Why No-Fault Insurers Underpay Provider Bills — and What to Do About It

Published August 4, 2026 · No-Fault · by Hassan A. Zaarour

Providers treating auto accident patients in Michigan routinely see remittances well below billed charges. The reasons cluster into four categories, and each one calls for a different response. Treating them all as "the insurer denied it" is why so much of this receivable ages out.

1. Fee schedule reductions

Since the 2019 amendments, most treatment covered by Michigan no-fault is reimbursed by reference to a Medicare-based calculation rather than the provider's usual charge. Where a service has no Medicare analog, a different method applies. Disputes here are arithmetic and legal at the same time: which schedule applies, which rate year, whether the service was correctly matched, and whether an exception applies to the facility.

2. Utilization review

Carriers can challenge whether treatment was reasonably necessary or appropriately delivered through utilization review. There is an administrative appeal path, and using it — properly and on time — preserves arguments that are harder to make for the first time in litigation.

3. Recoding and bundling

An insurer may reprice a service by treating it as a different code, bundling it into another service, or disallowing a modifier. The explanation of review usually reveals which. This is often the most winnable category, because the documentation either supports the billed code or it does not, and that is a question the provider's own records answer.

4. Medical necessity and causation

The hardest denials assert that the treatment was unrelated to the accident or not necessary at all, frequently supported by an insurer-retained examination. These require clinical proof, not just billing records.

The deadline that quietly deletes claims

Michigan's no-fault act generally limits recovery to expenses incurred within one year before suit is filed. That is not the same as a statute of limitations, and it operates independently of whether the claim is otherwise timely. A practice that lets a receivable sit for eighteen months while adjusters go quiet has usually lost the oldest portion of it permanently — not because the claim was bad, but because of the calendar.

The practical consequence: aged no-fault AR needs to be reviewed on a set schedule. Quarterly is reasonable. Annually is too slow.

A working sequence

1. Reconcile. Build one document showing billed, paid, adjusted, and denied by date of service, with the stated reason for each reduction.
2. Sort by reason, not by dollar amount. The four categories above respond to four different arguments.
3. Confirm the assignment. A provider suing in its own name needs a valid assignment of benefits. Check its wording and its date.
4. Check the calendar against the one-year-back window before deciding what to pursue.
5. Demand with specifics. A demand citing dates of service, codes, the applicable rate, and the shortfall gets a different response than a letter asking why the bill was not paid.

Overdue benefits can also carry statutory penalty interest and, in the right circumstances, attorney fees where the refusal to pay was unreasonable. Those are part of the leverage, and they are lost along with everything else when a file simply ages.