Bill Summary – FastDemocracy

SENATE BILL NO. 1088
     November 13, 2024, Introduced by Senators BAYER, CAVANAGH, MCMORROW, CHANG,
       KLINEFELT, POLEHANKI and GEISS and referred to the Committee on Finance, Insurance,
       and Consumer Protection.
          A bill to amend 1956 PA 218, entitled
    "The insurance code of 1956,"
    by amending sections 2006 and 3142 (MCL 500.2006 and 500.3142),
    section 2006 as amended by 2017 PA 223 and section 3142 as amended
    by 2019 PA 21.
                    THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
       Sec. 2006. (1) A person must pay on a timely basis to its
 insured, a person directly entitled to benefits under its insured's
 insurance contract, or a third party tort claimant the benefits
 provided under the terms of its policy, or, in the alternative, the
 person must pay to its insured, a person directly entitled to
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 benefits under its insured's insurance contract, or a third party
 tort claimant 12% interest, as provided in subsection (4), on
 claims not paid on a timely basis. Failure to pay claims on a
 timely basis or to pay interest on claims as provided in subsection
 (4) is an unfair trade practice unless the claim is reasonably in
 dispute.
       (2) A person shall not be found to have committed an unfair
 trade practice under this section if the person is found liable for
 a claim pursuant to a judgment rendered by a court of law, and the
 person pays to its insured, the person directly entitled to
 benefits under its insured's insurance contract, or the third party
 tort claimant interest as provided in subsection (4).
       (3) An insurer shall specify in writing the materials that
 constitute a satisfactory proof of loss not later than 30 days
 after receipt of a claim unless the claim is settled within the 30
 days. If proof of loss is not supplied as to the entire claim, the
 amount supported by proof of loss is considered paid on a timely
 basis if paid within not later than 60 days after receipt of proof
 of loss by the insurer. Any part of the remainder of the claim that
 is later supported by proof of loss is considered paid on a timely
 basis if paid within not later than 60 days after receipt of the
 proof of loss by the insurer. If the proof of loss provided by the
 claimant contains facts that clearly indicate the need for
 additional medical information by the insurer in order to determine
 its liability under a policy of life insurance, the claim is
 considered paid on a timely basis if paid within not later than 60
 days after receipt of necessary medical information by the insurer.
 Payment of a claim is not untimely during any period in which the
 insurer is unable to pay the claim if there is no recipient who is
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 legally able to give a valid release for the payment, or if the
 insurer is unable to determine who is entitled to receive the
 payment, if the insurer has promptly notified the claimant of that
 inability and has offered in good faith to promptly pay the claim
 on determination of who is entitled to receive the payment.
       (4) If All of the following apply if benefits are not paid on
 a timely basis: , the
       (a) The benefits paid bear simple interest as provided in
 subdivision (b) from a date beginning 60 days after satisfactory
 proof of loss was received by the insurer, at the rate of 12% per
 annum, if the claimant is the insured or a person directly entitled
 to benefits under the insured's insurance contract. If the claimant
 is a third party tort claimant, the benefits paid bear interest as
 provided in subdivision (b) from a date beginning 60 days after
 satisfactory proof of loss was received by the insurer, at the rate
 of 12% per annum if the liability of the insurer for the claim is
 not reasonably in dispute, the insurer has refused payment in bad
 faith, and the bad faith was determined by a court of law. The
 interest must be paid in addition to and at the time of payment of
 the loss. If the loss exceeds the limits of insurance coverage
 available, interest is payable based on the limits of insurance
 coverage rather than the amount of the loss. If payment is offered
 by the insurer but is rejected by the claimant, and the claimant
 does not subsequently recover an amount in excess of the amount
 offered, interest is not due. Interest paid as provided in this
 section must be offset by any award of interest that is payable by
 the insurer as provided in the award.
       (b) The interest rate charged under this section must be as
 follows:
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       (i) 1.5% per month for the first 30 days a payment is late.
       (ii) 2% per month if the payment is 31 to 90 days late.
       (iii) 4% per month if the payment is more than 90 days late.
       (5) If a person contracts to provide benefits and reinsures
 all or a portion of the risk, the person contracting to provide
 benefits is liable for interest due to an insured, a person
 directly entitled to benefits under its insured's insurance
 contract, or a third party tort claimant under this section if a
 reinsurer fails to pay benefits on a timely basis.
       (6) If there is any specific inconsistency between this
 section and chapter 31 or the worker's disability compensation act
 of 1969, 1969 PA 317, MCL 418.101 to 418.941, the provisions of
 this section do not apply. Subsections (7) to (14) do not apply to
 a person regulated under the worker's disability compensation act
 of 1969, 1969 PA 317, MCL 418.101 to 418.941. Subsections (7) to
 (14) do not apply to the processing and paying of Medicaid claims
 that are covered under section 111i of the social welfare act, 1939
 PA 280, MCL 400.111i.
       (7) Subsections (1) to (6) do not apply and subsections (8) to
 (14) do apply to health plans when paying claims to health
 professionals, health facilities, home health care providers, and
 durable medical equipment providers, that are not pharmacies and
 that do not involve claims arising out of chapter 31 or the
 worker's disability compensation act of 1969, 1969 PA 317, MCL
 418.101 to 418.941. This section does not affect a health plan's
 ability to prescribe the terms and conditions of its contracts,
 other than as provided in this section for timely payment.
       (8) Each health professional, health facility, home health
 care provider, and durable medical equipment provider in billing
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 for services rendered and each health plan in processing and paying
 claims for services rendered shall use the following timely
 processing and payment procedures:
       (a) A clean claim must be paid within 45 not later than 30
 days after receipt of the claim by the health plan. A clean claim
 that is not paid within 45 not later than 30 days after receipt of
 the claim by the health plan bears simple interest at a rate of 12%
 per annum.specified in subsection (4)(b).
       (b) A health plan shall notify the health professional, health
 facility, home health care provider, or durable medical equipment
 provider within by not later than 30 days after receipt of the
 claim by the health plan of all known reasons that prevent the
 claim from being a clean claim.
       (c) A health professional, health facility, home health care
 provider, or durable medical equipment provider has 45 30 days, and
 any additional time the health plan permits, after receipt of a
 notice under subdivision (b) to correct all known defects. The 45-
 day 30-day time period in subdivision (a) is tolled from the date
 of receipt of a notice to a health professional, health facility,
 home health care provider, or durable medical equipment provider
 under subdivision (b) to the date of the health plan's receipt of a
 response from the health professional, health facility, home health
 care provider, or durable medical equipment provider.
       (d) If a health professional's, health facility's, home health
 care provider's, or durable medical equipment provider's response
 under subdivision (c) makes the claim a clean claim, the health
 plan shall pay the health professional, health facility, home
 health care provider, or durable medical equipment provider within
 by not later than the 45-day 30-day time period under subdivision
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 (a), excluding any time period tolled under subdivision (c).
       (e) If a health professional's, health facility's, home health
 care provider's, or durable medical equipment provider's response
 under subdivision (c) does not make the claim a clean claim, the
 health plan shall notify the health professional, health facility,
 home health care provider, or durable medical equipment provider of
 an adverse claim determination and of the reasons for the adverse
 claim determination within by not later than the 45-day 30-day time
 period under subdivision (a), excluding any time period tolled
 under subdivision (c).
       (f) A health professional, health facility, home health care
 provider, or durable medical equipment provider must bill a health
 plan within by not later than 1 year after the date of service or
 the date of discharge from the health facility in order for a claim
 to be a clean claim.
       (g) A health professional, health facility, home health care
 provider, or durable medical equipment provider shall not resubmit
 the same claim to the health plan unless the time period under
 subdivision (a) has passed or as provided in subdivision (c).
       (h) A health plan that is a qualified health plan for the
 purposes of 45 CFR 156.270 and that, as required in 45 CFR
 156.270(d), provides a 3-month grace period to an enrollee who is
 receiving advance payments of the premium tax credit and who has
 paid 1 full month's premium may pend claims for services rendered
 to the enrollee in the second and third months of the grace period.
 A claim during the second and third months of the grace period is
 not a clean claim under this section, and interest is not payable
 under subdivision (a) on that claim if the health plan has complied
 with the notice requirements of 45 CFR 155.430 and 45 CFR 156.270.
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       (9) Notices required under subsection (8) must be made in
 writing or electronically.
       (10) If a health plan determines that 1 or more services
 listed on a claim are payable, the health plan shall pay for those
 services and shall not deny the entire claim because 1 or more
 other services listed on the claim are defective. This subsection
 does not apply if a health plan and health professional, health
 facility, home health care provider, or durable medical equipment
 provider have an overriding contractual reimbursement arrangement.
       (11) A health plan shall not terminate the affiliation status
 or the participation of a health professional, health facility,
 home health care provider, or durable medical equipment provider
 with a health maintenance organization provider panel or otherwise
 discriminate against a health professional, health facility, home
 health care provider, or durable medical equipment provider because
 the health professional, health facility, home health care
 provider, or durable medical equipment provider claims that a
 health plan has violated subsections (7) to (10).
       (12) A health professional, health facility, home health care
 provider, durable medical equipment provider, or health plan
 alleging that a timely processing or payment procedure under
 subsections (7) to (11) has been violated may file a complaint with
 the director on a form approved by the director and has a right to
 a determination of the matter by the director or his or her the
 director's designee. This subsection does not prohibit a health
 professional, health facility, home health care provider, durable
 medical equipment provider, or health plan from seeking court
 action.
       (13) In addition to any other penalty provided for by law, the
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 director may impose a civil fine of not more than $1,000.00 for
 each violation of subsections (7) to (11) not to exceed $10,000.00
 in the aggregate for multiple violations.
       (14) As used in subsections (7) to (13):
       (a) "Clean claim" means a claim that does all of the
 following:
       (i) Identifies the health professional, health facility, home
 health care provider, or durable medical equipment provider that
 provided service sufficiently to verify, if necessary, affiliation
 status and includes any identifying numbers.
       (ii) Sufficiently identifies the patient and health plan
 subscriber.
       (iii) Lists the date and place of service.
       (iv) Is a claim for covered services for an eligible
 individual.
       (v) If necessary, substantiates the medical necessity and
 appropriateness of the service provided.
       (vi) If prior authorization is required for certain patient
 services, contains information sufficient to establish that prior
 authorization was obtained.
       (vii) Identifies the service rendered using a generally
 accepted system of procedure or service coding.
       (viii) Includes additional documentation based on services
 rendered as reasonably required by the health plan.
       (b) "Health facility" means a health facility or agency
 licensed under article 17 of the public health code, 1978 PA 368,
 MCL 333.20101 to 333.22260.
       (c) "Health plan" means all of the following:
       (i) An insurer providing benefits under a health insurance
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 policy, including a policy, certificate, or contract that provides
 coverage for specific diseases or accidents only, an expense-
 incurred vision or dental policy, or a hospital indemnity, Medicare
 supplement, long-term care, or 1-time limited duration policy or
 certificate, but not to payments made to an administrative services
 only or cost-plus arrangement.
        (ii) A MEWA regulated under chapter 70 that provides hospital,
 medical, surgical, vision, dental, and sick care benefits.
        (d) "Health professional" means an individual licensed,
 registered, or otherwise authorized to engage in a health
 profession under article 15 of the public health code, 1978 PA 368,
 MCL 333.16101 to 333.18838.
        (15) After December 31, 2017, this section applies to a
 nonprofit dental care corporation operating under 1963 PA 125, MCL
 550.351 to 550.373.
        (16) Beginning January 1, 2026, and by not later than January
 1 each year thereafter, an insurer shall report all of the
 following information on its website:
        (a) The number of claims as described in subsection (4) paid
 not later than 60 days after the claim being filed.
        (b) The number of claims that were not timely paid under this
 act.
        (c) The amount of interest paid for the untimely payment of
 claims.
        Sec. 3142. (1) Personal protection insurance benefits are
 payable as loss accrues.
        (2) Subject to subsection (3), personal protection insurance
 benefits are overdue if not paid within by not later than 30 days
 after an insurer receives reasonable proof of the fact and of the
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 amount of loss sustained. Subject to subsection (3), if reasonable
 proof is not supplied as to the entire claim, the amount supported
 by reasonable proof is overdue if not paid within by not later than
 30 days after the proof is received by the insurer. Subject to
 subsection (3), any part of the remainder of the claim that is
 later supported by reasonable proof is overdue if not paid within
 by not later than 30 days after the proof is received by the
 insurer. For the purpose of calculating the extent to which
 benefits are overdue, payment must be treated as made on the date a
 draft or other valid instrument was placed in the United States
 mail in a properly addressed, postpaid envelope, or, if not so
 posted, on the date of delivery.
       (3) For personal protection insurance benefits under section
 3107(1)(a), if a bill for the product, service, accommodations, or
 training is not provided to the insurer within by not later than 90
 days after the product, service, accommodations, or training is
 provided, the insurer has 60 days in addition to 30 days provided
 under subsection (2) to pay before the benefits are overdue.
       (4) An overdue payment bears simple interest at the