Do you really need to protect your settlement from your health insurance provider? We have been asked this question so many times that we decided to address it here. Unfortunately, Health Maintenance Organizations (HMOs) have forced deep discounts on hospitals, not to mention their reluctance to pay several claims. This has forced many hospitals to squeeze out as much cash as they can from patients. Some even go as far as laying claim to part of their patients’ liability settlements to collect what is owed to them. While this is fair, some health care providers take it too far.
How Do Health Care Providers Take it too Far?
Medical insurance payments are not complicated. Here’s how it works…
The health insurance provider will get in touch with the hospital and pay them a fixed amount for each type of charge or a certain percentage. For example, if a normal x-ray is $200, the health insurer may decide to cap the total payment due for the X-ray at $150. The insurer’s contract with its customers may require them to pay up to 70% of the cost of the X-ray. So if you receive an X-ray the insurer will pay 70% of $150 and you will have to pay the rest.
So the big question is who will pay the remaining $50? The answer is no one. The insurer’s contract with the hospital effectively reduces the cost of the X-ray for you and all its policyholders.
If you are involved in an accident in Providence, RI, you may need extensive medical attention and the cost can add up very quickly. After the health insurance provider pays their portion, you will be required to pay the rest. This means that the hospital can collect the remaining share from the proceeds of your accident settlement.
But sometimes hospitals get greedy and overcharge their patients. In this case, once the health insurance provider has made their payments, the hospital will try to charge you what you owe them plus the discounted $50 from your injury settlement. This is what is known as balance billing and it is illegal. Obviously, some hospitals are clearly ignoring the law especially where car accidents are involved.
How do Hospitals Make a Claim on a Settlement?
Let’s say you were admitted in a hospital after suffering some serious injuries from a car accident. Assuming you have health insurance through a HMO, you will provide the hospital with all the necessary details. The hospital, without your consent, can file a claim on your accident insurance settlement within 30 days after they have provided care to you.
So let’s assume you settled with the health insurance provider for $20, 000. Your hospital bill was $10, 000 and your insurance provider paid 70% of it ($7, 000). The amount you owe the hospital would be $5, 000. However, instead of collecting $5, 000, the hospital decides that it will collect $10, 000, which should cover what you owe them, and the discount that your health insurance provider gives to all its policyholders. This is illegal. Patients can use hospital for balance billing and they have been doing so, resulting in big judgments against the hospitals.
Can Your Health Insurance Provider Take Part of Your Settlement?
This depends on what you agreed to in your health insurance policy but generally, they are entitled to take part of your settlement. This is what is known as subrogation, meaning your health insurance provider can recover every penny it paid for your medical care.
The theory behind this is to avoid paying medical bills twice for their policyholders. So rather than having them pay your medical bills and then getting them paid again through a settlement, the insurance company will recover the amount they paid for your medical expenses.
How to Get a Free Evaluation for Your Legal Claim in Providence, RI
It’s not easy to understand who is entitled to what in a personal injury claim. Things get even more complicated when a third party like a hospital or a health insurance provider is involved. If you do not know who is responsible for what, you might end up being under compensated or not being compensated at all.
Hiring a personal injury lawyer in Providence, RI is vital. At Kevin P Landry Law Offices, we can evaluate your case free of charge. All our initial consultations are free. Call us at 401-751-0101 or visit our Providence offices today.