A recent CNN report (“Insurer skips doctors and sends massive checks to patients, prompting million-dollar lawsuit” March 1, 2019) highlights a serious problem faced by medical providers such as mental health rehabilitation facilities in obtaining payment for the services they provide. Health insurers typically allow patients to assign payment for the services they receive in order to permit providers to receive prompt direct payment for their services. This is a unique feature of healthcare in America since this issue does not arise in countries that have single-payer healthcare since there is no need to rely on patients to pay providers for the services they receive.
Without an assignment, or in situations where insurers refuse to accept assignments, a patient who receives medical treatment submits the bill to their insurer, receives the amount payable under the terms of the coverage, and then pays the doctor or hospital directly. The problem with that approach, and the reason why providers prefer direct payment, is to facilitate speedier payment and avoid the need for providers to pursue collection efforts against their patients.
The CNN story presents the viewpoint of providers who are being pressured into accepting rock bottom reimbursement rates by joining the insurers’ “networks” as a condition of receiving direct payment; and who are also denied payment when the patient who receives payment directly from their insurer fails to remit that payment to the doctor or facility that has provided treatment.
Although it is typically the patient, not the provider, that has a contract with the insurance company, insurers and providers contract for lowered reimbursement rates or fixed charges in order to be listed within an insurer’s network of providers. But that does not mean that a non-network provider’s rates are necessarily excessive. And many providers justifiably refuse to join insurer networks if the reimbursement rates do not fully cover the actual charges incurred. However, when insurers refuse to accept patients’ assignments to their providers and send reimbursement directly to the patients, it creates a host of problems.
Doctors, hospitals, and rehabilitation treatment centers cannot afford to provide treatment if they are not being paid. Continuity of patient care also depends on prompt reimbursement from insurance companies. Most problematic, though, are situations that have arisen in relation to substance abuse. Effective treatment of patients suffering from addictions often requires the patient to be in a residential setting. After discharge, recovery is dependent on the patient overcoming the temptation to resume drug abuse. Putting what can amount to more than a hundred thousand dollars of insurance reimbursement directly into the hands of an addict can be like pouring gasoline on a fire. The patient’s recovery is jeopardized and the patient’s access to future treatment is also impeded by the absence of direct payment by the patient’s insurer.
One of the nation’s largest insurers, Anthem, has been sued over its practice of directly reimbursing patients, and other cases are beginning to be filed accusing insurers of strong-arming them into accepting lower reimbursements to join insurer networks in order to receive direct payment. Plaintiffs in those lawsuits also allege negligence and irresponsibility in turning over funds to individuals who are likely to misuse the payments and not reimburse their providers.
The success of such cases depends on providers’ retention of lawyers experienced in issues unique to health insurance as well as experience in ERISA law, the federal statute governing employee benefit claims. Since most health insurance in the U.S. is provided to employees through their employers, claims and litigation under those policies falls within the scope of ERISA.
The experience of the attorneys at DeBofsky, Sherman & Casciari, P.C. encompasses all issues relating to health insurance claims and litigation.