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Hello Friends. We have a lot to report in this edition. First, we are finally starting to get some case law interpreting the post-2019 provisions on the no-fault law, particularly for the fee caps of section 3157.
I. CHARGES VERSUS REIMBURSEMENTS
The 2019 reforms adopted a system of charge regulation for the first time. It’s important to understand that the new fee caps do not regulate what plaintiffs may charge. Rather, they regulate only what plaintiffs may be reimbursed. Paramount Physical Rehab LLC et al v Liberty Surplus Ins Corp, Ct App #368957 (October 16, 2024). Perhaps this difference is only of academic interest, as provider reimbursement cannot exceed the applicable cap.
If the service is reimbursable under Medicare, the no-fault reimbursement for services rendered since July 2023 is capped at 190% of the Medicare charge.
II. HOME CARE AGENCY SERVICES ARE GOVERNED BY THE
MEDICARE REIMBURSEMENT CAP OF SECTION 3157(2)
Insurers have tried to argue that home care agency charges are regulated under the non-Medicare reimbursement cap of section 3157(7). This is the cap that currently calls for reimbursement to be capped at 52.5% of the providers’ January 2019 charge description master. This is obviously a devastating fee cap and has put many providers out of business. Fortunately, the Court of Appeals has now clarified in two published decisions that home care agency charges are governed by the Medicare fee cap of section 3157(2). This should prove to be a significantly better fee cap. The most recent published decision is West Michigan Home Care Services v MEEMIC Ins Co, issued on October 20, 2025. The Court declared:
“‘[T]he simple question to answer...is whether Medicare covers the service at issue.’ And in this case, the record reflects that home-health-aide and skilled-nursing care are covered by Medicare. Medicare has billing codes for these particular services, and defendant used these codes in its Explanation of Benefits. That these amounts are made under the prospective payment system and may be payments in instances of low utilization or outlier payments does not change that there are amounts payable for such services. Accordingly, because there are amounts payable under Medicare for home-health-aide and skilled-nursing care, the trial court did not err by finding that MCL 500.3157(2) applies.”
One week after the Court of Appeals issued the published West Michigan Home Care Services case, the Court of Appeals issued an excellent unpublished decision in Advisacare Home HealthCare Solutions v Auto Club Group Ins Co, Ct App #368589 (October 27, 2025). Plaintiff’s patient (Virginia Carah) was injured on August 22, 2020. Before July 2021, defendant paid $28.55/hour for home health aide services provided by plaintiff. After July 2021, relying on the new fee caps in §3157, defendant paid $17.56/hour for the same services. The Court stated the issue as follows: “Put simply, if Medicare provides coverage or an amount payable for the treatment, then the cap in Subsection (2) applies; if Medicare does not provide coverage or an amount payable for the treatment, then the cap in Subsection (7) applies.” The Court characterized the holding in Central Home Health Care, supra, as follows:
“This Court concluded that it did not need to ‘discern the actual difference between a [Medicare] fee schedule and prospective payment system,’ as ‘the simple question to answer in determining whether MCL 500.3157(2) or MCL 500.3157(7) applies is whether Medicare covers the service at issue.’”
Relying on Central Home Health Care, and two subsequent federal district courts decisions (Elite Nurse Staffing, LLC v State Farm Mut Auto Ins Co, 755 F Supp 3d (1008 (WD Mich, 2024); and Prof Rehab Serv, Inc v. State Farm Mut Auto Ins Co, unpublished opinion of the US District Court for the Western District of Michigan, issued September 26, 2024 (Case No. 1:22-cv-1093)), the Court concluded that home-health-care and skilled-nursing care both have amounts payable under Medicare.
The Court also had some very important language on the role of the Medicare fee caps in determining the ultimate reimbursement:
“It bears mention that the purpose of MCL 500.3157(2) and MCL 500.3157(7) is to set a reimbursement cap. Keeping this purpose in mind, we agree with other courts that have considered this issue and found that it seems unlikely that the Legislature would have intended ‘the hiring of Medicare experts to plow through a vast dataset filled with potential disputes over how to calculate a Medicare payable number, the only function of which is to serve as a cap for the reasonable charge.’ cit om. Again, the question is simply whether Medicare covers or provides an amount payable for the treatment at issue...”.
In simple terms, this case stands for the proposition that, once it is determined that the service is covered by Medicare, then we know that the Medicare cap of §3157(2) is operative.
So while the fee caps continue to demand legislative attention, this is a bit of good news.
III. THE CONTROVERSY OVER MEDICARE RATES VERSUS
MEDICARE RULES
Once it is determined that reimbursement is governed by the Medicare fee cap in section 3157(2), the applicable Medicare fee cap must still be determined. This determination may not be a simple one. This is because Medicare has so many reimbursement rules. One of the early questions under the 2019 reforms are whether those reforms adopt Medicare reimbursement rules, as opposed to simply applying Medicare rates without reference to the rules. The first case to consider this issue is Favot v MemberSelect Ins Co, __ Mich App __ (2025). In Favot, the insurer sought to apply 3 Medicare rules to the charges of plaintiff’s service providers: (1) the “packaged service” rule; [P]ackaged services are items and services that are considered to be an integral part of another service that is paid under the OPPS. No separate payment is made for packaged services, because the cost of these items and services is included in the APC payment for the service of which they are an integral part. For example, routine supplies, anesthesia, recovery room use, and most drugs are considered to be an integral part of a surgical procedure so payment for these items is packaged into the [ambulatory payment classification] payment for the surgical procedure]. (2) the multiple-procedure payment reduction rule (MPPR); and billing modifiers. Relying on Central Home Health Services supra, the Court in Favot concluded that “the amount payable by insurers are not determined by the rates in the fee schedule alone, but also by applying limitations related to the rates in the fee schedule.” In other words, §15(f) says that Medicare limitations that are “unrelated” to the rates in the Medicare fee schedules are not to be used in no-fault calculations. However, limitations that are related to the rates and amounts payable by Medicare are to be used in calculating no-fault payments. The Court found that all three of the Medicare rules at issue in this case (MPPR, packaged-service rule, and geographical billing modifiers) were related to the fee schedule and therefore available for use by the no-fault insurer. However, as in Central Home Health Care, the Court found that factual questions remained as to the actual amounts that defendant must pay. Accordingly, the Court held that summary disposition for the defendant was inappropriate, and remanded for further proceedings.
In summary, even where Medicare rates apply, under Central Home Health Services and Favot, fact questions for jury determination may still remain. So we continue to need further guidance as to how Medicare rates will be interpreted and applied under section 3157(2).
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