When the victim of a motor vehicle accident (MVA) arrives in the emergency room, clinicians work urgently to patch wounds, repair broken bones and perform lifesaving surgeries. However, when the hospital bills for those services are due, payments are rarely made in an urgent manner.
Most hospitals attempt to bill the liability insurance carrier associated with the driver in the motor vehicle accident. But those claims can take months or years to be completed, as liability insurance carriers often require a determination of fault and will not pay medical bills until a settlement has occurred.
“There is no guarantee that bills will be paid, and these bills often cycle out to self-pay collections and eventually become bad debt,” says Lori Lipocky, president and general manager of Aspirion, a revenue cycle management company focused on recovering revenue from complex claims.
Complicated reimbursements such as those related to motor vehicle accidents, Veterans Affairs and workers’ compensation claims may represent only a small percentage of hospital revenue. But when these reimbursements are written off as bad debt, as they frequently are, those numbers add up. By implementing a focused Motor Vehicle Accident/Premises Liability (MVA/PL) program, hospitals can increase their cash collections while providing patients with assistance to ensure their medical bills are paid.
Understanding the Challenges
There are a number of reasons why hospitals have a difficult time getting paid for the services they provide to patients for injuries related to motor vehicle accidents and other accidents.
First, if the patient has commercial health insurance, the payer will often avoid or delay payment, using the excuse that there may be a possibility of medical coverage included with the auto policy of the at-fault driver, explained Kyle Fischer, general counsel at Aspirion, speaking at a September HFMA educational session. Also, patients who are uninsured often don’t know they may have coverage available to pay their medical bills from automobile or other property and casualty insurance policies, he said.
Getting paid promptly and fully requires an investigation to identify all potential payers and provide documentation. But most hospitals cannot provide the expertise and staff hours to do that for such a small segment of their revenue, Fischer added.
Hospitals can file liens to ensure they will be paid from any settlement resulting from accident-related litigation, but that doesn’t always work. Patients’ personal injury attorneys work to intimidate hospitals and pressure them to discount fees or avoid collecting altogether. In addition, state governments frequently change the laws regarding when and how such liens can be filed. If hospital leaders are unaware of recent changes, they can get into trouble.
“Payments from liability coverage can be a significant source of revenue recovery for medical providers, but you need experienced legal resources to manage these processes effectively to avoid legal risk,” Fischer said.
Reviewing the Settlement Process
The right legal resources are necessary to guide hospital revenue leaders through the liability settlement process and ensure their bills get paid when the settlement is completed. According to Fischer, the settlement process includes six steps:
- The accident is reported to the insurance companies for the involved drivers, and the insurance companies investigate to determine liability.
- The patient pursuing a liability settlement may retain an attorney to assist or may work directly with the adjusters for the at-fault party’s insurance provider.
- After the patient’s treatment is completed, all medical records and bills are submitted as part of a “settlement demand” to the at-fault party’s insurance provider. The insurance company evaluates and makes a settlement offer to the patient or the patient’s attorney.
- The patient (or the patient’s attorney) and the insurance company will negotiate until they reach a settlement agreement. If they cannot reach an agreement, litigation may be pursued until the case is settled or a trial occurs.
- Settlement proceeds are sent to the patient’s attorney for disbursement. If no hospital lien has been filed, it is the patient’s choice whether to pay any outstanding medical bills from the settlement proceeds.
- If a lien has been filed, most patient attorneys will attempt to negotiate the payment of the outstanding bill with the hospital’s representative. “Generally, the attorney will argue that the hospital’s lien should be reduced because the charges are not reasonable, there was no notice, there was a failure in the lien perfection process or that the lien was not filed timely,” Fischer said.
Legal resources who have insurance defense and personal injury litigation experience can help hospitals manage each step throughout the settlement process in a way that will mitigate risk and pursue a favorable resolution.
Considerations for an Effective MVA/PL Program
When considering whether to pursue reimbursement through a liability settlement, hospitals often succeed in pursuing reimbursement through other payers for medical care rendered to patients as a result of motor vehicle and other accidents. For example, the patient may have their own commercial health insurance coverage, Medicaid or Medicare, which may pay more reliably, timely and with a higher rate of reimbursement than a liability settlement. In some cases, there are other insurance policies that could provide reimbursement for accident victims, such as personal injury protection or guest medical coverage, which is often included in homeowners’ insurance policies.
Billing a patient’s health insurance as primary must be thoughtfully considered because states may have specific laws or regulations that dictate how available coverages should be coordinated and not following those guidelines can lead to no reimbursement or financial liabilities. While it can be tempting to pursue the higher reimbursement that liability coverage may provide, Aspirion does not recommend pursuing third-party liability insurance as the primary payer if the patient has other health insurance with certain provisions in their contract.
“This creates unnecessary legal risk that could result in financial loss for medical providers, or the creation of bad law that may negatively impact the future ability to be paid for the services provided,” Fischer said. A perfect example is in Colorado where the hospital lien statute prohibits filing a lien in lieu of billing a patient’s other health insurance, and a hospital that violates this prohibition must pay twice the amount of the lien asserted by statute.
Another mistake commonly made is when a hospital only files liens against high-balance patient accounts. Pursuing liability coverage can still be effective, even for accounts with smaller balances. For example, hospitals might file liens on accounts with balances greater than $10,000 — but high-balance accounts may be less likely to be paid through a liability settlement where the yield is dependent on the amount of available coverage.
“That’s because there may be competing liens on the same settlement when patients are treated at multiple facilities, multiple injured parties needing to divide the $50,000 in available coverage, or patients with high-balance accounts who may have injuries that are disabling or long term and are not fully compensated from the settlement,” Fischer said. “Accounts with smaller balances are often paid in full, and most hospitals usually have more outstanding accounts in the $2,000 to $5,000 range than above $10,000.”
Creating a Win-Win for Hospitals and Patients
When hospitals implement an MVA/PL program, they implement a focused procedure for managing and recovering revenue for complicated reimbursements.
“A good program helps maximize collections for services provided by identifying all potential sources of payment, and by providing the documentation necessary for successful collection,” Lipocky said. “Hospitals increase cash collections and make sure they get paid for services they provide.”
These programs aren’t just good for hospitals but they’re also good for patients.
“We help the patient identify a source of payment that doesn’t come out of their pocket,” Fischer said. “Filing a hospital lien allows patients to avoid collection activity and gives them time to resolve their liability claim before the bill has to be paid.”
Aspirion helps hospitals and health systems maximize revenue recovery by focusing on their most challenging reimbursements. Aspirion achieved the top 2022 Best in KLAS for Revenue Integrity/Underpayments ranking which is reflective of its unparalleled technological innovation and team of 100-plus attorneys, 30-plus clinicians, and seasoned claims processors. From Motor Vehicle Accident, Workers’ Compensation, and Veterans Affairs/TRICARE to Denials and Aging AR, Aspirion’s 1000-plus healthcare clients across 45 states count on Aspirion for superior revenue recovery performance.
This published piece is provided solely for informational purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions by participants are those of the participants and not those of HFMA. References to commercial manufacturers, vendors, products, or services that may appear do not constitute endorsements by HFMA.