When the Legislature reformed the Michigan no-fault act on June 11, 2019, one of the many changes was the implementation of a utilization review process. This new procedure allows insurers and the Michigan Catastrophic Claims Association (MCCA) to seek further information and make determinations regarding treatment, training, products, services, or accommodations that were potentially overutilized or inappropriate. It also allows providers to appeal utilization determinations to the Department of Insurance and Financial Services (DIFS). Previously, the only option for insurers was to address these issues through the normal claims-handling process.

The statute providing for utilization reviews, MCL 500.3157a, requires DIFS to implement rules for the process. On December 18, 2020, DIFS finalized those rules. They apply to the MCCA and all insurers providing personal protection insurance (PIP) coverage through a no-fault policy, a managed care plan, or the Michigan Automobile Insurance Placement Facility (MAIPF). The rules also apply to any treatment, training, products, services, or accommodations provided after July 1, 2020.

The most urgent issue is that PIP insurers and the MCCA must have their plans for utilization reviews in place on or before February 16, 2021. DIFS must review and approve each plan. The Application for Initial Certification of No-Fault Utilization Review Program (Form FIS 2357) is available here.

The other major points of the new rules are as follows:

• An insurer’s plan can include retaining a medical review organization to perform the utilization reviews.
• An insurer can initiate a utilization review if a provider supplies treatment, training, products, services, or accommodations that are not usually associated with an injured person’s diagnosis or condition, or that were more frequent or longer in duration than that usually required for the diagnosis or condition.
• An insurer has 30 days from the date it receives a bill to issue a written request to the provider for an explanation regarding the necessity or indication for the treatment, training, products, services, or accommodations at issue. The insurer also can request medical records, bills, or other types of information.
• A provider has to respond in writing to a request for information within 30 days.
• If an insurer concludes that the treatment was overutilized or inappropriate, or that the cost was inappropriate, it must provide written notice of that determination within 30 days after it receives the provider’s written explanation. The notice must include specific information, such as the criteria used to make the determination, the amount paid to the provider, an explanation for any payment that was less than the amount charged, additional records required for reconsideration of the determination (if applicable), the date of the determination, and a copy of the form prepared by DIFS (FIS 2356) to appeal the determination.
• A provider has 90 days from the date of the insurer’s determination to appeal the decision to DIFS. A provider can appeal any denial of benefits based on overutilization or inappropriateness, even if the insurer did not request additional information in accordance with the rules.
• DIFS must provide written notice of the appeal to the insurer and the claimant within 14 days of receiving it. The insurer may file a reply within 21 days after the date of the notice. DIFS has prepared a form for this purpose (FIS 2361).
• DIFS has 28 days from the date it receives the insurer’s reply (or from the reply deadline) to issue a ruling. DIFS may extend this deadline by 28 days if it provides written notice. It must base its decision on the written documentation provided by the parties.
• Any party can seek judicial review of the DIFS decision pursuant to the Administrative Procedures Act. The party has 60 days from the date of mailing to file a petition. The court’s review is based on the record from the DIFS proceedings, subject to some exceptions. The standard of review is deferential to DIFS.

Our analysis of these rules indicates that utilization reviews are not a mandatory administrative process. In other words, insurers and providers can choose to utilize these procedures, or they can address utilization and cost issues through the normal claims process and subsequent litigation. Accordingly, it is unclear whether carriers and providers will take advantage of the new process.

For a more detailed evaluation of the new utilization review rules and their implications, please see our article, Too Much or Not Enough? An Inside Look at Michigan’s New Utilization Review Process.

If you have questions about the new utilization review process, please feel free to contact the author, Matthew S. LaBeau. More information about Collins Einhorn’s General and Automotive Liability Practice Group is available here.