The U.S. Supreme Court ruled against an insurance carrier’s attempt to enforce subrogation rights against a patient’s liability settlement. The decision may force health insurers into a quandary on whether to pay, deny or indefinitely stall the release of medical benefits on injury-related claims.
Medical billers must carefully monitor such medical claims to insure that they do not sit for months in the insurance carrier’s “pended” black hole. Because the ruling chips away at carrier’s subrogation rights, health insurance carriers may attempt to stall the release of benefits by seeking additional records or subrogation rights from both providers and patients after injury-related claims are filed. The result could be an even longer wait for reimbursement on the most costly types of treatment.
“This is a really unfortunate decision for both medical providers and health insurance carriers. Health insurance companies are not in a financial position to absorb the costs associated with paying for medical claims someone else may be ultimately responsible for. However, many health carriers recognize the duty to protect their clients from amassing huge unpaid debts while a liability lawsuit makes its way through court. Many carriers pay such claims in hopes of recouping funds against eventual settlements. That practice is now on shaky ground and providers are sure to see a growing reluctance on the part of health carriers to pay high dollar injury-related claims,” said Tammy Tipton, President of Appeal Solutions.
The case involves the victim of an auto accident. Her health coverage was through her husband’s ERISA health benefit plan, partially funded by Great-West Life & Annuity Insurance Co. Great-West paid $411,157.11 of medical claims after an auto accident which left the patient a quadriplegic. The victim of the accident brought a liability suit against the auto manufacturer and others involved in the crash. The suit resulted in a settlement which allocated the bulk of the recovery to legal fees and to a trust for the patient’s future medical care. Great-West and California Medicaid was to get $13,828.70 and $5,000, respectively, for their previous payments on medical claims. $256,745.30 was allocated to a trust fund for future medical care while more than half the settlement, $373,426, was carved out to cover attorney fees and costs.
Great-West refused to cash the reimbursement check and, instead, filed an action against the patient in an attempt to enforce a lien against any future proceeds she might receive related to the case. Great-West argued that ERISA, the federal law governing employee benefit plans, allows them to pursue such action against beneficiaries who receive funds which are not provided for in the ERISA plan. The case was further complicated by the fact that the liability action is governed by state law while the health benefit plan falls under federal jurisdiction.
The Supreme Court ruled that, according to ERISA, health benefit plans are limited to seeking equitable relief when benefits are paid for claims which are not covered. However, in this situation, the court decided that the insurance carrier was seeking legal relief, rather that equitable relief, because they were seeking to extend the patient’s liability to funds beyond those set aside for past medical bills.
Many medical providers are unaware that the majority of their medical claims fall under ERISA jurisdiction, according to Tipton. The latest figures indicate that about 64 percent of the population have insurance sponsored by the employer. Such coverage is almost always governed by ERISA.
Delayed reimbursement can take a heavy financial toll on health care facilities. Often, the most costly medical bills are those that are most heavily scrutinized by insurance carriers. Despite the recent enactment of many state prompt payment acts, large balance accounts are still often delayed for months while carriers seek additional medical opinions, coordination of benefits information and subrogation forms.
Appeal Solutions is offering a special opportunity to medical facilities with large balance accounts which appear to be unnecessarily stalled by an insurance company. Our staff of claims analysts will perform appeals for your facility on stalled claims for the flat rate of $1500 per account. We will pursue the carrier for immediate payment of the claim and, at the same time, seek the assistance of the patient in providing the necessary information needed to process the claims. Accounts will be worked for 120 days and returned to the facility with no charge if not resolved in that time frame. Accounts for the previous and current calendar year can be placed with Appeal Solutions to appeal and we accept single accounts or volume placements. Our company needs a copy of the claim and a copy of the explanation of benefits in order to initiate the appeal. Medical records and verification of benefits records may be requested after the initial review of the claim.
Appeal Solutions will charge $1500 for any successfully recovered account. However, no charge will be made on those accounts which are not successfully resolved. Call 888-399-4925 for more information.
To read the U.S. Supreme Court case, visit http://www.supremecourtus.gov/opinions/01slipopinion.html. Once there, click on Great-West Life & Annuity Ins. Co. v. Knudson (decided January 8, 2002).
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