Emergency care presents a unique and often discussed problem to business office managers: Treatment must be rendered before ability to pay is assessed.
When the coverage is Medicaid or Medicare, many providers are faced with a situation where the expected reimbursement is barely more, sometimes even less, than the cost of providing treatment. It is an inherent economic risk of practicing medicine.
A few providers in a few selected cases are making the decision to increase their risk even a great deal more. These providers are making a conscious and very carefully reviewed decision not to bill Medicare in hopes that a third party will pay, and pay much more generously, than the government. The third party they are pinning all hope on is liability insurers.
Medicare requires most medical providers to have emergency room patients complete a detailed form upon admission. Part of the information sought in the form is the source of the injury and the potential for other insurance coverage which may cover the treatment. In many instances, the patient’s injuries may be covered under an auto or other liability policy. If payment can be “reasonably expected” from the liability carrier, providers are required to bill the liability carrier. However, after 120 days, the provider has the option of billing Medicare for a conditional payment. If a provider bills Medicare, the Medicare rate must be accepted and only the coinsurance and deductible amounts can be sought from the liability carrier.
“One of the biggest issues for hospital and possibly orthopedic surgeons, because of the discrepancy between governmental reimbursement and liability reimbursement, is deciding whether to bill the government or pursue the liability carrier. Pursuing liability offers a real possibility of doubling your recovery, but you might blow any chance of recovery if there is not a pot of gold at the end of the rainbow,” said Paul Armstrong. Armstrong’s law firm, Medical Lien Recovery, Limited, in Wilmette, Illinois, specializes in protecting the rights of medical providers through filing medical liens in personal injury cases.
Medical Center East in Birmingham, Alabama, is one of many hospitals which now opts not to bill Medicare and wait out the liability coverage. The bottom line well known in Medical Center East’s business office is that liability companies pay better than govermental entities.
“I believe an awful lot of hospitals are not utilizing their rights to pursue the liability and they are doing themselves a disservice by not,” said Doug Hughes, Legal Counsel for Medical Center East.
In 1990, Medical Center East was involved in a landmark case, Joiner v. Medical Center East, Inc., which established that a medical lien can be attached to personal injury settlements even if the plaintiff was a Medicare beneficiary at the time of the injury. In such cases, plaintiff attorneys often argued that the hospital lien was invalid and that the hospital was only entitled the Medicare proceeds. However, several court cases have upheld the validity of hospital liens and awarded the hospital the full amount of the billed charges.
As a result, Hughes said the Medical Center East business office reviews each emergency room admission for potential liability coverage. If a decision must be made between billing a carrier or pursuing the liability proceeds, Hughes recommends reviewing the police incident report related to the treatment.
“If you’ve got a guy who tried to beat the railroad train through the railroad crossing, obviously, he does not have a good change of winning so you go ahead and file Medicare, accept the payment and go on,” Hughes said.
“If someone slammed into the back (of your patient’s car) and everyone has insurance, that’s one that you can be pretty confident that you are going to get 100 percent recovery on. You really have to look at these on a case by case basis.”
To add to the quandary, Medicare’s position on whether providers can pursue liability carriers has been less than clear. A 1989 statute prohibits Medicare providers from billing liability insurers or placing a lien against a liability insurance settlement for Medicare covered services. The regulation was challenged by hospitals in both Oregon and the District of Columbia based on the fact that it contradicted the Secondary Payer Statute enacted to save government money in situations were there is an alternative payer. In both cases, the courts ruled in favor of the hospital. The reasoning followed in these decisions, and later in the Medical Center East case, is that the Secondary Payer Statute was meant to save government money and that allowing providers to pursue liability settlements was in keeping with this statute.
As a result, the Health Care Financing Administration issued a memorandum outlining the proper procedure to be followed when liability insurance is available to reimburse medical treatment. According to Armstrong, the memorandum requires medical providers to only bill the liability insurer for the first 120 days. Therefore, good liability cases must be quickly identified so that Medicare is not inadvertently billed.
“A lot of times cases will not be settled at 120 days so you have to make a decision on the kind of case you have,” Armstrong said. “If the case involves really serious injuries and significant bodily injury, the case could take years to settle. If it is a small amount of injury, the chance for settlement within six months to a year is good. You are taking a gamble, so you have to have someone evaluate it to see if it is a good gamble of not. You can’t ever go against the patient, except for deductibles and coinsurance, so if the liability carrier is not responsible, the provider gets nothing.”
The provider also needs to be familiar with medical lien laws of their state. Armstrong’s company is also developing a reference tool which will include information on filing medical liens on a state-by-state basis. Lien laws vary from state to state on several key points, including what types of providers can file liens, how and to whom the lien must be delivered and how much time the provider has for filing the lien.
“In recent years, there has been increasing pressure on those dealing with injury cases to cut the liens of medical service providers because of shrinking recoveries obtained by verdict or settlement. This is done in various ways. Often the injured party’s attorney will set up a court “adjudication” in which medical service providers are given notice of a court proceeding. If they or a representative does not appear, the lien is cut to nothing,” said Armstrong.
“At other times, the attorney, adjuster or other representative will call the medical service provider and demand the reduction of the lien. Increasingly, attorneys, insurance companies and patients simply ignore the lien and leave the medical service provider to seek his own legal remedies. All these procedures put an increasing burden of time and money on the medical practitioner who either routinely or occasionally deals with injury cases.”
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