DIFS Utilization Review Decisions Favor Hospitals

The Michigan Department of Insurance and Financial Services (DIFS) issued in early April two important utilization review decisions in favor of hospitals related to auto no-fault insurance reimbursement. Under the new system enacted as part of Public Act (PA) 21 of 2019, hospitals are entitled to more than Medicare reimbursement when the cost of treatment is covered by the auto no-fault insurance system. PA 19 does not adequately define Medicare rates and some auto no-fault insurers have paid less than appropriate amounts for hospital services rendered to auto accident patients. These decisions are extremely helpful in establishing the appropriate methodology to use in determining auto no-fault insurance reimbursement moving forward.

In the case of Hurley Medical Center v. Pioneer State Mutual Insurance Company, DIFS Director Anita Fox found that Medicare “pass-through” payments for graduate medical education, nursing and allied health, and the ancillary adjustment are payable under section 500.3157 of the Michigan Insurance Code. These amounts are payable in addition to the appropriate base payment rate multiplied by the diagnosis related group (DRG) relative weight. The ultimate amount in dispute in this case is $3,500, which the insurer now owes to Hurley Medical Center.

The case of Hurley Medical Center v. Progressive Michigan Insurance Company involved a dispute over the appropriate DRG. Progressive Michigan disputed the DRG, which totaled $58,126 after the amount was multiplied pursuant to PA 19. In response to the bill from Hurley, Progressive paid a DRG-multiplied amount of $26,642. After review, Fox found that Hurley Medical Center billed under the appropriate DRG, more than doubling the amount owed to the hospital. The amount payable to Hurley was reduced by $200 because the multiplied DRG amount exceeded Hurley’s charge for the service by that amount.

In each case, the insurer may appeal the finding to the circuit court. The MHA is tracking further developments in these cases, as well as several other utilization review appeals pending before DIFS. The MHA is also preparing a Utilization Review Appeals Toolkit to guide members through the utilization review (UR) process including the deadlines for filing UR appeals, specific information required for filings, a pre-filing checklist and a sample cover letter for filings. That information is expected to be sent to members by the end of April. For more information about these decisions and other auto no-fault insurance reimbursement issues, contact Laura Appel at the MHA.