First, why wouldn't a hospital want to get paid from health insurance? As you will see, this issue is more complex than it might seem at first blush. Some hospitals WILL submit their bills to health insurance,
UNLESS they feel they can recover more of their charges by not submitting it to health insurance.
Hospitals collect information promptly on a patient's arrival about available health insurance as well as how the injuries occurred. However, they don't always choose to send their bill to your health insurance for payment. The real questions are: (A) Why Not and
(B) Is it Legal?
(A) WHY NOT?
Health insurance companies have re-pricing agreements with hospitals. That is why you may notice a huge bill from the hospital for and E.R. visit but then you see that your health insurance pays only a fraction of that bill. That is re-pricing at work.
Hospitals encourage and work intensively to negotiate these agreements with insurance companies. Their motivation is to shore up contracts for large-scale revenue streams. A hospital landing a new health insurance company as a provider assures more patients with that particular insurance frequenting the hospital, and therefore more money for the hospital.
However, some hospitals in Colorado are starting to realize that in certain cases they can recover higher percentages of their original billing by pursuing patients individually and not submitting their bill to the patient's health insurance. This allows the hospital to gain the advantages associated with reaching these agreements with health insurance companies, but also "feathering their nest" by cherry-picking when not to submit their billing to those health insurance companies. The specific occasions where some hospitals are not submitting their billing to health insurance seem to correspond to when the hospitals learn that a patient stands to recover sums of money from an at-fault person's liability insurance company. Motor vehicle crashes are fertile grounds for this specific conduct.
Why should a patient care whether the hospital gets paid from health insurance or through the negligent driver's auto insurance? Insurance is insurance, right? WRONG!
The answer is that very often the money that gets paid to hospitals from the at-fault party's insurance is taken right out of the hands of the patient. While health insurance is in place to pay these bills at a lower rate, often with little or no obligation on the part of the patient to ever pay back those charges, auto insurance will simply pay the injured person. But if there is a hospital lien recorded, they are required to include the hospital's name on the settlement check. That allows the hospital to make unfair demands for greater percentage recovery of their medical bill (much more than health insurance would pay them) with the threat of holding up the final settlement if they don't get their way. If the patient wants to get anything, they often have to succumb to the demands of the hospital. In the end, the hospital gets paid more while the injured person gets less. This is a win for the hospital, and big loss for the patient.
So, now that we understand that some hospitals are doing this and we understand their economic motivation, the next question is whether it is legal for them to do it?
(B) IS IT LEGAL?
Can hospitals end-run their own agreements and cherry-pick when they choose to bill health insurance as opposed to collecting directly from their patient's personal injury settlement?
In our view they CANNOT.
We feel that CRS 10-16-705 specifically precludes the hospitals from playing this economic shell-game on their patients. CRS 10-16-705 states that a hospital is not allowed to pursue a patient for a hospital bill that should have otherwise been covered by a health insurance company that has an existing relationship with the particular hospital. This statute specifically requires the hospital to submit their bills to health insurance, regardless of whether the patient is personally rich or poor. It further stands to reason that the hospital would not be allowed to consider the viability of a patient's underlying personal injury claim, or any other factor, before electing whether or not to submit their billing to health insurance.
So, we know hospitals are doing it, and it is illegal, what can be done about it?
(C) WHAT CAN YOU DO ABOUT IT?
CRS 38-35-204 provides a legal remedy whereby an action can be brought against a hospital that records a spurious (false) lien. In our view, bringing this sort of action against hospitals that are cherry-picking the submitting of their billing to health insurance and alternatively recording liens is the only way to halt this brazen and illegal conduct.
By statute, if a court finds that the hospital has recorded a spurious lien, the court will order the lien removed and is required to award the patient's attorney fees for having to pursue the hospital in this regard. However, a patient should be mindful that under this statute, if a patient brings such a claim and a court were to find it not spurious, the court is compelled to award the hospital's attorney fees against the patient. Accordingly, bringing such a claim should be done only after all other less extreme efforts have been exhausted to get the hospital to voluntarily withdraw their lien.
CONCLUSION:
At ANDERSON, HEMMAT & LEVINE, we feel knowledge is power. Knowing your rights is key to understanding your available arsenal of responses to any issue that arises. Many of our clients do not realize, before they meet with us, that their health insurance should be the primary payer for all medical care they receive as a result of a motor vehicle collision. They are often surprised to find out the implications of the way in which their medical bills have been paid. Please don't let yourself be surprised, call and speak with one of our attorneys today. We are happy to help you understand the rights you have and how they can help you obtain a better recovery in your case.