Michigan Prompt Pay Rules For Health Claims
Michigan law sets deadlines for paying health claims and adds interest when claims are paid late. The rules reach insurers, Blue Cross Blue Shield of Michigan as a health care corporation, and insurers that administer noninsured benefit plans. Here is what employers should know.
The 45-Day Rule For Provider Claims
45 Days To Pay
Under the Insurance Code, a clean claim from a health professional, health facility, home health care provider or durable medical equipment provider must be paid within 45 days after the health plan receives it. Employers can use this timeline as a reference when reviewing how a carrier or administrator handles claims.
12 Percent Interest
A clean claim that is not paid within 45 days bears simple interest at 12 percent per year. The interest accrues on the unpaid amount, so a pattern of late payments can add up. Self-funded employers in particular should understand who bears that cost under their agreements.
30 Days To Explain
The health plan must notify the provider within 30 days after receipt of all known reasons the claim is not a clean claim. That notice gives the provider a chance to supply what is missing, so ask for copies of these notices in turnaround reporting if claim delays are a concern.
Pharmacies Are Different
These provider rules do not apply to pharmacies, which are handled under other parts of the statute. Pharmacy claims follow different rules, and prescription benefits are often handled through a separate vendor, so ask counsel or your advisor how pharmacy payment timing is addressed in your contracts.
Rules For Nonprofit Health Care Corporations
60 Days And 12 Percent
Under the Nonprofit Health Care Corporation Reform Act, benefits payable to a member that are not paid on a timely basis bear simple interest from 60 days after a satisfactory claim form was received, at 12 percent per year. Counsel can explain how this applies to your plan arrangement.
Claim Form Notice
The corporation must specify in writing what makes up a satisfactory claim form within 30 days after receiving a claim, unless the claim is settled within 30 days. This sets an early checkpoint in the process, so claim forms and supporting documents should be complete when first submitted.
Provider Claims Too
The 45-day clean claim provisions of the Insurance Code also apply to a health care corporation. Employers whose coverage is insured through a health care corporation should not assume the timing rules differ, and can ask counsel to confirm how they apply to their arrangement.
Noninsured Benefit Plans
Interest Paid By The Plan
When an insurer provides services in connection with a noninsured benefit plan and benefits are not paid on a timely basis, they bear simple interest at 12 percent from 60 days after a satisfactory claim form was received. The noninsured benefit plan pays that interest in addition to the claim.
Why Employers Care
For a self-funded employer, late claim interest becomes a plan cost, so claim turnaround standards belong in administrator agreements. The interest is a plan expense for the employer, and delays also frustrate employees and providers, so ask how the administrator measures and reports payment timing.
Check With Counsel
How state prompt pay laws apply to a particular self-funded ERISA plan is a legal question. Have your attorney confirm your situation. Counsel can also say whether any state requirement applies at all, and how it interacts with federal rules for the plan, before you rely on any of the timelines above.
Practical Steps For Employers
Ask For Turnaround Reports
Request claim processing time reports from your carrier or administrator and review them at renewal. Look at how long claims take from receipt to payment, how many are pended and how many are denied or appealed, and ask about any trend that looks unusual.
Build It Into Contracts
Include payment timeliness standards and responsibility for interest in your administrative services agreement. Ask counsel to review the language, including how late payment interest is allocated, what reporting the administrator will provide and what remedies apply if standards are missed. Agree on the reporting format at signing.
Route Complaints
If employees report delayed payment, collect the claim details and escalate through your carrier or advisor. Keep a simple log of dates, claim numbers and responses so patterns are visible, and share the log at renewal or whenever a service review is held.
Frequently Asked Questions
How fast must Michigan insurers pay clean provider claims?
Within 45 days after receipt. Late payment bears 12 percent simple interest.
What is a clean claim?
A claim with no known reason that prevents it from being paid. The health plan must tell the provider within 30 days why a claim is not clean.
Do the rules apply to Blue Cross Blue Shield of Michigan?
The Nonprofit Health Care Corporation Reform Act sets a 60-day interest rule for member benefits and applies the 45-day clean claim provisions.
Does a self-funded plan pay the interest?
For noninsured benefit plans administered by an insurer, the statute says the plan pays interest on late benefits. Confirm the application to your plan with counsel.
Where do I find the statute?
In the Michigan Compiled Laws: MCL 500.2006, MCL 500.5208a and MCL 550.1403.
Is this legal advice?
No. This page is general information, not legal advice. Confirm current law and how it applies to your plan with your attorney.
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