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How Utilization Review Can Keep No-Fault Costs Down

Michigan has a new auto insurance law in place that requires insurance companies to implement utilization review, which determines the medical necessity for treatment after a car accident. The new law, effective December 18, 2020, can also help to keep no-fault costs down for insurers.

The utilization review process allows insurers and the Michigan Catastrophic Claims Association (MCCA) — the excess coverage carrier for the no-fault system — to gather additional information to determine whether services, treatment, accommodations or medical products were over-utilized or inappropriate. Within 30 days of receiving a provider’s bill, an insurer or the MCCA may request that a medical provider submit a written explanation concerning the need for treatment that is not usually required. They could fall into one of these four categories:

  • The choice of treatment
  • The duration of the treatment
  • The frequency of the treatment
  • An extension of the treatment

Medical bills, records or any other information regarding the medical treatment, products, services or accommodations can be requested by the insurance company, along with the written explanation.

Prior to the passage of the statute, the claims-handling process was the only way these matters could be resolved. Under the new law, medical providers are permitted to appeal to the Department of Insurance and Financial Services (DIFS) regarding utilization determinations within 90 days. After the provider has filed an appeal, the insurer or MCCA may file a reply within 21 days.

The DIFS has 28 days from the date of receiving the insurer’s reply to make a determination. Following its review, the DIFS will issue its ruling and send the order to both the health care provider and the insurer. The decision made by the DIFS must be based on the written documentation that was submitted by both parties.

The attorneys of Bowen, Radabaugh & Milton, P.C. have extensive experience representing insurance providers and their insureds in matters concerning no-fault and obtaining favorable results. Call 248.641.8000 or contact us online to schedule a consultation at our Troy, Michigan office.