LANSING – Governor Rick Snyder put a major emphasis Thursday on how much hospitals, physicians and other health care providers charge for care in unveiling his plan to overhaul how the state regulates medical coverage for those catastrophically injured in automobile accidents.
One of the key components of the legislation, expected to be introduced next week, is that it will dictate that providers charge insurers the average price for such procedures as opposed to the existing charges that providers levy for those in the catastrophic care system. For years, insurers have screamed that providers are virtually gouging them because of the unlimited benefits available, but now Snyder is lending his voice to that argument.
“Let’s look at comparable rates for other kinds of insurance,” Snyder said at a Capitol news conference. “Shouldn’t that be a similar kind of rate? Why should there essentially be no controls or very high rates on auto related insurance issues when there’s many kinds of insurance out there with well-established prices being paid for them and shouldn’t it be the same type of rate structure?”
As Mr. Snyder announced his plan – and publicly attached himself to it in a much stronger way than he did to legislation that died in the 2011-12 term – the argument on prices underlined how much numbers define the early debate on one of the hottest issues at the Capitol. Besides arguing over prices, supporters are emphasizing a rate rollback of $125 per vehicle – framing it as $250 per household assuming two-vehicle household – while opponents note Michigan would retain the higher than average even with the changes.
Insurance and Financial Services Director Kevin Clinton cited the recent investigative piece in Time magazine, which devoted an entire edition in March to how hospitals set prices according to a “chargemaster” that might price an aspirin at $8 per pill or a test at thousands of dollars.
Clinton said hospitals are charging insurers the chargemaster prices for patients severely injured in automobile accidents and covered through the Michigan Catastrophic Claims Association, which provides unlimited medical benefits for those with care costs exceeding $500,000.
“The chargemaster file is a set of charges that really bears no relationship to cost,” he said.
But David Finkbeiner, senior vice president for advocacy at the Michigan Health and Hospital Association, said the criticism on prices ignores several realities: coverage for catastrophic injuries costs more and health insurance plans that bring larger volume rightfully receive lower prices. Level-one trauma hospitals also have to maintain a certain level of trauma experts at all hours.
Finkbeiner disputed the allegation that insurers are paying full price for clients in the MCCA. Hospitals charge everyone the same, he said.
“What various insurance companies pay does differ based on the volume of patients that they bring to a facility; that is the marketplace,” he said. “Higher volume, reduced prices.”
Finkbeiner noted that prices vary among health insurers and disputed Clinton’s assertion that auto insurers lack the leverage of a Blue Cross to negotiate prices.
“Michigan’s hospitals have negotiated with auto insurers,” he said. “Auto insurers have an immense amount of flexibility in what they pay hospitals and physicians.”
The key outlines of the proposal – a $1 million cap on coverage, a rate rollback, replacing the MCCA with a new Michigan Catastrophic Claims Corporation for future injuries needing more than $500,000 in care and using part of what auto owners pay to address a shortfall in Medicaid – were first reported by Gongwer News Service. The legislation would take $25 from the new MCCC fee, for which officials could not provide a figure, toward making up the problem in the claims tax.
The new MCCC, unlike the MCCA, would be subject to the Open Meetings Act.
At the news conference, Snyder – flanked by the chairs of the House and Senate Insurance committees as well as representatives from the insurance industry – announced some additional specifics, namely that the rate rollback would be $125 per vehicle for one year with prices subject to the market afterward.
Rep. Pete Lund (R-Shelby Township) accused opponents, consisting of attorneys, health care providers, accident victims and others – of providing false information about the issue.
“Please, please, please question their assertions and their facts,” he said. “This is too important an issue for the people of Michigan to allow people to make accusations, throw numbers out there and say things that … just aren’t true.”
John Truscott, a spokesperson for the Coalition Protecting Auto No-Fault, issued a blistering response to the criticism, which appeared directed at CPAN. Truscott said CPAN stands by its assessment that the insurance industry stands to reap billions in profits from the legislation. MCCA rules require surpluses to be returned to its members, which are insurers, Truscott said.
“You were told by numerous officials, both elected and appointed, that you shouldn’t trust the opposition because we’re not telling the truth,” he said. “I think all of you know me well enough that I don’t say things I can’t back up.”
Snyder, asked whether the insurance industry would come out ahead or break even under the legislation, said he expected everyone would benefit under it.
Lund and Snyder also hammered at the point that even with the legislation, Michigan would retain the most generous benefits in the nation, 20 times those of the next-highest, New York state.
“Understand that right now Michigan, when it comes to benefits, we are number one in the country,” Mr. Lund said. “And if this bill passes, we will drop all the way to number one.”
Opponents did not contest that point, but instead noted that Michigan voters have repeatedly showed they like the existing system rejecting previous attempts to change it through referendums and through putting pressure on the Legislature.
Business groups hailed the legislation.
“Rare is the occasion when the Legislature has the opportunity to reduce costs to consumers, job providers and insurers,” said Rob Fowler, president of the Small Business Association of Michigan, in a statement. “Even rarer is the opportunity to cut the cost of health and auto insurance.”
But a phalanx of opponents ripped the legislation.
Arnie Grinblatt, a 54-year-old West Bloomfield man injured in a 2011 auto accident whose coverage is through the MCCA, said the proposal would prove a disaster for those suffering future injuries. Those now in the MCCA would remain there, eligible for unlimited benefits.
Grinblatt, who uses a wheelchair, said he requires 24-hour care and has trouble swallowing. He worried about possible limitations in the legislation on care for those in the current system, especially attendant care, which if limited he said would put him in a nursing home. He estimated his medical costs at $350,000 a year. He was on hand with other members of CPAN in the lobby outside the Governor’s Capitol Office to speak to reporters once the news conference ended.
“I would be in Medicaid. I’d be in a nursing home and vegetative,” he said of what would happen to him if his accident had occurred with this legislation in law. “All I can say is thank God I live in Michigan right now and I hope Michigan does not pass this law.”
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