Bill Text: MI HB5151 | 2013-2014 | 97th Legislature | Introduced

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Bill Title: Insurance; unfair trade practices; no interest for unpaid claims due to circumstances not within insurer's control; clarify. Amends sec. 2006 of 1956 PA 218 (MCL 500.2006).

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2014-02-11 - Re-referred To Committee On Insurance [HB5151 Detail]

Download: Michigan-2013-HB5151-Introduced.html

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HOUSE BILL No. 5151

 

November 13, 2013, Introduced by Reps. Leonard, Goike, Glardon, Hovey-Wright, Segal and Cochran and referred to the Committee on Insurance.

 

     A bill to amend 1956 PA 218, entitled

 

"The insurance code of 1956,"

 

by amending section 2006 (MCL 500.2006), as amended by 2004 PA 28.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 2006. (1) A person must shall pay on a timely basis to

 

its insured, an individual or entity directly entitled to benefits

 

under its insured's contract of insurance, or a third party tort

 

claimant the benefits provided under the terms of its policy, or,

 

in the alternative, the person must shall pay to its insured, an

 

individual or entity directly entitled to benefits under its

 

insured's contract of insurance, 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 has not be found to have committed an

 

unfair trade practice under this section if the person is found

 

liable for a claim pursuant to under a judgment rendered by a court

 

of law , and the person pays to its insured, an individual or

 

entity directly entitled to benefits under its insured's contract

 

of insurance, or a 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 shall be is considered paid on a

 

timely basis if paid within 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 shall be is considered paid on a

 

timely basis if paid within 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 shall be is

 

considered paid on a timely basis if paid within 60 days after

 

receipt of necessary medical information by the insurer. Payment of

 

a claim shall is not be untimely during any period in which the

 

insurer is unable to pay the claim when if there is no recipient

 

who is legally able to give a valid release for the payment, or

 

where 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 upon determination of who is entitled to

 

receive the payment.

 

     (4) If benefits are not paid on a timely basis the benefits

 

paid shall bear simple interest from a date 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 an individual

 

or entity directly entitled to benefits under the insured's

 

contract of insurance. If the claimant is a third party tort

 

claimant, then the benefits paid shall bear interest from a date 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 shall 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 shall be payable is due based upon 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. If benefits are not

 

paid within 60 days after satisfactory proof of loss was received

 

by the insurer due to circumstances not within the control of the

 

insurer, interest is not due. Interest paid pursuant to under this

 

section shall be offset by any award of interest that is payable by

 

the insurer pursuant to the award.

 

     (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, an individual or

 

entity directly entitled to benefits under its insured's contract

 

of insurance, or a third party tort claimant under this section

 

where if a reinsurer fails to pay benefits on a timely basis.

 

     (6) If there is any specific inconsistency between this

 

section and sections 3101 to 3177 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 an entity 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 sections 3101 to 3177 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

 

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 shall be paid within 45 days after receipt

 

of the claim by the health plan. A clean claim that is not paid

 

within 45 days shall bear simple interest at a rate of 12% per

 

annum.

 

     (b) A health plan shall notify the health professional, health

 

facility, home health care provider, or durable medical equipment

 

provider within 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, and durable medical equipment provider have 45 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 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

 

the 45-day time period under subdivision (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 the 45-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 shall bill a health

 

plan within 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 frame in

 

subdivision (a) has passed or as provided in subdivision (c).

 

     (9) Notices required under subsection (8) shall 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 commissioner director of the department of insurance and

 

financial services on a form approved by the commissioner director

 

of the department of insurance and financial services and has a

 

right to a determination of the matter by the commissioner director

 

of the department of insurance and financial services or his or her

 

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. A

 

health plan described in subsection (14)(c)(iv) is subject only to

 

the procedures and penalties provided for in subsection (13) and

 

section 402 of the nonprofit health care corporation reform act,

 

1980 PA 350, MCL 550.1402, for a violation of a timely processing

 

or payment procedure under subsections (7) to (11).

 

     (13) In addition to any other penalty provided for by law, the

 

commissioner director of the department of insurance and financial

 

services 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 upon 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 an expense-incurred

 

hospital, medical, surgical, vision, or dental policy or

 

certificate, including any policy or certificate that provides

 

coverage for specific diseases or accidents only, or any 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.

 

     (iii) A health maintenance organization licensed or issued a

 

certificate of authority in this state.

 

     (iv) A health care corporation for benefits provided under a

 

certificate issued under the nonprofit health care corporation

 

reform act, 1980 PA 350, MCL 550.1101 to 550.1704, but not to

 

payments made pursuant to under an administrative services only or

 

cost-plus arrangement.

 

     (d) "Health professional" means a health professional licensed

 

or registered under article 15 of the public health code, 1978 PA

 

368, MCL 333.16101 to 333.18838.