How is Michigan’s Surprise Medical Billing law stacking up?

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By Joseph L. Rivet

The Michigan Surprise Billing Law is just over two years old. In comparison to the federal No Surprises Act, or NSA, Michigan’s law has not garnered much attention.

Gov. Gretchen Whitmer signed the Surprise Billing Act, Act 234, into law on Oct. 20, 2020, MCL 333.2450, et seq. under the Public Health Code. The Department of Insurance and Financial Services, or DIFS, has promulgated Rules 500.241 to 500.245 covering procedures for calculation reviews by DIFS and approval of arbitrators.

There was great debate and differing opinions around the law regarding reimbursement. One area of contention was the carriers’ sole control of how much a medical claim is paid and provides them with a stronger hand to not negotiate with out-of-network providers or drive down current reimbursement rates for contracted providers. These same concerns are consistent with the NSA.

DIFS is responsible for three components of the law: (1) reviewing the carrier’s calculation of its negotiated median amount upon a nonparticipating provider’s request; (2) facilitating arbitration; and (3) preparing an annual report.

Under MCL 333.24515, DIFS is required to prepare an annual report by July 1 of each year reporting on the three components. The annual report contains data from Jan. 1 through Dec. 31 of each year.

The law requires the calculation of payment to a nonparticipating provider or facility to be paid the greater of the carrier’s median amount or 150% of the Medicare fee schedule excluding any in-network coinsurance, copayments or deductibles. The median amount is the negotiated amount for the region and provider specialty which is left to the carrier to decide. (See MCL 333.24515(2).)

How is the state law stacking up? 

DIFS has published two annual reports. The 2021 annual report, however, is the first annual report inclusive of the number of requests for recalculation and arbitration as those components of the law were not effective until July 1, 2021.

The 2022 annual report will be the first report to contain data for a complete reporting year with all components of the law in effect.

Recalculation requests: DIFS 2021 Annual Report reflects there were 37 requests for the department to review payment calculations. The report provides no further breakdown of which carriers the requests involved nor the outcome of the recalculation.

The legislature outlined for DIFS what the report is to include. However, they did not limit the report requirements. (MCL 333.24515).

To increase transparency, there would seem to be no harm in providing data on what specialties requested a recalculation request, the number of requests for each carrier and the number of recalculated requests that resulted in a different payment.

Arbitration requests: DIFS 2021 Annual Report shows there were no requests for arbitration.

The availability for arbitration under state law is limited only to payments made for services rendered to an emergency patient that involves a complicating factor. (MCL 333.24511). Under the law, a complicating factor is defined as a factor that is not normally part of the health care service, such as increased intensity, time, technical difficulty, severity of the patient’s condition or the physical or mental effort required in providing the services. (MCL 333.24511(8)).

The nonparticipating seeking additional reimbursement is required to submit the medical record showing the complicating factor and the emergency patient’s medical record with portions highlighted supporting the complicating factor.

An “emergency patient,” as defined by the statute (MCL 333.24502(4)), is not determined based on the place of service — it is determined based on the patient’s physical or mental condition. Meaning, an “emergency patient” can be in locations well outside of the emergency department. Additionally, the law does not require the claim to be submitted with specific billing codes or modifiers on a claim to show increased work by the nonparticipating provider.

If a nonparticipating provider can show to the carrier the services provided to an emergency patient and a complicating factor applies, the carrier is to pay an additional 25% of the median amount or 150% of the Medicare fee schedule, whichever is greater. (MCL 333.24511(2)(a)).

If the claim under these narrow circumstances is denied, the nonparticipating provider has the option to request arbitration.

Currently, there are 21 approved arbitrators listed on the DIFS website. The makeup of the approved arbitrators are: three former judges, 12 attorneys, one physician, four dispute resolution organizations and one active judge from Texas. All but one of the approved arbitrators have healthcare or medical related experience.

The annual reporting year for 2022 will likely be released in early summer 2023. It will provide better insight into how the Surprise Billing law is operating in our state.

Joe Rivet is the principal attorney of Rivet Health Law in Norton Shores. He focuses his practice on reimbursement matters and representing physicians and other providers on third-party audits and payor overpayment demands, and holds CCS-P, CPC, CPMC, CEMC, CHRC, CHC, CHPC, CHRC, CAC and CACO certifications.