07 July 2022

The No-Fault Fee Schedule and Contractual Discounts: Beware the Insurer Having Its Cake and Eating It Too

The 2019 amendments to Michigan’s no-fault law resulted in many changes.  One of the most important impacts how much a no-fault insurer must pay to a medical provider for treatment provided to an injured person following a motor vehicle accident.  Under the new no-fault law, a medical provider’s no-fault payment for a particular service is capped at the amount Medicare would pay for the same service, plus a percentage mark-up.  The mark-up is calculated based upon the calendar year the service was provided, the medical provider’s trauma level, whether the treatment was for emergency or routine care, and the provider’s indigent patient population.  Generally speaking, no-fault carriers will pay medical providers a greater amount for emergency care and an even greater amount if the provider’s indigent patient population is high.  And if there’s not an amount payable under Medicare for the service, the payment cap will be tied to a percentage of the medical provider’s charge as of 2019.

But what if the medical provider and the no-fault insurer both participate in a network discount arrangement?  Nothing in the new or the old no-fault law prevents medical providers and no-fault insurer from contracting with each other for a negotiated payment rate.  Participating provider agreements—also called network discount agreements—have been a staple of medical provider-insurer relations for decades.  Network contracts typically require participating no-fault insurers to pay participating medical providers a pre-determined percentage of a covered charge, i.e., “85% of the provider’s charge.”  But if applying no-fault’s new statutory fee cap to a provider’s charge results in a payment rate lower than the contracted rate under a discount agreement, what payment rate controls?  Answer:  The rate negotiated by the parties and contained in their agreement should control. 

In other words, no-fault insurers cannot have their cake and eat it too.   They can terminate their participation in a network discount agreement, but they can’t pretend it doesn’t exist.  And neither can providers.  Providers must also accept the contractual rate as payment in full, even if the statutory rate under no-fault’s fee cap is higher.

Also, beware “the double-dipping insurer.”  A no-fault insurer cannot try to take advantage of both systems, i.e., the insurer first applies the statutory fee schedule to your charge and only then applies the contractual discount to the re-priced charge (instead of to your actual charge).  This, too, is inappropriate.  The terms of the network discount contract control.

BEST PRACTICE:  Do not accept a no-fault insurer’s payment of an amount that is less than your expected contractual payment without first having your attorneys review the requirements of your contract to ensure compliance.  If you are experiencing a no-fault insurer paying you an amount lower than your expected contractual reimbursement, the no-fault insurer may be in breach of contract.  Hold the insurer to the terms of the contract.

Please contact the author or any of the attorneys in Miller Johnson’s Med Recovery Group for questions about this alert or for a review of your contractual discount agreements at  We are here to help.