Flagship Services Group Blog

Early Observations on Michigan’s New Auto No Fault Laws

Jan 4, 2021 9:18:03 AM / by Robert J. Finley

The State of Michigan passed new no-fault auto insurance legislation that applies to auto policies issued or renewed after July 1, 2020. See Michigan S.B. 1 and H.B. 4397. Prior to July 1, 2020, if you were injured in an automobile accident, then your insurance company would cover your past and future medical expenses. The new law could change how Medicare pays for injuries resulting from auto accidents under the new Michigan state law. Consequently, in light of the new Michigan law, to ensure compliance with Medicare Secondary Payer laws, primary payers and their responsible reporting entity (RRE) must be familiar with these changes, understand its possible effects on conditional payment demands and reporting ongoing responsibility for medical (ORM), and update MSP-related claims handling processes accordingly.

According to Michigan’s Department of Insurance and Financial Services (DIFS), in the past, Medicare would not pay for auto accident injuries in Michigan because everybody in Michigan was required to buy lifetime unlimited personal injury protective (PIP) coverage benefits under their personal auto policy; thus, Medicare, as secondary payer, never had to pay. Under the new law, DIFS reportedly confirmed with the federal government, a Medicare-eligible person can opt out of no-fault/PIP coverage and instead bill Medicare if no other coverage applies and subject to Medicare’s coverage limits. Medicare beneficiaries under Parts A, B and C can choose to opt-out of PIP. Medicare-eligible persons are not required to opt-out of their personal auto policy’s no-fault/PIP benefits and could purchase PIP options at different coverage level limits. If PIP benefit coverage is purchased, then PIP is primary up to the PIP limits with Medicare remaining a secondary payer. Where PIP limits are exhausted, eligible beneficiaries can submit claims for payment by Medicare. www.michigan.gov, DIFS, Michigan’s New Auto Insurance Law: Frequently Asked Questions.

There is a significant amount of media from diverse sources describing and commenting on this new law. PIP is not health insurance, so there are different terms and benefits which apply. Similarly, PIP covered benefits are distinguishable from those provided by Medicare and Medicaid. PIP opt-out is only available to persons with a Qualified Health Coverage (QHC) whose health insurance covers auto injuries and has a deductible of $6,000 or less. Medigap is not QHC and PIP opt-out is only available based on other conditions. Auto insurers may require applicants to provide a qualified health coverage letter and/or coordination of benefits letter.

Key observations:
1. Michigan PIP claims no longer categorically provide for lifetime ORM.
2. Know the claimant’s Medicare and/or Medicaid eligibility status.
3. Know the claimant’s PIP coverage and its exhaustion limits, as well as other available coverage and coordination of benefits.
4. Be aware that Michigan’s state law may conflict with both federal Medicare Secondary Payer regulations on conditional payment repayment claims and Medicaid Secondary Payer regulations on lien recoveries. Notwithstanding, PIP limits may curb exposure to Medicare and Medicaid recovery actions.
5. RRE must analyze Section 111 reporting duties in particular ORM on a claim-by-claim and benefit-by-benefit basis keeping in mind applicable PIP limits.
Plot your course. Be proactive. Create winning compliance strategies in line with best claims handling procedures and business judgment rule.

About Flagship Services Group
Flagship Services Group is the premier Medicare and Medicaid compliance services provider to the property & casualty insurance industry. Our focus and expertise have been the Medicare and Medicaid compliance needs of P&C self-insureds, insurance companies, and third-party administrators. We specialize in P&C mandatory reporting, conditional payment resolution, and set aside allocations. Whether auto, liability, no-fault, or work comp claims, we have assembled the expertise, experience and resources to deliver unparalleled MSP compliance and cost savings results to the P&C industry. To find out more about Flagship, our team, and our customized solutions, please visit us at www.flagshipservicesgroup.com. To speak with us about any of our P&C MSP compliance products and services, you may also contact us at 888.444.4125 or info@flagshipsgi.com.

Disclaimer: This publication is provided for informational purposes only. It is not intended to constitute, and shall not be construed as, the rendering of legal, accounting, or business advice or opinion or professional services of any type. Nothing herein constitutes the views of the firm or its clients or the endorsement of any particular case, principle, or proposition. The contents of this publication should not be viewed as a substitute for the guidance, advice, or recommendations of a retained professional.

Tags: Medicare

Robert J. Finley

Written by Robert J. Finley

Robert J. Finley, a partner with Hinshaw & Culbertson LLP, has litigation and trial practice experience focused in tort, employment and healthcare. He also counsels firm clients under health plans, auto, property/casualty, no-fault, and workers compensation policies on Medicare repayment and Medicaid reimbursement compliance. Robert advises Flagship Services Group on high value matters, in administrative hearings, and with educational solutions involving Medicare Secondary Payer issues. For more information, visit: https://www.hinshawlaw.com