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Frequently Asked Questions
Below are some frequently asked questions that we get from hospitals and healthcare providers regarding third party liability (TPL) and motor vehicle accident accounts:
- Q: What Is A Hospital Lien?
A: A hospital lien is a right created by state or county statutes that “protects” a hospital’s bill in an injured patient’s personal injury settlement or award. If the hospital follows the specific statutory requirements (known as “perfecting” the lien), the lien ensures that a hospital’s bill will be paid when a patient receives personal injury proceeds. If the bill is not paid, a hospital has an independent right to recover this money from the settling parties. - Q: How do I “perfect” a hospital lien?
A: Each state has varying requirements on perfection. Many states require the lien to be filed in local property records. Some state statutes require actual notice to be sent to the patients, the party responsible for the patient’s injuries, the settling insurance company and/or lawyers. These requirements are very specific and must be complied with for the hospital to maintain a hospital lien. - Q: Our hospital pursues the patients directly (self-pay), do I really need to have a hospital lien process in place?
A: Well, if you don’t, we can assure you that your hospital is losing money on these accounts. Unfortunately, once personal injury money is paid to a patient there is no guarantee that the hospital will be paid. Without a hospital lien, there is no protection of the bill and you will be left to the good will of the patient to pay you directly. - Q: Our hospital business office gets Letters of Protection from the patients’ attorneys, why would I need a lien?
A: Attorney Letters of Protection do not have the binding effect of a hospital lien. In most cases, they are not enforceable if the attorney does not pay the hospital out of his client’s settlement. - Q: Are Assignment of Benefits really that important to get from the patient?
A: Yes. A properly signed and executed Assignment of Benefits (AOB) is one of the most important documents in your admissions process. It may entitle the hospital to be paid directly by the liability insurance, med-pay or personal injury protection (PIP) insurance carrier, and/or a health insurance plan. Also, in states that don’t have hospital lien laws, the AOB becomes a very important document to have to protect hospital’s charges in personal injury matters. - Q: Patients’ attorneys many times tell us that we are not entitled to billed charges, is this true?
A: Typically, as long as the hospital’s charges are deemed to be usual and customary, no discounts are automatically allowed. Many plaintiff’s personal injury lawyers will argue that a hospital can recover no more than Medicare DRG or insurance discounted rates. In most states, this is just not the case. - Q: If the injured patient is Medicare eligible, does the hospital have to bill Medicare instead of potentially getting billed charges from the patients’ personal injury settlement/award?
A: No. Again, many PI lawyers will make this argument. The federal Medicare Secondary Payor Act is specific in that a hospital can pursue its billed charges from insurance proceeds as primary. There are time limits and filing requirements that apply however. - Q: How about Medicaid, is it secondary to liability insurance proceeds?
A: In many states, yes. Since Medicaid is state specific, you should consult with your attorney on the laws that apply. - Q: Can I do anything if we filed a lien and the personal injury money was paid directly to the patient who did not pay the hospital?
A: In most states a “pay over lien” case can be instituted against various parties including the liability insurance company who cut the check, the lawyer (if any) that accepted the check on behalf of his patient client, and/or the patient. Your hospital attorney can institute such a lawsuit. - Q: We have several large balance cases where the patients are involved in ongoing litigation. Is there anything we should do to make sure our bills are protected?
A: Yes. Besides perfecting a hospital lien and obtaining a valid AOB, your attorneys can “intervene” in the patients’ personal injury cases. An intervention is basically a legal action filed on behalf of the hospital in an existing lawsuit. In the intervention, the hospital should assert its lien claims, assignment of benefits claims, suit on account, and other various and appropriate causes of action to protect its unpaid bills. The hospital will then be a party to the case and be included in all hearings, meditation, and trial. We highly suggest this process on large balance claims.
Insurance Denial Accounts
- Q: What is a pre-existing condition?
A: The definition of a pre-existing condition varies among plans and states. However, most plans and states follow the federal definition of a pre-existing condition: a condition for which the patient received any medical advice or treatment received from a medical provider within the six (6) months prior to enrollment with the plan. If the patient did not receive any treatment within the six (6) months prior to enrollment with the plan, a pre-existing condition denial can often be overturned. Additionally, the exclusion period gets reduced down for each day of prior continuous coverage without a “gap” in coverage of 63 or more days. Insurers often exclude claims when the patient did not get treatment for the condition within the six (6) months prior to enrollment or the patient had prior continuous coverage. Overturning a pre-existing condition denial is a technical and often complicated process that typically requires legal intervention. - Q: We did not obtain an authorization prior to rendering treatment and now the insurer is denying for lack of authorization. Is there anything we can do?
A: Most states do not require an insurer to allow “retro-authorizations.” However, many plans allow a retro-authorization. Additionally, some states prohibit an insurer from requiring an authorization for emergency services. You should consult with your attorney to see if he or she can file a request for retro-authorization or an appeal based on state law. - Q: We received an EOB reflecting a discount for usual and customary reimbursement from a payor that does not have a contract with our facility. What does this mean?
A: In the last few years, more and more payors have failed to pay based on 100% of charges for out-of-network facilities. In that case, payors essentially self-discount a hospital bill by labeling the reduction as a “usual and customary” or “reasonable and customary” reduction. Some states have laws that prohibit discounts without a contract. In other states, if a hospital can show its charges are reasonable for its service area, its rates should be upheld In any event, a facility should notify its attorney as soon as it recognizes a payor utilizing this tactic so he or she can get the appeals process underway.