Utilization Review – Frequently Asked Questions

Editorial Board member, Katie Tucker, answers common questions regarding Michigan’s new Utilization Review.

Frequently Asked Questions – And Answers

Are case managers, guardians, transportation providers and others that render services to auto accident victims that fall outside the category of “medical care” subject to the new Utilization Review Rules and process?

Yes.  The Rules broadly define a “provider” as “[a] physician, hospital, clinic, or other person providing treatment, training, products, services, and accommodations to an injured person.”

Can an insurer or the MCCA contract with a medical review organization to perform utilization review activities?

Yes.  The Rules suggest that an insurer or the MCCA may contract with a medical review organization, or a third-party auditor, to conduct utilization review activities. Specifically, Rule 62(d) provides that “[n]othing in these rules should be construed to limit the ability of insurers and the catastrophic claims association to contract with a medical review organization to perform utilization review activities on their behalf.” 

Importantly, however, even if it contracts with an external medical review organization, an insurer remains fully liable and responsible for satisfying its obligations under the No-Fault Act and any related administrative rules or regulations.  In this regard, Rule 62(d) provides that “[a]n insurer that uses a medical review organization remains responsible for complying with the act and any rules promulgated thereunder.”

Is the DIFS appeal process the only mechanism for a provider to challenge an initial determination by the insurer or the MCCA?

No.  The amended version of the No-Fault Act, which took effect on June 11, 2019, also permits a provider to file a lawsuit in a Michigan trial court to challenge an insurer’s denial and to pursue recovery of unpaid no-fault benefits. Specifically, under MCL 500.3112, “[a] health care provider listed in section 3157 may make a claim and assert a direct cause of action against an insurer . . . to recover overdue benefits payable for charges for products, services or accommodations provided to an injured person.”

Must a provider exhaust its administrative remedies before filing a lawsuit to challenge an insurer’s determination or denial of benefits?

Most likely no.  As noted above, under MCL 500.3112, a provider has the right to assert a direct cause of action by filing a lawsuit in a Michigan trial court to challenge an insurer’s denial and to pursue recovery of unpaid no-fault benefits.  Nothing in the No-Fault Act requires a provider to pursue an appeal with DIFS or to otherwise exhaust its administrative remedies before exercising that statutory right of direct action.

Further, nothing in the new Utilization Review Rules requires a provider to pursue an appeal through DIFS before filing a civil lawsuit to challenge an insurer’s denial of no-fault benefits.  To the contrary, Rule 65(1) expressly states that a “provider may appeal a determination made by an insurer or the association” to DIFS.

Finally, although §101 of the Administrative Procedures Act (“APA”), which is referenced in §244(1) of the Insurance Code, requires a person to “exhaust[] all administrative remedies” before seeking “judicial review” of an agency decision, that statutory provision does not appear to apply in the case of an appeal to DIFS taken under Rule 65.  The reason for this is that §101 of the APA only applies in “contested case[s]” and an appeal to DIFS taken under Rule 65 does not constitute a “contested case,” as defined under the APA, because the parties are not afforded the opportunity for an “evidentiary hearing.”  As noted above, the DIFS appeal process does not involve any evidentiary or other hearing.  Instead, the Director makes a decision based solely upon written materials submitted by the parties.

Must a provider retain copies of utilization review-related records?

Yes – for at least 2 years.  Under Rule 69, “[i]nsurers, the association, and providers must retain copies of all requests, explanations, and determinations issued under these rules for at least two years after the date of the request, explanation, or written notice, and must submit them to the department upon request.”

If you have any utilization review-related questions for the AutoNoFaultLaw.com Editorial Board, please submit them to autonofaultlaw@sinasdramis.com.