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Surprise House hearing on Michigan auto insurance reform bill leads to walkout

 A first-time hearing Thursday on legislation responding to complaints regarding fee cuts for medical services for survivors of catastrophic crashes ended with seven Republicans leaving the meeting, the bill failing to advance and the removal of the bill from committee by House leadership.

House members who left the House Insurance Committee meeting said the bill was not listed on the agenda ahead of time and that Chairwoman Daire Rendon, R-Lake City, did not tell members in advance that the legislation would be discussed, leaving lawmakers no time to review the bill or any accompanying analysis. 

The bill, introduced by Rep. Ryan Berman, R-Commerce Township, in March, would increase penalties on insurance companies that delay payments to medical providers providing services to no-fault auto insurance clients.

Rendon's surprise move to hear testimony on the bill came after House Speaker Jason Wentworth, R-Farwell, said in March there were no plans to change the controversial no-fault auto reform law and that it was "time to move on."

Wentworth was not aware the bill would be taken up in committee, said spokesman Gideon D'Assandro, a rarity when it comes to controversial legislation. 

Rep. Beau LaFave, the Iron Mountain Republican who serves as vice chairman for the House Insurance Committee, said members weren't told of the legislation until the committee had referred out two other bills and went into recess. 

"I was not given prompt notice of the prompt pay bill so I promptly left," LaFave said Friday. "Members are not happy when they are not told what is going on and the members of the public and the committee are not given notice about what is happening."

Rep. Matt Hall, R-Comstock Township, said Rendon's office told him ahead of time that only two bills would be discussed in committee. By the time the third bill was brought up, Hall said he had other commitments including the preparation of his tax relief plan passed out of the House and Senate later that day. 

A total of seven Republicans left the meeting during the recess, leaving the committee without the quorum needed to refer the bill to the House floor. Later Thursday evening, the bill was removed from Rendon's committee and referred to the House Rules and Competitiveness Committee chaired by state Rep. Jim Lilly, R-Park Township. 

The transfer to Lilly's committee occurred because "they do good work," D'Assandro said. 

The Michigan Home Care and Hospice Association criticized lawmakers' "insurance walkout."

"We can only conclude, those members who chose to leave the committee meeting today were listening to legislative leaders influenced by the powerful insurance lobby, and ignoring the growing catastrophic care crisis here in Michigan," said Barry Cargill, president and CEO for the association, in a Thursday statement. 

Rendon said she held the hearing on the legislation after listening to catastrophic crash victims and their medical providers affected by the July 1, 2021 fee cut. Many medical providers have still not been paid by insurance companies for their services, she said.

"They're providing them to patients who cannot move without help and assistance, cannot do simple personal care functions, and they're being forced to look for another service because their provider has gone out of business or will have to drop them for non-payment," Rendon said. "And that was not part of the deal."

One of the more controversial provisions of the historic 2019 no-fault auto insurance reform was a July 1, 2021 cut to what medical providers could charge insurance companies for providing care to those injured in catastrophic crashes. The rule required providers to cut their costs to 55% of what they charged in January 2019 or, for Medicare reimbursable services, 200% of the Medicare rate. 

Auto no-fault survivors and their medical providers have fought the change for months, arguing the cut was too severe to sustain business operations and still provide the level of service their clients had received over the years. Additionally, medical providers have said insurance companies are taking advantage of the complexity of the new fee schedule to delay payments. 

Berman's bill would force the insurance provider to pay three times the amount of the overdue payment if the insurance provider were delaying payment in "bad faith."

Insurance Alliance of Michigan Executive Director Erin McDonough criticized the legislation as a "backdoor way" to avoid the new fee cuts and prevent insurance providers "from investigating fraudulent claims." The association's member companies, McDonough said, are reporting they're paying nine out of 10 claims "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."

Tammy Hannah of Origami Rehabilitation told lawmakers Thursday that the company's payment turnaround time doubled to about 4.9 months within a year of the legislation going into place, then grew to 6.3 months in April 2021 and peaked at 8.1 months in December 2021. 

"When money is only going out and not coming in, it's impossible to provide care," Hannah said.

Bob Mlynarek of 1st Call Home Healthcare told lawmakers his company has had to add a second biller and payroll has been difficult to maintain "when our reimbursement system has been so erratic." He said many delays have related to a host of paperwork discrepancies between what's required under the law and what insurance companies have been demanding of providers.

"It is a constant delay, delay, deny and then litigate," Mlynarek said. 

The Michigan Legislature set up a $25 million fund last year for medical providers who could show a "systemic deficit" due to the fee cut to access but, so far, none of the providers have received money from the fund. 

Several medical providers contended that the paperwork required and the lack of payments from insurance companies made it nearly impossible to apply for the funding.