HOUSE BILL NO. 5473
February 22, 2024, Introduced by Rep. Schriver and referred to the Committee on Government
Operations.
A bill to amend 1956 PA 218, entitled
"The insurance code of 1956,"
by amending section 2006 (MCL 500.2006), as amended by 2017 PA 223.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 2006. (1) A person must pay on a timely basis to its
2 insured, a person directly entitled to benefits under its insured's
3 insurance contract, or a third party tort claimant the benefits
4 provided under the terms of its policy, or, in the alternative, the
5 person must pay to its insured, a person directly entitled to
6 benefits under its insured's insurance contract, or a third party
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1 tort claimant 12% interest, as provided in subsection (4), on
2 claims not paid on a timely basis. Failure to pay claims on a
3 timely basis or to pay interest on claims as provided in subsection
4 (4) is an unfair trade practice unless the claim is reasonably in
5 dispute.
6 (2) A person shall not be found to have has not committed an
7 unfair trade practice under this section if the person is found
8 liable for a claim pursuant to a judgment rendered by a court of
9 law, and the person pays to its insured, the person directly
10 entitled to benefits under its insured's insurance contract, or the
11 third party tort claimant interest as provided in subsection (4).
12 (3) An insurer shall specify in writing the materials that
13 constitute a satisfactory proof of loss not later than 30 days
14 after receipt of a claim unless the claim is settled within the 30
15 days. If proof of loss is not supplied as to the entire claim, the
16 amount supported by proof of loss is considered paid on a timely
17 basis if paid within 60 days after receipt of proof of loss by the
18 insurer. Any part of the remainder of the claim that is later
19 supported by proof of loss is considered paid on a timely basis if
20 paid within 60 days after receipt of the proof of loss by the
21 insurer. If the proof of loss provided by the claimant contains
22 facts that clearly indicate the insurer's need for additional
23 medical information by the insurer in order to determine its
24 liability under a policy of life insurance, the claim is considered
25 paid on a timely basis if paid within 60 days after receipt of the
26 necessary medical information by the insurer. Payment of a claim is
27 not untimely during any period in which the insurer is unable to
28 pay the claim if because there is no recipient who is legally able
29 to give a valid release for the payment, or if because the insurer
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1 is unable to determine who is entitled to receive the payment, if
2 the insurer has promptly notified the claimant of that inability
3 and has offered in good faith to promptly pay the claim on
4 determination of who is entitled to receive the payment.
5 (4) If benefits are not paid on a timely basis, the benefits
6 paid bear simple interest from a date 60 days after satisfactory
7 proof of loss was received by the insurer at the rate of 12% per
8 annum, if the claimant is the insured or a person directly entitled
9 to benefits under the insured's insurance contract. If the claimant
10 is a third party tort claimant, the benefits paid bear interest
11 from a date 60 days after satisfactory proof of loss was received
12 by the insurer at the rate of 12% per annum if the liability of the
13 insurer for the claim is not reasonably in dispute, the insurer has
14 refused payment in bad faith, and the bad faith was determined by a
15 court of law. The interest must be paid in addition to and at the
16 time of payment of the loss. If the loss exceeds the limits of
17 insurance coverage available, interest is payable based on the
18 limits of insurance coverage rather than the amount of the loss. If
19 payment is offered by the insurer but is rejected by the claimant,
20 and the claimant does not subsequently recover an amount in excess
21 of the amount offered, interest is not due. Interest paid as
22 provided in this section must be offset by any award of interest
23 that is payable by the insurer as provided in the award.
24 (5) If a person contracts to provide benefits and reinsures
25 all or a portion of the risk, the person contracting to provide
26 benefits is liable for interest due to an insured, a person
27 directly entitled to benefits under its insured's insurance
28 contract, or a third party tort claimant under this section if a
29 reinsurer fails to pay benefits on a timely basis.
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1 (6) If there is any specific inconsistency between this
2 section and chapter 31 or the worker's disability compensation act
3 of 1969, 1969 PA 317, MCL 418.101 to 418.941, the provisions of
4 this section do does not apply. Subsections (7) to (14) do not
5 apply to a person regulated under the worker's disability
6 compensation act of 1969, 1969 PA 317, MCL 418.101 to 418.941.
7 Subsections (7) to (14) do not apply to the processing and paying
8 of Medicaid claims that are covered under section 111i of the
9 social welfare act, 1939 PA 280, MCL 400.111i.
10 (7) Subsections (1) to (6) do not apply and subsections (8) to
11 (14) do apply to health plans when paying claims to health
12 professionals, health facilities, home health care providers, and
13 durable medical equipment providers, that are not pharmacies and
14 that do not involve claims arising out of chapter 31 or the
15 worker's disability compensation act of 1969, 1969 PA 317, MCL
16 418.101 to 418.941. This section does not affect a health plan's
17 ability to prescribe the terms and conditions of its contracts,
18 other than as provided in this section for timely payment.
19 (8) Each health professional, health facility, home health
20 care provider, and durable medical equipment provider in billing
21 for services rendered and each health plan in processing and paying
22 claims for services rendered shall use the following timely
23 processing and payment procedures:
24 (a) A clean claim must be paid within 45 days after receipt of
25 the claim by the health plan. A clean claim that is not paid within
26 45 days bears simple interest at a rate of 12% per annum.
27 (b) A health plan shall notify the health professional, health
28 facility, home health care provider, or durable medical equipment
29 provider within 30 days after receipt of the claim by the health
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1 plan of all known reasons that prevent the claim from being a clean
2 claim.
3 (c) A health professional, health facility, home health care
4 provider, or durable medical equipment provider has 45 days, and
5 any additional time the health plan permits, after receipt of a
6 notice under subdivision (b) to correct all known defects. The 45-
7 day time period in subdivision (a) is tolled from the date of
8 receipt of a notice to a health professional, health facility, home
9 health care provider, or durable medical equipment provider under
10 subdivision (b) to the date of the health plan's receipt of a
11 response from the health professional, health facility, home health
12 care provider, or durable medical equipment provider.
13 (d) If a health professional's, health facility's, home health
14 care provider's, or durable medical equipment provider's response
15 under subdivision (c) makes the claim a clean claim, the health
16 plan shall must pay the health professional, health facility, home
17 health care provider, or durable medical equipment provider within
18 the 45-day time period under subdivision (a), excluding any time
19 period tolled under subdivision (c).
20 (e) If a health professional's, health facility's, home health
21 care provider's, or durable medical equipment provider's response
22 under subdivision (c) does not make the claim a clean claim, the
23 health plan shall must notify the health professional, health
24 facility, home health care provider, or durable medical equipment
25 provider of an adverse claim determination and of the reasons for
26 the adverse claim determination within the 45-day time period under
27 subdivision (a), excluding any time period tolled under subdivision
28 (c).
29 (f) A health professional, health facility, home health care
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1 provider, or durable medical equipment provider must bill a health
2 plan within 1 year after the date of service or the date of
3 discharge from the health facility in order for a claim to be a
4 clean claim.
5 (g) A health professional, health facility, home health care
6 provider, or durable medical equipment provider shall not resubmit
7 the same claim to the health plan unless the time period under
8 subdivision (a) has passed or as provided in subdivision (c).
9 (h) A health plan that is a qualified health plan for the
10 purposes of 45 CFR 156.270 and that, as required in 45 CFR
11 156.270(d), provides a 3-month grace period to an enrollee who is
12 receiving advance payments of the premium tax credit and who has
13 paid 1 full month's premium may pend claims for services rendered
14 to the enrollee in the second and third months of the grace period.
15 A claim during the second and third months of the grace period is
16 not a clean claim under this section, and interest is not payable
17 under subdivision (a) on that claim if the health plan has complied
18 with the notice requirements of 45 CFR 155.430 and 45 CFR 156.270.
19 (9) Notices required under subsection (8) must be made in
20 writing or electronically.
21 (10) If a health plan determines that 1 or more services
22 listed on a claim are payable, the health plan shall pay for those
23 services and shall not deny the entire claim because 1 or more
24 other services listed on the claim are defective. This subsection
25 does not apply if a health plan and health professional, health
26 facility, home health care provider, or durable medical equipment
27 provider have an overriding contractual reimbursement arrangement.
28 (11) A health plan shall not terminate the affiliation status
29 or the participation of a health professional, health facility,
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1 home health care provider, or durable medical equipment provider
2 with a health maintenance organization provider panel or otherwise
3 discriminate against a health professional, health facility, home
4 health care provider, or durable medical equipment provider because
5 the health professional, health facility, home health care
6 provider, or durable medical equipment provider claims that a
7 health plan has violated subsections (7) to (10).
8 (12) A health professional, health facility, home health care
9 provider, durable medical equipment provider, or health plan
10 alleging that a timely processing or payment procedure under
11 subsections (7) to (11) has been violated may file a complaint with
12 the director on a form approved by the director and has a right to
13 a determination of the matter by the director or his or her
14 designee. This subsection does not prohibit a health professional,
15 health facility, home health care provider, durable medical
16 equipment provider, or health plan from seeking court action.
17 (13) In addition to any other penalty provided for by law, the
18 director may impose a civil fine of not more than $1,000.00 for
19 each violation of subsections (7) to (11) not to exceed $10,000.00
20 in the aggregate for multiple violations.
21 (14) As used in subsections (7) to (13):
22 (a) "Clean claim" means a claim that does all of the
23 following:
24 (i) Identifies the health professional, health facility, home
25 health care provider, or durable medical equipment provider that
26 provided service sufficiently to verify, if necessary, affiliation
27 status and includes any identifying numbers.
28 (ii) Sufficiently identifies the patient and health plan
29 subscriber.
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1 (iii) Lists the date and place of service.
2 (iv) Is a claim for covered services for an eligible
3 individual.
4 (v) If necessary, substantiates the medical necessity and
5 appropriateness of the service provided.
6 (vi) If prior authorization is required for certain patient
7 services, contains information sufficient to establish that prior
8 authorization was obtained.
9 (vii) Identifies the service rendered using a generally
10 accepted system of procedure or service coding.
11 (viii) Includes additional documentation based on services
12 rendered as reasonably required by the health plan.
13 (b) "Health facility" means a health facility or agency
14 licensed under article 17 of the public health code, 1978 PA 368,
15 MCL 333.20101 to 333.22260.333.22121.
16 (c) "Health plan" means all of the following:
17 (i) An insurer providing benefits under a health insurance
18 policy, including a policy, certificate, or contract that provides
19 coverage for specific diseases or accidents only, an expense-
20 incurred vision or dental policy, or a hospital indemnity, Medicare
21 supplement, long-term care, or 1-time limited duration policy or
22 certificate, but not to payments made to an administrative services
23 only or cost-plus arrangement.
24 (ii) A MEWA regulated under chapter 70 that provides hospital,
25 medical, surgical, vision, dental, and sick care benefits.
26 (d) "Health professional" means an individual licensed,
27 registered, or otherwise authorized to engage in a health
28 profession under article 15 of the public health code, 1978 PA 368,
29 MCL 333.16101 to 333.18838.
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1 (15) After December 31, 2017, this section applies to a
2 nonprofit dental care corporation operating under 1963 PA 125, MCL
3 550.351 to 550.373.
4 Enacting section 1. This amendatory act does not take effect
5 unless Senate Bill No.____ or House Bill No. 5477 (request no.
6 01038'23) of the 102nd Legislature is enacted into law.
LEP Final Page 01038'23 s


Statutes affected:
House Introduced Bill: 500.2006