New Fee Regulations Under the Amended No-Fault Act

Since May, 2019, the No-Fault provider community has been living under the Sword of Damocles and it is about to descend come July 1, 2021.  How’s that for imagery?  Well, it may be hyperbolic but many in the No-Fault community feel great apprehension with the advent of Fee Schedules and the new, uncertain world for accident victims and their service providers that Fee Schedules will bring.  

The new regulations are a revolution in the No-Fault law and there is a lot to it, more than can be easily covered and digested in one article. Therefore, this article will serve as a basic introduction; intended to provide information about the fee regulations on the horizon and suggestions for your preparation.   Other articles will follow.  

Before we dive in, I have an important word or two here for you about the actual words used by the Legislature and the words I have chosen for this article.  This topic is commonly referred to as fee “schedules” but the Legislature did not create fee schedules at all.  Did I just blow your mind?  I know, this sounds crazy because this topic has been widely discussed by many as the new fee schedules under the amended No-Fault Act.  Here’s the thing:  the Legislature did not create fee schedules, it created fee caps that regulate the amount you may receive for services, products or accommodations.  So, the phrase fee “schedules” is actually a misnomer and what was created is more appropriately called regulations regarding fees or plainly, the fee caps.         

1. What are the new fee regulations?

Fee caps are a key component of the amended No-Fault Act.  They are found in a single section of the Act, that being MCL 500.3157 and are addressed in many subparts under that section.  Specifically, you find the regulation regarding fees at:  MCL 500.3157(2) – (14).  While there are different fee caps dependent on the kind of provider (i.e., hospital, rehab hospital, Medicaid provider, etc), there are two significant fee caps that will affect many in the post-acute world.    

The first, found at Section 3157(2), provides that a provider will receive at most 200% Medicare rate if the service has a corresponding Medicare rate on the Medicare fee schedule.   The maximum percentage decreases to 195% in 2022, and 190% in 2023.  In effect, if Medicare’s fee schedule provides an amount payable for the service you provide, you look to that Medicare fee schedule for your possible maximum recovery.  You can find the Medicare fee schedule at  Be alert that you need a code (either CPT or HCPCS) to search for a possible, associated rate.  

Some examples of common codes are:

Physical TherapyOccupational TherapySpeech TherapySocial WorkHome Care
97163 Eval, high complexity97167 Eval, high complexity96125 Cog Eval 90832 Indv Psychotherapy 99509 ADL
97164 Re-Eval97168 Re-Eval92507 Indv90837 Indv Psychotherapy 99507 Cath Care
97010 hot/cold packs97166 Eval, mod complexity92508 Group therapy90833 Psychotherapy eval99347-99350 Established Patient
97032 Elec stimulation97165 Eval, low complexity92521 Eval fluency
99341-99345 New Patient
97035 Ultrasound97110 Therapeutic exercise92522 Eval sound 
94005 Vent Assist
97110 Therapeutic exercise97150 Group Therapy92524 Eval voice 90834 Indv Psychotherapy 99503 Respiratory Therapy

The Medicare fee schedule is code specific and when you search the Medicare fee schedule, you will see a search page that looks like this:

What if the Medicare fee schedule does not have a rate for the service you provide?  You look to Section 3157(7)(a) for the second fee cap largely applicable to post-acute providers.  This fee cap will apply when 3157(2) does not (there is no Medicare rate for your coded service or there is no code).  This fee cap is referred to as the “55% schedule” because it provides that a provider will receive at most 55% of its 1/1/19 charge master for that same service.  If no 1/1/19 charge master, you receive at most, 55% of your average charge as of 1/1/19 for that service.  The maximum percentage decreases to 54% in 2022, and 52.5% in 2023.  To be clear, this appears to mean that those whose services are not covered by Medicare, and those who were not in business as of 1/1/19, will be covered by NEITHER fee cap under the amended Act.  This has extremely important potential for business planning. Stated another way: new businesses providing non-Medicare services appear to not be covered by the 55% fee cap.

Importantly, keep in mind that both “fee schedules” will operate as “fee caps” because the legislature essentially stated as such in both (2) and (7)(a) indicating that the schedules provide the most that is recoverable.   So, 200% Medicare or 55% charge master/average charge is the maximum payment; it is not mandated as the actual payment amount.  Thus, insurers may argue that less than 200% Medicare or less than 55% charge master/average charge is reasonable.    

2.  When do the new fee regulations go into effect?

Unless there is a legislative change, fee caps become effective on 7/1/21.  Remarkably, for the first time in the history of No-Fault insurance, not only will there be fee caps other than “reasonable and customary” but one of them is linked to another system, Medicare, as discussed above. 

3. What should you be doing now to prepare?

While it may be appealing, the “ostrich in the sand” approach is one I do not recommend when it comes to preparing for the advent of the new fee regulations.  The fee caps will redefine the No-Fault landscape and the providers who are prepared to meet the administrative and financial challenges are the providers poised to weather the storm.  So, right now, you should be evaluating whether your services may be coded and if those codes have associated Medicare rates.  If not, you should determine if you had a charge master on 1/1/19.  If no charge master, ask: what was your average charge for each service you provided on 1/1/19?  Consider whether there are services you provide now that were not on a charge master and may be so new that there was no 1/1/19 average charge.  Those services should be reimbursed under the general rule of MCL 500.3157(1):  reasonable and customary charge.  

Consider also these five things as you work to understand what may be your reimbursable rate maximum after 7/1/21:

a. If you have a coded service for which there is a Medicare associated rate, that rate should apply without limitation regarding Medicare rules.  Section 3157(15) defines “Medicare” for purposes of the No-Fault Act to mean the fee for service without regard to Medicare’s limitations.  Of course, there are new limitations under the No-Fault Act to contend with:  the Utilization Review provision and the rules promulgated by DIFS.     

b.  Your reimbursement rate will fluctuate as the Medicare rate adjusts.  Section 3157(8) addresses this point specifically.  So, if your reimbursement is tied to Medicare, it will adjust as Medicare rates adjust.  Also, be mindful that codes change, are deleted, and revised on an annual basis.  What may not be coded today, may be coded next year.  Likewise, there may be other codes that could apply to your services now or later, dependent on code changes promulgated by the American Medical Association or CMS.  

c.   200% Medicare is not permitted to exceed your average charge on 1/1/19.  Section 3157(8) makes this point.  Thus, even if the Medicare fee schedule applies to your service, whether you provided that service on 1/1/19 is significant because the average charge for the service as of that date is a cap on reimbursement from the insurer.   

d. Your charge master or average charge adjusts annually by the Medical care Component of the Consumer Price Index.  If you are subject to the 55% fee cap, the percentage recovery decreases to 54% in 2022 and 52.5% in 2023 and thereafter.  However, your charge master or average charge is also supposed to adjust annually by the percentage change in the Medical Care Component of the Consumer Price Index for the year preceding the adjustment.    

e.  Neither Medicare fee schedule nor 55% fee cap may apply to you.  What fee regulation applies to your service on and after 7/1/21 when:  there is no Medicare associated rate for your service, you had no charge master on 1/1/19, you had no average charge for the service on 1/1/19, and you were not in business on 1/1/19?  In this situation, it appears that you default to the general rule of MCL 500.3157(1):  reasonable and customary charge.  For business planning purposes, this point may be particularly important as new businesses providing non-Medicare services appear to not be covered by the 55% fee cap.

As you move forward, know that Miller & Tischler stands ready to navigate the waters about the new fee regulations for your specific case and all matters.  We welcome you contacting us with specific questions and to see how we can put our expertise to work for you.      

Maureen H. Kinsella
Miller & Tischler, PC