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Hospital association: Some Michigan hospitals could be pushed closer to the brink by new auto insurance law

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A top health care official says parts of Michigan's new auto insurance law are unsustainable.

Brian Peters is CEO of the Michigan Health and Hospital Association.

The law set rigid limits on what health care providers can charge to care for auto accident survivors — and Peters said those limits will push some hospitals further into financial trouble.

Peters said many hospitals already have "razor-thin" margins and adequate compensation for caring for auto accident patients helps them stay afloat.

"We are holding on by our fingernails, in many respects, in certain institutions and in certain parts of the state, and so it is a crisis, without question," he said, adding that in states that failed to address similar problems, hospitals have closed.

"And all of a sudden something that we took for granted is no longer there."

But Peters said unfortunately, there's no political will among elected leaders to fix the law heading into an election year.

Peters defended the hospital industry's role in closed door negotiations with lawmakers that led to the new in 2019. He said it was clear that changing the state's auto insurance law was the top priority for Republicans in control of the Legislature, and it was going to happen no matter what, so being a part of the talks was the lesser of two evils.

He said the issue of applying the new law retroactively to cut care for survivors injured prior to 2019 was mentioned during talks, but he didn't know it would be included in the bills until the last minute.

"Sometimes you have these negotiations and meetings and testimony and all the rest, and you don't find out the devil in the details until the bill is on the floor and the votes are cast," he said.

The law caps hospital charges for auto accident patients at up to 250% of what Medicare pays. Peters said it's a bit too soon to tell, but it will be a concern if insurance companies decide to pay hospitals significantly less than the upper limit of the cap.

The situation is far more dire for non-hospital-based health care providers that do not have Medicare codes they can use to bill insurance companies. Those providers, including adult group homes, residential rehab centers, nurse case managers, and home care agencies, can only get about half what they were charging in 2019. That amount is far less than their actual costs, and the entire long term care provider industry for survivors is expected to collapse in a matter of a few months.

That will likely result in more financial stress for hospitals, as catastrophically injured auto accident survivors who've lost their care end up in emergency rooms because there is no other place for them to go, and new auto accident patients end up having to stay in hospitals for much longer periods because they can't find safe post-hospital care.

But Peters still holds out hope that eventually, elected leaders will take up the issue again.

"If not for the pandemic, this would have a tremendous amount of visibility in the public eye," he said. "I really do think there would be a much higher degree of conscientiousness about what's happening in Michigan right now with the ramifications of the new law."

He added, "The mantra for many public policy members was, 'we're going to do something different and sit back and see how it plays out, and make adjustments if necessary.' So I think we're going to have an opportunity to revisit this issue, if things continue to play out as they have in these initial months. The proof will be there that maybe this did not benefit Michiganders in the way that many thought it would."