A Medical Provider treated the victim of a serious mowing accident which resulted in partial amputation. Insurance was verified at the time of patient admission at 80%-20% coverage with a $1,000 deductible. The medical bill, which totaled more that $75,000, was filed immediately after the patient’s discharge.
The Carrier refused payment based on a subrogation clause within the self-funded policy which gave the carrier the right to pursue third parties for reimbursement. Subrogation is the process by which insurers recover amounts paid to their policyholders from third parties who are responsible for causing damages. According to the carrier’s attorney, the family was filing suit to try to force the homeowner’s coverage to pay for certain expenses, including loss of the use of a limb. The attorney stated they would not pay until the patient signed an agreement stating any payment received from the homeowner’s coverage would be paid back to the self-funded plan until full restitution was made to the self-funded carrier. Any amount left over would be retained by the patient for her suffering and loss of the limb.
A copy of the policy was obtained. The subrogation clause clearly indicated that the self-funded Carrier had the right to restitution under any third party liability coverage. Therefore, the attempt by the Carrier’s attorney to obtain an additional agreement was unnecessary and merely delayed payment of the claim, a violation of the state’s Timely Payment Statute and the Unfair Trade Practices Act. Further, the medical claims must first be paid in order for the subrogation clause to be activated.
The provider appealed citing both the policy language and several cases wherein subrogation issues rest on the theory that payment is made by the medical payor first. The provider also requested that the matter be formerly appealed before the self-funded plan’s board of directors and also communicated to the patient’s attorney the need for both parties to put pressure on the self-funded carrier for payment. He agreed and also decided to ask the patient to sign the additional subrogation agreement requested by the carrier.
The board of directors for the self-funded group met and voted to pay the outstanding medical expenses without further delay.
Application For Your Facility
In any coordination of benefits issue, the only victim is the medical provider. There is plenty of insurance to protect the patient. The carriers generally pay less because the liability is spread out over multiple carriers. And the provider has to sit with an unpaid claim while everybody else sorts out the payment method. Such claims should be vigorously pursued against the primary payor, generally the accident and health carrier, for immediate payment because many subrogation clauses indicated that the primary carrier cannot pursue its right to subrogation until the medical claim has been paid. You may want to cite your state’s timely payment statute in your correspondence to the carriers. Also, it is important for every provider to understand both state medical lien laws and subrogation laws.
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