Surgeons and surgery centers

The cap on surgical charges

MCL 500.3157(2) caps payment for services Medicare pays for at a percentage of the amount Medicare would pay for the same service in the same locality:

Providers with 20% to 30% indigent volume and designated freestanding rehabilitation facilities get 220% after July 1, 2023, and providers with 30% or more indigent volume get 250% (MCL 500.3157(3) to (5)). Where Medicare has no amount payable, the cap is 52.5% of your January 1, 2019 charge for most providers. Under every formula, payment cannot exceed your average charge for the service on January 1, 2019, adjusted yearly for medical inflation. The cap is a ceiling: MCL 500.3157(1) also limits charges to a reasonable amount, not more than you customarily charge in cases without insurance.

For patients injured before June 11, 2019, while covered by a policy issued before that date, Andary v. USAA (July 31, 2023) holds that the fee schedule does not apply, and the old reasonable-charge standard governs. Check the crash date and policy before accepting any fee-schedule reduction.

Which Medicare rules the insurer may apply

MCL 500.3157(15)(f) excludes Medicare payment limitations “unrelated to the rates in the fee schedule,” such as utilization or bad-debt adjustments. The Court of Appeals has read that exclusion narrowly:

• Favot v. Brown (Sept. 18, 2025): insurers may apply fee-schedule-related Medicare rules, including the multiple-procedure payment reduction, packaged-service rules and geographic billing modifiers, when computing the cap.
• Jawad A. Shah, M.D., PC v. Auto Club (unpublished, Apr. 20, 2026): the panel followed Favot as binding. One judge concurred only because Favot controlled and wrote that it was wrongly decided.
• Precision Surgical Associates v. Auto Club (unpublished, Apr. 27, 2026): the cap reflects the full Medicare payment methodology, which put the insurer’s assistant-at-surgery, CRNA and bundled add-on code reductions in play. The court sent the case back to recalculate the cap, because the amounts owed were still disputed.

What this means in practice: arguing that only the raw fee schedule rate times 190% counts is a losing position today. The fight is over whether the insurer applied each Medicare rule correctly, for the right year, locality, modifier and place of service. Insurers make mistakes in those details often, and every line is checkable. Preserve the broader argument in case the Supreme Court takes up Favot.

Insurer medical exams and necessity denials

Most large surgical denials follow an insurer medical exam. MCL 500.3151 requires the examining physician to be licensed and, if the patient is being treated by a specialist, to practice the same specialty, and to be board certified in it if the treating physician is. In the year before the exam, the examiner must have spent most of their professional time in active clinical practice or teaching in that specialty. An exam that fails these tests is open to attack.

Your surgeon’s records carry the necessity case. Pre-operative imaging, documented conservative care that failed, the operative report, and a clear causation statement tying the condition to the crash are what a jury and an adjuster look for. Insurers can also request a written report and records under MCL 500.3158(2), and the utilization review rules let them ask for an explanation of unusual care. See reasonable proof and utilization review appeals.

Surgery centers and facility fees

Surgery centers bill a facility fee separate from the surgeon’s professional fee, and insurers price them under different Medicare systems. Check that the insurer used the facility rate for the right setting and year, and that implant and supply charges were handled under the matching Medicare rule rather than simply denied. If the insurer says Medicare pays nothing for an item, the 52.5% formula and your January 1, 2019 charge master apply instead, and DIFS requires that charge master for a cost appeal.

Why surgical claims are worth litigating

• Interest compounds the stakes. A large balance earns 12% simple interest a year from 30 days after reasonable proof. See interest and attorney fees.
• Fees can shift. If the denial was unreasonable, MCL 500.3148 makes the attorney fee a charge against the insurer.
• Funding arrangements need review. If surgery was financed through a lien or receivables company, the 2025 C-Spine decision makes ownership of the claim a threshold issue. See direct claims and assignments.

Sources: MCL 500.3142, 500.3148, 500.3151, 500.3157 and 500.3158; Andary v USAA Cas Ins Co (Mich, July 31, 2023); Favot v Brown (Mich App, Sept 18, 2025); Jawad A Shah, MD, PC v Auto Club Ins Ass’n (Mich App, unpublished, Apr 20, 2026); Precision Surgical Associates, PC v Auto Club Ins Ass’n (Mich App, unpublished, Apr 27, 2026); C-Spine Orthopedics, PLLC v Progressive Mich Ins Co (Mich, July 3, 2025).