DIFS Publishes Bulletin on No-fault Reimbursement Following Andary Decision

The Michigan Department of Insurance and Financial Services (DIFS) issued Bulletin 2022-17-INS Oct. 5 in the matter of payment and billing guidance for no-fault automobile insurers and healthcare providers following an order from the Michigan Supreme Court in the Andary v. USAA lawsuit that effectively reinstated the obligation of auto no-fault insurers to cover benefits for the catastrophically injured as those benefits had been in place prior to June 11, 2019.

The lawsuit was brought by a group of catastrophically patients injured before June 11, 2019, which is prior to passage of changes to Michigan’s auto no-fault law. Auto insurers implemented benefit and payment reductions for all claims including for patients who were injured before the new law took effect. The plaintiffs in Andary sued their insurer to establish that they are entitled to full lifetime no-fault benefits (such as unlimited hours of family attendant care) and claimed the limited reimbursement for medical and other personal injury protection coverage does not apply retroactively.

The bulletin explains the process providers who believe they are due additional reimbursement for claims subject to the Andary decision should follow if a provider believes a reprocessing of a claim is necessary. As outlined in the bulletin, providers are advised to first contact the insurer to request reprocessing of those claims. If a dispute related to a reprocessed claim cannot be resolved directly with the insurer, the provider may contact DIFS for assistance at DIFSComplaints@michigan.gov.

The Michigan Supreme Court also issued a separate order granting USAA’s application for permission to appeal the question of whether the Court of Appeals erred when it:

  • Held that claimants injured before June 11, 2019 are not subject to the reduced reimbursement for care under the new law.
  • Held that application of the new law to claimants injured before June 11, 2019 violates the Contracts Clause of the Michigan Constitution.
  • Remanded the case to the circuit court for discovery to determine if the new law passes constitutional muster.

The MHA is evaluating the DIFS bulletin and have submitted clarifying questions to external legal counsel. Members with questions may contact Laura Appel at the MHA.

DIFS Utilization Review Decisions Favor Hospitals

The Michigan Department of Insurance and Financial Services (DIFS) issued in early April two important utilization review decisions in favor of hospitals related to auto no-fault insurance reimbursement. Under the new system enacted as part of Public Act (PA) 21 of 2019, hospitals are entitled to more than Medicare reimbursement when the cost of treatment is covered by the auto no-fault insurance system. PA 19 does not adequately define Medicare rates and some auto no-fault insurers have paid less than appropriate amounts for hospital services rendered to auto accident patients. These decisions are extremely helpful in establishing the appropriate methodology to use in determining auto no-fault insurance reimbursement moving forward.

In the case of Hurley Medical Center v. Pioneer State Mutual Insurance Company, DIFS Director Anita Fox found that Medicare “pass-through” payments for graduate medical education, nursing and allied health, and the ancillary adjustment are payable under section 500.3157 of the Michigan Insurance Code. These amounts are payable in addition to the appropriate base payment rate multiplied by the diagnosis related group (DRG) relative weight. The ultimate amount in dispute in this case is $3,500, which the insurer now owes to Hurley Medical Center.

The case of Hurley Medical Center v. Progressive Michigan Insurance Company involved a dispute over the appropriate DRG. Progressive Michigan disputed the DRG, which totaled $58,126 after the amount was multiplied pursuant to PA 19. In response to the bill from Hurley, Progressive paid a DRG-multiplied amount of $26,642. After review, Fox found that Hurley Medical Center billed under the appropriate DRG, more than doubling the amount owed to the hospital. The amount payable to Hurley was reduced by $200 because the multiplied DRG amount exceeded Hurley’s charge for the service by that amount.

In each case, the insurer may appeal the finding to the circuit court. The MHA is tracking further developments in these cases, as well as several other utilization review appeals pending before DIFS. The MHA is also preparing a Utilization Review Appeals Toolkit to guide members through the utilization review (UR) process including the deadlines for filing UR appeals, specific information required for filings, a pre-filing checklist and a sample cover letter for filings. That information is expected to be sent to members by the end of April. For more information about these decisions and other auto no-fault insurance reimbursement issues, contact Laura Appel at the MHA.

MHA CEO Report — Auto No-fault: Our Work Continues

MHA Rounds Report - Brian Peters, MHA CEO

“I pass my life in preventing the storm from blowing down the tent, and I drive in the pegs as fast as they are pulled up.” — Abraham Lincoln

MHA Rounds Report - Brian Peters, MHA CEOYou may have seen recent media coverage noting that the MHA is joining efforts to address and reform Michigan’s auto no-fault insurance law. The reality is our efforts to protect and preserve what we viewed as the best system in the nation for ensuring access to care for auto accident victims dates back decades. Despite those efforts, in 2019, we clearly understood that the political stars were aligning in such a way that substantial reforms were imminent and, hence, our work in the months and years since has pivoted.

I am proud that we led an effort to assist consumers in making educated purchasing decisions in light of those 2019 reforms, and we are pleased that most Michigan drivers to date have seen the wisdom in continuing to purchase unlimited coverage to protect themselves and their families in the event of a catastrophic accident. While this effort was intended to be very visible to the public, some of our other efforts have played out behind the scenes and relate to the regulatory aspects of the new law that impact how hospitals and other care providers are compensated for the important services rendered to accident victims.

The changes to reimbursement that went into effect last July created several significant difficulties for hospitals. In effect, the new law created price controls, something we argued is never a good idea because they inevitably create real inequities. Throughout the no-fault debate, we have argued hospitals and other providers need to be fairly compensated to ensure we have the physical space, the technologies, the staffing expertise, and everything else that is necessary to provide care in the hospital emergency department, intensive care units and in the venues that provide rehabilitative and attendant care. Every step of that process is very important for the physical, mental, and fiscal health and well-being of those auto accident victims and their families.

The impact on post-acute facilities has already been well publicized, as reimbursement inequities are leaving many to reduce their patient load or close their doors entirely. While most of these patients have no immediate needs that require hospitalization, the lack of available alternatives means they increasingly have nowhere else to go; some patients are now being transferred to hospitals at a time when we are short staffed and operating at high capacity. Emerging from yet another COVID-19 surge, hospitals need every available bed for patients requiring acute hospital care.

Also impacting hospitals has been a lack of consistency in payment rates and confusion on payment limitations. Claims processing from insurers has been significantly delayed, and there are serious inconsistencies in reimbursement rates across payers due to confusion over Medicare rates. The definitions from the law passed in 2019 are insufficient, and additional clarity is needed to ensure reimbursement rates are accurate and consistent with the intent of the law. The MHA has spent much time working with the Department of Insurance and Financial Services on the need for a proper definition of Medicare rates to address this problem. The payment inadequacy, discrepancies and delays are at odds with the negotiations that occurred in 2019 and the intent of the law. The law was designed to reduce the cost of auto insurance. Instead, it is creating an unfair and unstable system of reimbursement and threatening access to certain types of patient care.

Many hospitals across Michigan operate on razor thin patient care margins and have done so for many years. In fairness to all involved, when the auto no-fault reform legislation was signed into law back in 2019, no one could have foreseen an impending pandemic and the unprecedented financial stress it would impose on hospitals and the entire healthcare ecosystem. But we clearly see the reality of the situation now.

The MHA is fully supportive of reforms that will address our concerns. It is often said that “politics is the art of the possible.” We will continue to do all that we can to advocate for public policy that ensures access to much-needed care, in the context of a challenging political environment.

On that note, I would be remiss if I didn’t thank the governor, as well as Republicans and Democrats in the state Legislature, for their bipartisan support of House Bill 5523, which will deliver critically needed funding support to address our healthcare workforce crisis. Our elected officials came together and got it right. When it comes to our auto no-fault system, I am optimistic that we will ultimately make things right as well.

As always, I welcome your thoughts.

State Implements Regulations to Avert Surprise Billing for Health Services

The Michigan Department of Insurance and Financial Services (DIFS) has implemented new regulations following the enactment of surprise billing legislation in 2020. MHA advocacy efforts resulted in significant changes to the legislation before it became law. As passed, Michigan’s surprise billing law generally exempts direct hospital employees from its requirements through its definition of a healthcare provider. In the context of the surprise billing statute, “provider” means an individual who is licensed or authorized as a health professional under article 15 of the Michigan Public Health Code and does not mean a hospital or other health facility. However, hospitals and health systems should be aware of the new regulations and who must comply with them.

The DIFS regulations and the Michigan statute require healthcare providers to inform consumers of the possibility of surprise billing through a disclosure form sent at least 14 days before a scheduled medical service. The form must explain that the consumer’s insurance company may not cover the entire cost or all services and that the patient would be personally responsible for any uncovered costs. As part of the notice, patients must also be given a good faith estimate of the total cost of the care they will receive, enabling them to budget for these expenses in advance or choose alternative care. The law applies to most health plans.

In addition to establishing disclosure requirements, the new law states that payment for out-of-network emergency services must be negotiated between the provider and the patient’s insurance company, not with the patient directly. Beginning July 1, certain payment disagreements between out-of-network providers and insurers may go to binding arbitration under the law.

DIFS has established a webpage specific to surprise medical billing that hospitals should reference for additional information.

The MHA is also monitoring federal rulemaking on surprise billing and will keep members informed when those requirements, which are expected to be similar to the state requirements, are scheduled to go into effect.

Members with questions should contact Adam Carlson at the MHA.