The Michigan Court of Appeals recently addressed the “rates versus rules” debate that has arisen following implementation of the Medicare fee schedule in 2019’s No-Fault Act reforms. Plaintiff medical providers typically argue that while Medicare rates can be applied, the adjustment rules Medicare uses cannot. Conversely, insurers argue that the “fee schedule” encompasses both a system of rates and rules, adjustments, and policies that all must be implemented to comply with the Act’s new requirements.
In Favot v Memberselect, released this past week, the Court provided an answer to this “rules” question after previously determining in Central Home v Progressive — a case handled by MBL attorneys — that the “rates” apply. In Favot, Plaintiff was initially injured in a motor vehicle accident and sought PIP benefits under the no fault act. The insurer, Memberselect, filed a motion for partial summary disposition, arguing that it had paid the maximum amount allowed under the No-Fault fee schedule set forth in MCL 500.3157. Memberselect further argued that, under Sec. 3157(15)(f), it could apply “certain limitations used by Medicare to determine the amount payable,” because those limitations were necessarily related to the rate that would be paid. The trial court denied these motions and Memberselect appealed.
The Court of Appeals was thus asked to consider whether an insurer can apply the limitations of Multiple Procedure Payment Reductions (MPPR), the packaged-service rule and billing modifier used by Medicare when calculating PIP reimbursements. In doing so, the Court relied on Central Home, holding that, “the amount payable by insurers is not determined by the rates in the fee schedule alone, but also by applying limitations related to the rates in the fee schedule.”
The Court invoked the canon of ejusdem generis, noting “general rules follow a designation of particular subjects… only things of the same kind, class, character or nature as those specifically enumerated.” The Court used that doctrine to interpret MPPR, packaged service rules and billing modifiers. MPPR covers the cost of the highest valued procedure a healthcare provider performs and typically covers 50% of the second and subsequent procedures. Package service rules do not allow separate payments and instead package all services and items into one single payment. Billing modifiers are used to adjust base rates for the different regional labor costs. The Court thus ruled that all these modifiers are related to the rates and amounts payable to Medicare, and therefore, are considered part of the fee schedule.
Under the doctrine of ejusdem generis, only “listed” unrelated rules are excluded from the fee schedule in Medicare’s governing statutes; the rest of the general rules are considered of a “different character” because they adjust the fees themselves. Therefore, since they “affect the amount Medicare would pay for a particular service,” they may be considered when rendering payment. The Court therefore reversed the trial court’s denial of Memberselect’s Motion in this published decision.
As the decision is published, it is binding law. Therefore, insurers can rely on this opinion to render payment with consideration of Medicare billing rules such as the MPPR, the packaged-service rule, and billing modifiers. However, given the tenacity of this debate, it is likely that a Supreme Court application will follow.
MBL’s appeals attorneys will continue to monitor this case as it further develops. Please reach out to your MBL attorney with immediate questions or concerns.
Dated: September 22, 2025
