House Insurance Committee Chair Daire Rendon (R-Lake City) began the process of passing legislation that penalizes auto insurers that are not fully compensating the providers of those taking care of people catastrophically injured in car accidents.

Although it wasn’t on the agenda, Rendon took up Rep. Ryan Berman’s (R-Commerce Twp.) HB 5870, which hits insurers acting in bad faith that don’t pay the bill sent to them by providers three times the amount of the overdue payment plus attorney costs.

She then took testimony from health care providers who claimed they hadn’t been compensated under the law for, in some cases, 10 months. They claimed they are having to take money out of their own pockets to make payroll.

The sudden change in the agenda caught fellow members and House leadership by surprise. It spurred several members, including Vice Chair Beau LaFave (R-Iron Mountain) and Republican Caucus Chair Matt Hall (R-Comstock Twp.) to walk out of committee. Berman’s bill didn’t move, but Rendon said she is interested in reporting it out in the future.

The Speaker’s office wasn’t aware the subject was being taken up, even though Speaker Jason Wentworth (R-Farwell) had said previously he’s not interested in taking up any major reforms to the state’s auto insurance this year.

However, MIRS has learned the Speaker is not averse to bills addressing a specific problem, which this one could become.

The Insurance Alliance of Michigan called the legislation a backdoor way for providers to avoid the medical fee schedule and to discourage insurance carriers from investigating fraudulent claims. IAM Executive Director Erin McDonough, executive director of the Insurance Alliance of Michigan, said with the fee schedule less than a year old, her member companies report that nine out of 10 claims are proceeding in a timely manner.

“The existing law already encourages prompt pay by setting strong penalties, including 12% interest, additional monetary fines and the ultimate penalty for an insurer to lose their license to sell insurance in Michigan,” she said. “In the remaining cases, insurers are seeing a wide range of changes in certain medical provider billing practices intended to avoid the new medical fee schedule including providers changing their names, increasing charges from 2019 and wrapping up weeks of charges into one line to avoid transparency.

“Bipartisan auto no-fault reforms created a new system for disputes to be resolved, called utilization review, which uses third-party, independent experts coordinated through the Michigan Department of Insurance and Financial Services. Utilization review is working and so are the overall bipartisan auto no-fault reforms.”

Two months ago, Rendon said before she dives too much deeper into potential adjustments to the state’s 2019 auto insurance law, she wants to see changes to the $25 million fund created to fully compensate providers of catastrophically injured patients.

The $25 million fund was set up about a year ago to provide brain injury clinics and home care providers financial relief from the 45% rate cut implemented as part of the auto insurance reform, but allegedly due too many bureaucratic strings, many aren’t getting the money.

Asked what changed her mind, Rendon said the “straw that broke the camel’s back” was a call from a friend who is a quadriplegic.

“She called me and said, ‘I am sorry, Daire, but I have never had to worry about my provider before and now I’m being told that I’m going to be let go. Now, I have to worry about this,’” Rendon said. “She’s just one of them. I’ve heard from many.

“These people who’ve already been victimized once should not have to be the victims of trying to find health care because their provider is no longer in business because they are not being paid.”

Outside of the human element, Rendon said she doesn’t understand why taxpayers should be on the hook for costs that insurers should be paying.

Berman, Rep. Robert Bezotte (R-Marion Twp.) and Rep.Joe Tate (D-Detroit) joined Rendon in her office later in the morning to talk about the issue.

“It’s an issue of fairness,” Tate said. “If you’re not getting paid on time, we know that in any other industry that is going to be an issue.”

Insurers respond that they may not be paying everything that is being billed to them out of concern that their costs may not be reimbursed through the Michigan Catastrophic Claims Association.

There’s also some confusion as to how much can be reimbursed due to the 2019 reform legislation that caps reimbursements at 55% of what was changed prior to the new law.

To that, Rendon said insurers have had at least a year to iron out any problems and changes need to happen.

This story courtesy of MIRS, a Lansing-based news and information service.