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    Insurance companies in Michigan administering automobile no-fault insurance claims are well aware of the reform that recently took effect. By many accounts, the reform has presented multiple challenges for insurance carriers and the industry as a whole. Below is an overview of reform and its impact so far on the industry.

    On July 1, 2020, Michigan’s reform no-fault insurance laws took effect. The state legislature developed the law in 2019 and chose a delayed start date. On July 1, 2021, the reform fee schedule went into effect. Auto insurance companies are now required to reimburse providers at 55 percent of what they were paying in 2019 for services that are not covered by Medicare. This July, that rate drops down to 54 percent. On July 1, 2023, that rate is scheduled to decrease to 52.5 percent.

    The Brain Injury Association of Michigan (BIAMI) commissioned a study performed by the Michigan Public Health Institute (MPHI) examining the impact of these fee changes. According to the study (Phase I Provider Survey Results from a Study Tracking Impact of Fee Changes in No-Fault Auto Insurance Reform), Michigan’s no-fault reform has brought significant challenges to the industry that affects employees as well as claimants. This particular study reviewed no-fault reform’s impact on 349 providers of various types and 273 stakeholder organizations.

    Approximately 26 percent of employee positions no longer exist due to no-fault reform. And about nine percent of patients who had been receiving care had to be discharged. In fact, 11 percent of surveyed providers and organizations said that they needed to discharge patients.

    The services providers are able to offer have been impacted as well. For example, 96 percent of the organizations surveyed stated the services they provide were affected by the limit imposed on medical benefits. Ultimately, the new medical benefits limit was found to be responsible for just over half of the organizations having to cut back on their services or products. Attendant care, case management, therapy and outpatient treatments were identified as having been impacted the most.

    Some organizations responded that they had not experienced negative effects at the time of the survey. However, 63 percent of those stated they probably won’t be able to “serve patients with auto insurance funding within the next 12 months.”

    Clearly, auto no-fault reform in Michigan has already had a significant impact on many aspects of the industry. As the next fee schedule changes to 54 percent this July, it remains to be seen what additional impacts the industry will experience.

    For a customized look at how Northwood can help your insurance company hold down claim costs and navigate the latest no-fault insurance reform changes, please call Rosanne Brugnoni at 586-755-3830 ext. 3771.

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