Automobile no-fault insurance tends to be discussed often among industry professionals in Michigan. That is perhaps even more true this year, as no-fault insurance in Michigan has recently seen insurance reform.
Previously, Michigan allowed for auto insurance policies to have limitless medical benefits for claimants. However, the state legislature developed new law in 2019, which did not go into effect until July 1, 2021. The reformed auto no-fault insurance law placed a 55 percent limit on the reimbursement of medical care to providers treating claimants injured in an auto accident.
In the months since the law went into effect, there have been many impacts, according to Phase I
Provider Survey Results from a Study Tracking Impact of Fee Changes in No-Fault Auto Insurance Reform, a study commissioned by the Brain Injury Association of Michigan (BIAMI) that was carried out by the Michigan Public Health Institute (MPHI). The study was done to examine what impacts occurred because of the changes to fee structure stemming from the 2019 law. Specifically, the study reviews these impacts on the services accessible to those that suffered catastrophic injuries because of an auto accident.
The study participants included 349 providers across 273 organizations. These organizations and providers employed over 16,200 people and helped over 16,700 injured people prior to the July 1, 2021, reform effective date.
The study reveals devastating effects. For example, about 26 percent of the employee positions from these participants no longer exist. And about nine percent of the patients receiving care had to be discharged.
Furthermore, 96 percent of the organizations participating in the study stated that the services they provide were affected by the limit on medical benefits under an auto insurance policy. Four services were identified as experiencing the largest impact. The services include attendant care, case management, therapy and outpatient treatments.
In addition, the new medical benefits limit was found to be responsible for 51 percent of the organizations having to cut back on services or products. Eleven percent of the respondents stated that they needed to discharge patients. And eight percent of respondents ultimately closed their operation.
Even of the 89 organizations that stated they didn’t experience negative impacts, 63 percent stated they likely won’t be able to “serve patients with auto insurance funding within the next 12 months.”
Insurance companies administering auto no-fault claims need to be aware of this reform and the impacts it is already having. Claims staff need to stay updated on the changes, which can take additional time. As a third-party administrator (TPA) of auto no-fault claims, Northwood has helped its partners navigate the no-fault reform.
Please call Rosanne Brugnoni at 586-755-3830 ext. 3771 today for assistance with understanding the impacts the no-fault reform could have on your claimants and your insurance company.
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