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Spectrum Health closes program over no-fault funding cuts

The announcement came the same week as Governor Whitmer called for insurance refunds from the MCCA.

Residential Rehabilitation, a long-term care program at Spectrum Health, will be ending soon. In a statement, representatives from the healthcare system say a loss of funding is what lead to its demise.

That funding came from the Michigan Catastrophic Claims Agency, or MCCA. The passing of Public Act 21 two years ago lead to a change with Michigan's no-fault insurance system. The Act set up a fee schedule, reimbursement cap and a limit on paid in-home care hours as it relates to victims of catastrophic auto accidents.

RELATED: 'I feel helpless': Hundreds rally in Lansing protesting consequences of changes to no-fault auto insurance

The changes from PA21 took place July 1, 2021. Since then, at least 45 clinics or long term care programs have closed, and more than 1,500 healthcare jobs have been lost due to those funding cuts.

Credit: 13 On Your Side

The same week Spectrum unveiled the closure of the Residential Rehabilitation Program, Governor Gretchen Whitmer sent a letter to the head of the MCCA, which you can read here. In it, she cites a surplus in the MCCA of upwards of $5 billion, and calls for that money to be refunded to Michigan drivers.

"The surplus reflects premium overcharges and is partly a reflection of the cost-saving measures implemented in the historic, bipartisan no-fault reform legislation I signed into law in 2019." Whitmer said in the letter.

RELATED: Whitmer: Give drivers insurance refunds of up to $675 a car

"It's interesting timing for the governor to call for a refund," said Tom Judd, President of the MBIPC. "Instead of going after big insurance companies, she chose to go after the catastrophic fund that takes care of catastrophically injured survivors throughout the state who paid their premiums."

Judd says a refund to drivers is the wrong area to focus on as so many are losing care due to the changes implemented in July as result of PA21. According to their statistics, 18,000 patients in Michigan rely on MCCA funding for their long term care needs. 

The closing of Spectrum's program is a worrying sight for Judd. "They hung on as long as they can trying to make things work hoping that a legislative fix would come in," He said. "It just didn't come in time for them. And it's not going to come in time for many other providers across the state."

Judd says his biggest issue with Whitmer's call for refunds is the lack of an audit on the MCCA. While the governor is correct in citing a surplus, their annual report is not an audit, which Judd says shouldn't be enough to "raid the MCCA" over. 

The Department of Insurance and Financial Services says the closing and the refunds are unrelated. In a statement, a representative said:

"Actuarial review has determined that there is a $5 billion surplus, after taking into account the funds needed to care for catastrophically injured people. That surplus has doubled since the end of 2020, and those funds belong to Michigan policyholders. The refund should be the maximum amount possible while maintaining the viability of the fund for auto accident survivors, and the MCCA board must make that determination and vote on the refund."

The last independent audit of MCCA was conducted June 30, 2020. A target examination audit by the Department of Insurance and Financial Services was published in August of 2019. 

PA21 calls for the MCCA to be audited every three years, but that wont take effect until July 1, 2022. 

Nobody with the Governor's office or DIFS was available for an interview. The Governor's office did say she "has been an advocate for the survivors of catastrophic accidents" in the past, and that she welcomes solutions to aid those who have lost care. 

A representative from the Governors office sent two letters about that advocacy, but both are dated prior to July 1, 2021 — the day PA21 took effect.

RELATED VIDEO: Fixing unintended consequences: State lawmakers propose 5 bills to adjust no-fault insurance reform

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