If a medical provider, such as a hospital, won’t publish their charges or even tell a prospective patient what an upcoming visit will cost them, why then should a patient tell them what they are willing to pay for the services rendered?
In essence, the hospital is saying to the patient, I won’t let you see my prices but I want to see your checkbook (proof of insurance) before we do business.
So you show your checkbook (proof of insurance) to the admissions clerk. You also sign a document allowing your bank (insurance company) to send payment direct to the hospital once a claim (demand) is filed. A section of the document states that whatever your bank (insurance company) does not pay, you are responsible for any unpaid balance.
Unknowing to the clueless insurance clerk, you have not told them how much is in your checking account – you only showed them that you have one. That’s fair, because after all the insurance clerk did not disclose what the visit would cost, so why should you disclose how much is in your checking account! Fair is fair as they say in Buffalo Breath, Montana.
By entering into an Assignment of Benefits, the hospital has legally “stepped into the shoes” of the Plan Document (PD). The PD governs how claims are to be paid, upon what basis and parameters stiplated therein. It also outlines, as required under ERISA, an appeals process for providers to follow should all or part of their demand is denied.
The hospital files a demand for $250,000 to your checking account. The bank president writes a check off your account for $50,000 and sends it to the hospital. That was all the money availble to be paid on this claim, no more and no less.
Unfortunately, the hospital is not happy and demands that the you pay the balance, or $200,000. But, since they accepted assignment of the claim, the Plan Document became the undesputed rule book. What now?
One of the rules requires the hospital to file an appeal, or a series of appeals to recoup moneys denied by the payer (the payer is now the insurance policy, not the patient).
The patient, through the Assignment of Benefits, has effectively established a contract with the provider.
Fortunately for the hospial, under ERISA, providers have 60 days to appeal. Failure to appeal a denial within the 60 day period can result in the forfeiture of a provider’s right to reimbursement or even access to court. A provider may have to complete two or more levels of appeals before they can file a lawsuit in federal court to pursue their legal right to reimbursement.
With Cost Plus and Medicare based reimbursment plans growing in the market, the phenomenon of balance billing is playing hard on the minds of human resource directors. HR directors fear balance billing as much as Superman’s adversion to Krytonite. But an assignment of benefits, in the view of some legal experts, is consideration in full, leaving balance billing issues mute.
Statistics show that under Cost Plus Plans and Medicare Based Reimbursment Plans, only 7% of providers ever file an appeal. That means 93% have effectively given up their legal remedies under ERISA to recoup denied revenue.
If Assignment of Benefits were not in play, then the insured would be the recipient of eligible claim dollars. Imagine Joe Sixpack receiving the $50,000 check. He could then negotiate with the hospital – “I’ll give you $40,000 for payment in full or nothing at all buddy. Your charges are outrageous!”
Isn’t this how automobile insurance works? You get a check from the insurance company, then go out to shop for the most competitive repair shop in town? You may even pocket some easy cash along the way.
From a Texas provider:
– Great points, Bill. If prices aren’t openly discussed, they will only increase