Earlier this week, the New York Times reported on how some hospitals will refuse to bill a patient’s health insurance in an attempt to collect more money from the patient later.
To understand why a hospital would do this, you need to understand how healthcare providers, such as doctors and hospitals, bill patients and how those billing practices are affected by insurance plans.
Assume your doctor ordered an MRI. You contact a local hospital, schedule an appointment, and go forward with the procedure.
The hospital may give you a bill for $1,200 despite the fact that the hospital knows it will never see that amount. This is because the hospital knows that your insurance company, if you have one, will not pay the full amount.
A private insurance company, such as Blue Cross Blue Shield or Tufts, may have a billing agreement with the hospital where they agree to pay $400 for that MRI service. As such, when they are presented the bill for the full $1,200, they only pay the $400. The hospital then writes off the balance of the bill. If you look at the final bill, or if your insurance company sends you an Explanation of Benefits, you will see the full charge listed as $1,200, you will see a line showing “insurance payments” of $400, and you will see a third line stating either “contractual adjustment” or just “adjustment” for the $800 difference. (For the purpose of this example, we are ignoring any deductibles or copays).
Obviously, there is a big difference between the $1,200 amount that the hospital charges and the $400 it actually receives. And if the patient has public health insurance, such as Medicare or Masshealth (also known as Medicaid), then they could receive only $300 or even $250 for the same service.
Therefore, it should be pretty obvious why a hospital would rather not accept a person’s insurance coverage and instead go after the patient directly for the full amount. This is especially true if the hospital, or other healthcare provider, knows that they are treating someone for an injury that was caused by a car accident. That way the hospital could try to collect the full value of its bill from any potential settlement that the patient could be entitled to.
Massachusetts law allows a hospital to assert a lien for any related services provided to any person injured in an accident. A lien means that means when a case settles, the hospital, or whoever has asserted a lien, has to be paid out from the settlement before the money can be collected by the injured party.
A car accident victim should not sign a waiver stating that they do not want their health plan billed. Instead, they should provide the hospital and all other healthcare providers with both their health insurance and car insurance information and direct the hospital to charge their insurance directly.
Can the hospital refuse to accept your insurance? If you have public insurance, stated above to mean Mass Health (Medicaid) or Medicare, the answer is no. Federal and state law prohibit a medical provider from trying to bypass Medicare or Mass Health and charge the patient directly. The Massachusetts law on point is found at 130CMR450.203 which states that “No provider may solicit, charge, receive, or accept any money, gift, or other consideration from a member, or from any other person, for any item or medical service for which payment is available under MassHealth.” The corresponding Federal law for Medicare can be found at 42 U.S.C 1396a(n)(3)(B).
An experienced personal injury lawyer can help to coordinate insurance payments so that all medical providers are paid out from the correct insurance companies and not from an injured party’s settlement.
If you have been injured in an accident, or need help negotiating a hospital lien, please contact us for a free consultation.