Courtesy MIRS News
The Coalition to Protect Auto No-Fault (CPAN) Tuesday proposed a plan to control medical treatment prices for car accident victims as long as insurance companies are banned from using ZIP codes and credit histories in setting rates.
For the first time in the group’s 15 years of existence, CPAN is proposing a fee schedule for all health care providers, including hospitals, that’s set at 185 percent of the Workers Compensation schedule and yet-to-be-determined rate caps for family-provided attendant care.
The group, made up of trial lawyers and head injury victim advocates, among others, is also suggesting a yet-to-be-determined cap on hourly rates for family-provided attendant care and a fraud authority. Combined, it’s three of the auto insurance industry’s major asks as it looks to lower one of the nation’s highest rates.
Here’s what insurers don’t like. CPAN wants to ban credit scores and ZIP codes from being using to set auto insurance rates. They want insurers to get state approval before they raise rates and the Michigan Catastrophic Claims Association to become a public body that’s subject to the Freedom of Information Act (FOIA).
Today’s announcement comes roughly six months since the Michigan Health and Hospital Association (MHA) broke from CPAN in an attempt to strike its own deal with Republican leaders and the insurance industry.
The list of 24 CPAN reforms does not include giving drivers more flexibility in determining what type of coverage they can purchase, known as personal injury protection (PIP) choice.
“You can’t really choose your accident,” said Bill BUCCALO, president of Rainbow Rehabilitation Centers. “You need the coverage necessary to take care of your needs for the rest of your life.”
He argued that drivers may select to save $100 or so today, only to be facing bankruptcy and begin receiving less-than-premium Medicaid coverage after a serious accident. CPAN General Counsel George SINAS also argued that creating different coverage bands will open the door to more litigation, which adds costs to Michigan’s unique no-fault insurance system.
“It’s very difficult to be in halfway with no-fault,” Sinas said. “It’s like you can’t be half pregnant. You’re either in it or you’re not.”
On the flip side, CPAN doesn’t want to mandate car insurance companies arbitrarily lower rates by a certain amount. Sinas argued that adopting CPAN’s proposal could lower rates by as much as 40 percent and the group would hate to set arbitrary limits to how low the rates could go.
For the auto insurance industry, today’s announcement was a “welcome acknowledgement” that Michigan’s no-fault system needs some reforms to make auto insurance more affordable and that limiting hospitals’ “excessive charges” is a great place to start.
Pete KUHNMUENCH of the Insurance Alliance of Michigan (IAM) said his group and CPAN will continue to have their differences, but it’s clear that consumers’ demands to lower car insurance are beginning to take hold and that significant legislative reform is in the near future.
However, his group will continue to oppose limits to their rate-setting process on the basis that it doesn’t lower costs in the system, it just spreads around the costs more evenly.
“If you want a person with a bad experience rating to pay less and someone who has a more responsible history to pay more, you’ll support that proposal,” Kuhnmuench said. “Our customers live in different areas and they have higher risks because of it. There are more accidents in certain areas. More thefts. Health care is more expensive in urban areas.”
CPAN’s aggressive move comes in the face of serious movement on the auto no-fault issue. First, House Speaker Tom LEONARD (R-DeWitt), the House’s former Insurance Committee chair, is passionate about moving real reforms in the upper chamber and has been in talks with Detroit Mayor Mike DUGGAN, who also wants to see some rate reductions in Motown.
Also, with the MHA breaking away and trying to cut their own deals with Republican leadership, CPAN may be trying to get to the table with their best deal rather than risk being left out entirely of whatever Leonard can get through the House.
The political momentum for accomplishing no-fault reform — the only major policy initiative Gov. Rick SNYDER has failed to get through the Legislature — is building and reform is more realistic. CPAN’s prior position of opposing any proposed changes to auto no-fault is looking less and less realistic.
However, the MHA still has significant power in Lansing and they are still opposed to fee schedules for health care providers, which it claims could “jeopardize access to needed treatment and recovery services for accident victims.”
“Our priority has been and is to protect patients,” said Chris MITCHELL, MHA’s senior vice president for advocacy.
The hospitals supports caps for attendant care and the creation of a fraud authority, but MHA hasn’t had time to review all of 24 of CPAN’s recommendations.
“At which time there is legislation to debate, we will review its impact on providers and their patients and communities, and develop a formal position on any such proposal,” Mitchell said. “Until then, the MHA continues to urge the Legislature to protect our state’s no-fault system that has been twice protected by voters and that ensures our critically injured residents get the accident recovery services they need.”