Michigan External Review of Denied Claims
How the Patient’s Right to Independent Review Act lets an employee on an insured plan take a denied claim to the state, with the deadlines, the steps and what employers should tell their people.
What External Review Is
External review gives an employee on an insured plan a second look at a denial from someone other than the carrier. The Act is 2000 Public Act 251.
Who the Act Covers
Section 5 says the act applies to all health carriers, with exceptions such as Medicare plans and the federal employees health benefits program. The text does not address self-funded employer plans, which answer to ERISA and the Department of Labor.
Who Can Request
A covered person or the covered person’s authorized representative can file the request. A doctor, attorney, parent or spouse can act with the member’s written authorization. Employers can help by telling employees that authorization must be in writing and by pointing them to the carrier’s form. HR should not complete the request on behalf of an employee unless the employee asks for that help.
First, the Carrier’s Own Appeal
The member must exhaust the carrier’s internal grievance process first. Exceptions include a carrier waiver and a carrier that fails to decide on time. Employees should keep copies of every appeal letter, response and deadline so they can show that step was completed. HR can help by explaining the carrier’s process in plain language, though the employee decides how to proceed.
Where the Request Goes
Requests go to the state insurance regulator’s office, which accepts or rejects them for review. Required materials include the request form and a copy of the final adverse determination. Employees should send complete paperwork the first time, since missing materials can delay a review. HR can remind staff to check the final denial letter for instructions and deadlines before preparing a request.
Who Decides
Contract disputes are decided by the state. Medical necessity and clinical questions go to an independent review organization, which makes a recommendation. The state director issues the decision. Employees often assume the carrier makes the last call, so it helps to explain that an outside reviewer may take part. Encourage them to ask their doctor for supporting records, and remind them to check the notice for details.
What a Reversal Means
If the decision reverses the carrier, the carrier must immediately approve the coverage at issue. A carrier may also reverse itself during review, which ends the review. Employers can tell employees to contact the provider and the carrier to confirm the approval and timing of care once a decision arrives. Keeping the written decision on file helps if the carrier’s later claim handling differs.
The Clocks to Know
The statute and the state’s consumer guide state a few of these differently. We show both so you can see why.
Standard Request Deadline
The statute allows 120 days after receipt of the adverse determination notice for requests after December 31, 2016. The state’s consumer guide tells members they have 127 days after the final adverse determination. Treat the earlier date as the deadline.
Expedited Review Criteria
The standard timeline must seriously jeopardize the member’s life or health, substantiated by a physician, and the member must also have filed an expedited internal grievance. Because this standard is demanding, an employee should talk with their doctor early about whether it applies. HR can remind staff that the expedited route has more conditions than the standard one and that counsel can advise on questions.
Expedited Request Window
The statute allows an expedited request within 10 days after the member receives the adverse determination. Employees facing urgent care should act quickly and check the denial notice for the exact deadline, since it can differ by plan type. HR can help them find the right contact and keep a record of the date received.
Expedited Decision Time
The statute sets the independent review organization recommendation at not more than 36 hours after the director received the request, and the director’s decision within 24 hours after that. The state’s consumer guide describes expedited review as conducted within 72 hours.
Standard Decision Time
The independent review organization recommends within 14 days after assignment, and the director gives notice within 7 business days after receiving the recommendation. These are statutory targets, and actual timing depends on the case and on when the reviewer receives complete records. Employers should set expectations accordingly and encourage employees to keep their providers informed while the review is pending.
After the Decision
An upheld denial is the final administrative remedy. Either party can seek judicial review in circuit court within 60 days of the decision. The state guide says appeals go to Ingham County or the member’s county. Employees considering court should speak with an attorney promptly, since deadlines are short. HR cannot give legal advice but can explain where the decision letter describes the next steps.
What HR Should Do With This
Know Which Plan You Have
External review under this act applies to insured plans. A self-funded plan follows ERISA and federal procedures, which your administrator should describe. Employers should confirm how the plan is funded and share the right instructions with employees before anyone needs them. Counsel or the administrator can confirm which route applies, and the plan documents should explain it.
Put the Deadline Where Employees See It
Remind employees that the clock starts when they receive the notice. Employees often miss deadlines because they wait for a second letter. A short reminder in the benefits guide, on the intranet and in any denial-support materials helps employees act in time. Include the date a notice is received as a first step, and encourage them to write it down.
Keep the Denial Letter
The request needs a copy of the final adverse determination. Tell employees to keep every letter from the carrier. A simple folder, paper or electronic, for letters, claim numbers and notes makes the process easier. HR can suggest this practice in enrollment materials and remind employees that the final determination is needed when they file.
Watch for Pattern Denials
Repeated denials of the same type are a renewal and carrier performance issue. Bring the letters to your renewal conversation. Track the carrier, the type of service and the reason given for each denial, without sharing personal health details beyond what is needed. A pattern can support a stronger conversation with the carrier than a single complaint.
Know the Cost
The statute does not state a fee charged to the member. The state may charge review organizations an application fee. Employees may still have other costs, such as time spent gathering records or fees from their own advisers, so set realistic expectations. Counsel can confirm the current fee rules, since they can change.
Pair It With Prior Authorization
Many external reviews begin as a prior authorization denial. See our prior authorization guide for the carrier’s response deadlines. Denials at the authorization stage are often the earliest chance to resolve a dispute, so early support from HR and the provider matters. Employees who understand both processes are better prepared if the matter moves forward to an outside review.
Questions Michigan Employers Ask
Does This Apply to Our Self-Funded Plan?
The act applies to health carriers and does not address self-funded employer plans. Ask your administrator which review process applies.
How Long Does an Employee Have to Ask?
The statute allows 120 days after receiving the notice. The state consumer guide says 127 days. Use the earlier one.
Does the Employee Have to Appeal to the Carrier First?
Yes, with exceptions for a carrier waiver or a carrier that fails to decide on time.
Can a Doctor File the Request?
Yes, with the member’s written authorization. For experimental or investigational denials the treating provider also submits a certification form.
What If the State Reverses the Carrier?
The carrier must immediately approve the coverage at issue.
Is There an Expedited Process?
Yes, for situations that seriously jeopardize life or health, with physician substantiation. It is not available for services already received.
Does It Cost the Employee Anything?
The statute does not state a member fee.
Is This Legal Advice?
No. This is general information from benefits advisors. Consult your attorney.
Related Guides
Related reading: Michigan Benefits Compliance Hub · Michigan Prior Authorization Law · Autism Insurance Mandate · Michigan Mental Health Parity
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Claims, Appeals And External Review
What a plan must offer when a claim is denied.
Laws and rules referenced
MCL 550.1901 et seq. — Michigan Patient’s Right to Independent Review Act (2000 PA 251).
42 U.S.C. § 300gg-19 and 29 C.F.R. § 2560.503-1 — Internal claims and appeals, and external review.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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