By Cory Bilton
As many accident victims and attorneys in the DC area know, doctors and hospitals charge far more than they consider their services to be worth. Although this has been the true for a long time, the topic is getting a lot of press lately following Medicare’s release of data showing the prices hospitals charge for the most common inpatient procedures (examples here and here). Similar to Medicare, private health insurers do not pay the price charged by doctors and hospitals either, but instead pay a lower, contractually negotiated price for medical care provided to its members. For simplicity, I’ll refer to the price that doctors and hospitals charge as the “list price” and the negotiated rate that doctors and hospitals actually receive the “insurance price.” The list price is always far, far more than the insurance price. For this reason, doctors and hospitals would prefer to be paid the list price.
When a person is injured in a car or bicycle accident, there are often multiple forms of insurance coverage available; for example, health insurance, liability insurance, medical payments coverage (MedPay), and personal injury protection coverage (PIP). With multiple forms of insurance available, doctors and hospitals often try to choose the insurance that will pay the most. While billing a patient’s health insurance will only net the doctor the insurance price, the patient’s MedPay or PIP will sometimes pay the doctor the list price instead. Paying the list price with her PIP or MedPay is always a bad deal for the patient.
During its most recent session, the General Assembly in Virginia passed a new law (SB 707) requiring doctors and hospitals to bill a patient’s health insurance, instead of the patient’s MedPay or PIP. The law, which will be codified as Virginia Code § 8.01-27.5, requires in-network doctors and hospitals to request payment solely from a patient’s health insurance. The only burden placed on the patient is that she must provide her insurance information to the doctor in time for the doctor to submit a bill to the health insurer (different health insurers may have different claims procedures, but a person with health insurance routinely provides the doctor with the insurance information anyway).
While there are no significant additional burdens placed on the patient, a health care provider (that normally accepts the patient’s insurance, dubbed an “in-network provider”) faces three new consequences for failing to bill the patient’s health insurance. First, the patient will have no obligation to pay for the services of the health care provider that should have been submitted to the health insurer. Second, the health care provider will not be able to assert a lien against the patient’s legal case (a lien is a legally enforceable IOU against the proceeds from a settlement or lawsuit). Third, the health care provider will not be able ask for payment from the patient’s MedPay. Taken together, these consequences make it far more difficult for doctors and hospitals to selectively opt for the coverage that will pay the list price.
I think the new law is supported by a number of strong policy arguments. People expect and deserve the benefit of the health insurance they purchase. It strikes me as unfair to permit a healthcare provider to ignore a person’s health insurance in order to charge the list price. Doctors who do this are clearly gaming the system. MedPay coverage also provides reimbursement of some lost wages, which health insurance does not cover. Therefore, doctors that bill a patient’s MedPay not only deprive a patient of the benefit of her health insurance, but can also rob her of the benefit of her MedPay by using up the coverage for health care expenses. The new law strikes a good balance between ensuring that doctors are paid a reasonable price for their services and injured people receive the benefit of the insurance coverage they purchase.
So starting July 1, accident victims that reside in Virginia no longer need to worry about whether to provide the doctor with their auto insurance information. If you have health insurance which the doctor would normally accept, the new law requires the doctor to use it.
Please read my disclaimer.