would:

  • Create a Michigan Automobile Insurance Fraud Authority, to which all auto insurers operating in Michigan would report incidents of suspected insurance fraud (suspicious claims amount to $400 million annually). The Authority would have the ability to assess auto insurers to provide grant funding that would be distributed to assist state and local law enforcement with fraud prosecutions. The assessments could not be used by carriers with respect to establishing a rate and the Authority would be subject to the Freedom of Information Act.
  •  Provide limits on attendant care provided in the home for persons injured in auto accidents. Attendant care provided by family members would be limited in compensation to $15 per hour, adjusted by U.S. CPI. Family members who are Licensed Medical Professionals are not subject to the limit.  Family and licensed care would be limited to 24 hours per day, regardless of the number of people providing care. A medical review of the patient’s needs and care may be requested by the patient or a representative of the patient.
  • Transition from the existing MCCA (would become the Michigan Legacy Claims Association or MCLA) reimbursement/reinsurance mechanism for catastrophic claims costs to a new Michigan Catastrophic Claims Corporation (MCCC) excess insurance mechanism. In the event of a policyholder injury, the primary no-fault carrier’s liability would be capped at $545,000, beyond which the claim and liability would transfer to the new MCCC. This $545,000 threshold would be adjusted for inflation every other year. Current catastrophic victims will remain with the new MLCA.
  • Reimbursements for medical products or services for auto accident related injuries, from carriers or the MCCC, would be 150% of Medicare rates which is anywhere from 20-30% higher than commercial reimbursement rates.
  • Require Department of Insurance and Financial Services to report to the House and Senate on the impact of the legislation’s changes. It also includes a $150,000 appropriation for creation of the report.
  • Require a $100 per vehicle rate reduction each year for two years.

This is as close as we have been to true reforms.  If this is something you want to see happen, then you need to be involved also at the grass roots level of influence.  The other side is not honest in this debate and are misleading catastrophic victims, their families, and their friends.