As Proposed Senate Bill 248 Would Cut More Than $11 Million Annually to Covenant HealthCare in Saginaw.

Thursday, April 23, the House Insurance Committee reported out a substitute to Senate Bill (SB) 248, which would slash hospital reimbursement and eliminate guaranteed benefits for accident victims, while providing no permanent, guaranteed reductions in auto insurance premiums. The bill imposes a fee schedule of 150 percent of Medicare rates for hospitals and other providers. In exchange, auto insurers would credit or rebate $100 per car annually for two years, not permanently. The Michigan Health & Hospital Association (MHA) estimates that the 150 percent of Medicare fee schedule represents a potential $1.2 billion reduction to hospital no-fault payments. On a statewide level, it would nearly eliminate hospital margins for all services and patients, result in a patient margin of negative 7 percent, and impose a permanent cut to hospital payments. 

During testimony to the House Insurance Committee, the MHA offered that hospitals would reduce charges to auto insurers by 20 percent, leading to a savings of $500 million annually. This would be accomplished through a rollback of hospital charges to Jan. 1, 2015. Those rates would stay in place for two years, increasing in 2018 by the medical consumer price index. However, the committee is going forward with the 150 percent of Medicare fee schedule.

For Covenant HealthCare, passage of this bill structured as proposed by the House Insurance Committee will be devastating. This bill would cut reimbursement to Covenant by over $11 million annually. Such a drastic reduction endangers Covenant’s ability to provide critical services and puts patients at risk. 

Covenant is encouraging citizens to let their representative know that this legislation, as it is written, must not pass.

The MHA has a Legislative Action Center to contact legislators electronically. The center provides easy access to find representatives contact information and to let them know they must oppose SB 248.