Not everyone is charged the same in the U.S. health care system.
Health care insurance companies negotiate for discounts from medical providers—hospitals, physicians, surgeons, and even pharmacies. The provider is usually willing to cut back the price significantly in order to get the assurance of quick and reliable payment. Medicare and Medicaid, two large government-run health insurance programs, operate in similar ways.
People who do not have health insurance often pay much higher rates. Hospitals, for example, charge premium rates for uninsured patients not only because they can get away with it, but also because there is an increased risk these patients may never pay their bills in full.
At this point, you’re asking: This may all be very interesting, but how does it apply to me?
Well, imagine that you have been taken to the hospital after a serious (but not life-threatening) car accident caused by another person. Ultimately, you’d like the bill for your ambulance ride, hospital stay, medical imaging, and other expenses to be covered by your auto insurance policy, or by that of the driver who hit you.
You know if you charge your hospital stay to your own health insurance (rather than car insurance), you will be facing hundreds of dollars in deductible fees and copayments. So you’d really prefer not to do that.
However, if you don’t use your health insurance information, your medical bills will add up at the inflated rates that uninsured patients are charged. If something goes wrong and you’re stuck paying the total, it could be three times larger than if you had used your medical insurance. And you really don’t want that to happen, either.
Subrogation and Health Insurance Liens
In the end, most patients choose to have billing handled by their health insurance carrier in order to obtain lower overall prices. However, the way most insurance policies are written, health insurance actually has a lower priority than liability insurance (such as car owner’s insurance) to pay for medical care related to an accidental injury.
In practical terms, the result is something like this: “We’ll pay for your hospital stay and related medical costs,” your health care insurance claims agent will tell you. “You’ll get the advantage of the bargain prices we have arranged. When the car insurance company pays you, or when you conclude your legal action against the other driver, we expect to be paid back.”
Under the legal principle called subrogation, your health insurance carrier has the absolute right to demand repayment this way. In many cases, the insurance company will even act to file a lien, or legal claim, on any money you get in a settlement or insurance payout over your case.
Because of the technical details in Pennsylvania law, a health maintenance organization may have a stronger claim than any other health insurance company by relying on subrogation; those other companies may require you to agree to a lien on your auto insurance benefits before they will spend any money on your medical care.
A health insurance lien (pronounced like the word “lean”) sounds like a hostile act. It isn’t. It’s the insurance company’s way of reminding you that you need to respect its legal rights and take your own rights to demand a recovery seriously. The health insurance company is actually working on your behalf throughout most of this process. It’s making sure you get the medical treatment you need following your accident at the most affordable price available. In many cases, we have found that when a law firm works cooperatively with a health insurance carrier, we can convince the medical insurer to delay billing for co-payments, forgive co-payment charges altogether, or reduce the reimbursement amount it demands for severely injured clients.
Working Out the Financial Details
Of course, negotiating with both health and liability insurance companies is a job best suited for advisors with an extensive record of handling such claims. The Harrisburg insurance lawyers at Schmidt Kramer have significant experience in this area of the law; our lawyers spend part of their careers teaching insurance law to other lawyers!
If you want that level of understanding applied to your case, call a Harrisburg personal injury lawyer today for a FREE review of your case. Call us at (717) 888-8888 toll-free to schedule a consultation, or to request a FREE copy of our informative client report, Navigating the Subrogation Nightmare: What to Do When the Insurance Company Says You Have to Pay Them Back.