Pumping the Brakes: Amendments to Michigan’s No-Fault Act and the Effect on Health Care Providers

This article was originally published on February 6, 2020. It has been revised to include additional guidance provided by the Michigan Department of Insurance and Financial Services (“DIFS”).

In 2019, Michigan enacted amendments to the No-Fault Act (the “Act”), MCL 500.3101 et seq., that will affect the way health care practitioners provide services and are compensated. The Act will permit insureds to place caps on the personal protection benefits under their policies. Individuals enrolled in Medicaid and whose spouses and/or other household relatives are either enrolled in Medicaid, have qualified health coverage, or have other coverage under the Act, can cap their benefits at $50,000. Persons with qualified health coverage can elect not to have any coverage. “Qualified health coverage” is either (1) health or accident insurance that does not exclude or limit coverage for motor vehicle accidents and has an annual deductible of $6,000 or less, or (2) “coverage under parts A and B of the federal Medicare program.”  All other persons may elect to limit coverage to $250,000, $500,000, or to have no caps. The purpose, at least in part, of the caps are to decrease the premiums paid by consumers.  The purpose, at least in part, of the caps is to decrease the costs paid by consumers.

The Act creates a statutory scheme for No-Fault insurers to perform “utilization reviews” of providers’ treatment and services, including the appropriateness of the level and quality of treatment under medically accepted standards. While  insurance carriers were permitted to and did conduct utilization reviews prior to the amendments, the amendments establish a role for regulators in that process, and DIFS has been given the task to establish the criteria or standards for such utilization review, including the appeals process. One of the major impacts on providers will be that, per the statute, by rendering treatment to persons for an injury covered by no-fault personal protection insurance, providers are “considered to have agreed to” participate in this process. MCL 500.3157a(1). DIFS’s implementation and enforcement of fair appellate procedures, however, will likely benefit providers.

The Act creates a “No-Fault Fee Schedule” based on a percentage of Medicare rates, or if Medicare has no rate, the rate of charge description master. The specific multiplier that applies changes based on various factors, such as the indigent patient volume a provider serves or the trauma service level of a provider. Providers seeking to qualify for higher rates in relation to these factors must “provide the director with all documents and information requested,” and the director shall annually review documents and information to certify whether the provider qualifies. Regardless, the multiplier that applies will decrease every year until 2023.

The Act gives providers a direct cause of action in court to recover payments from an insurer, rather than proceeding under assignment from a patient. Whether under assignment or through a direct cause of action, the payments must be “overdue.” This requires the provider to submit reasonable proof of the loss within 30 days – which requires insurers to pay within 30 days. If a provider does not submit proof of the service within 90 days, then the insurer has 90 days to pay before being overdue.

These modifications, some of which do not become effective until mid-2020 or later, leave much to be desired for providers.   While the Act creates certain timelines to submit claims, it does not provide a scheme to determine who gets reimbursed. When there is confusion as to whom will receive reimbursement, the Act permits any party to go to court for this. But, the potential caps will require providers to work diligently and efficiently in submitting claims because providers who file claims first in time may be the first (or only) ones to be paid.

DIFS has issued several bulletins regarding implementation since June of 2019, and has been diligent in communicating with the public and legal community to ensure that information about the Act is accurate.  Most recently, on February 10, 2020, DIFS released a bulletin (Bulletin 2020-05-INS) concerning the coverages and payment issues that may affect Michigan Medicare beneficiaries who elect to “opt out” of PIP coverage.  Providers should watch for additional guidance from DIFS as the new provisions of the Act are implemented.  As is typical with major reform statutes, there is also likely to be significant guidance, regulations, and case law developed in the coming years as providers, insurance carriers, and insureds engage in litigation.

Furthermore, providers will need to be diligent in preparing medical records as the insurers develop their own standards to apply for services provided to No-Fault patients. Given the number of No-Fault insurers, there could be multiple standards that apply, which could vastly increase billing difficulties for providers. However, DIFS guidance should bring much needed clarity and uniformity to this process.

About the Author:

Jeremy Belanger, Associate, is a health care attorney in the Troy, Mich. office and can be reached at 248-433-7542, jbelanger@dickinsonwright.com and his biography is available here.