Research & Commentary: Medical Fee Schedules for Michigan Auto Insurance

Published December 13, 2011

Auto insurance will be one of the key issues Michigan legislators face in the upcoming legislative session. Michigan’s unique auto insurance system provides uncapped coverage for injuries caused by auto accidents, resulting in the nation’s highest auto insurance premiums.

In an effort to bring Michigan auto insurance premiums closer to the national average, the legislature is now considering House Bill 4936, which would implement a fee schedule on auto insurance medical coverage similar to the one currently being used in Michigan’s workers’ compensation insurance system.

Fee schedules place a ceiling on the reimbursements health care providers receive for certain treatments. Opponents of the new legislation argue that under a fee schedule certain hospitals, physicians, and other health care providers could lose millions of dollars in reimbursements. They say out-of-pocket expenses for health care will likely increase for many patients.

Supporters of fee schedules argue the proposed changes are necessary to check growing provider reimbursements. Under the new system proposed by HB 4936, Michigan would still have the highest level of mandated medical benefits in the country.

The following articles examine fee schedules for medical services, how they have been applied to other programs in several states, and how effective they may be for auto insurance, from several perspectives.

Can Medical Fee Schedules Bring Down Fees for Michigan Auto Insurance?
This article from Out of the Storm News discusses the Insurance Institute of Michigan’s proposal to create a medical fee schedule for auto insurance.

Changes to State’s No-Fault Insurance System Would Benefit Consumers Pete Kuhnmuench of the Insurance Institute of Michigan examines House Bill 4936, the effects it could have on auto insurance rates for Michigan drivers, and the increased choice it would give Michigan policyholders.

State Efforts to Address Urban Auto Insurance Costs
The Property Casualty Insurers Association of America documents government policies, including fee schedules, that have been implemented to alleviate affordability concerns in urban areas (in some cases, the entire state) and reports on the effects of these policies.

Effectiveness of Workers Compensation Fee Schedules—A Closer Look
This study by the National Council on Compensation Insurance (NCCI) examines workers’ compensation medical fee schedules. The study and accompanying research brief use the experience of group health coverage to assess the effectiveness of workers’ comp fee schedules.

Michigan No-Fault Auto Insurance Reform: Frequently Asked Questions
The Coalition for Auto Insurance Reform summarizes the key issues in the debate over Michigan’s House Bill 4936, including the implementation of a fee schedule, from an insurer’s perspective.

Letter from DC: When Fee Schedules Are the Best Imperfect Option
Heartland Institute Vice President Eli Lehrer argues that although fees schedules are not the perfect solution for cutting costs, in many cases they are the best option available.

Florida No-Fault Insurance Reform: A Step in the Right Direction
This Florida State University Law Review article examines Florida’s original no-fault insurance statutes and the logic behind them, and takes a brief look at the current requirements of Florida’s laws. The report recommends the Florida Legislature consider requiring a more complete fee schedule for PIP insurance.

Reforms Will Save Michigan’s No-Fault System
In a letter in favor of House Bill 4936, the Coalition for Auto Insurance Reform argues Michigan’s medical fee schedule has brought consistency and stability to the Michigan workers’ compensation market and recommends the state do the same for auto insurance.

The Fight to Save Our No-Fault System: HB 4936
The Coalition for Protecting No-Fault examines HB 4936 and documents negative effects it contends the bill will have on Michigan’s insurance system.