Health Insurance, Med-Pay or Medical Lien? How to Coordinate Benefits, Stretch Your Dollar and Avoid Getting Ripped Off

Victims injured in motor vehicle collisions often have either no insurance to cover medical care whatsoever or several different kinds of insurance. People that are lucky enough to have health insurance often ask me if they should use their health insurance to pay for medical care related to an auto accident or whether they should use MED-PAY coverage that they have on their auto policy. There is general confusion in the medical/legal community about this topic. In this blog, I want to dispel some of the common confusion about these issues and also detail advantages and disadvantages of each option. There are some issues in the law that breed debate, and multiple viewpoints can often be correct. The views expressed here are generally regarded as the majority viewpoint of attorneys representing injury victims.

HEALTH INSURANCE:
Advantage: In the case of an auto accident, health insurance will pay for your treatment. They will not pay bills at full price. They pay bills at an agreed upon rate with the health care provider. At the same time, in these situations, the doctor's office cannot charge you the balance of what the health insurance does not pay, other than co-pays and deductibles.

Disadvantage: When settlement occurs, it is important to know that the health insurance company will nearly always seek reimbursement for medical expenses that they have paid. This right to be repaid is called subrogation. If you fail to pay back the health insurance in this situation, they can take action to suspend your insurance coverage and can even sue you. Please note that these insurance companies are often quite negotiable on the amount they are willing to take back in subrogation.

MED-PAY:
In a recent blog, I detail changes related to Colorado's new law requiring mandatory MED-PAY on all auto insurance policies. By way of review, starting in 2009, under Colorado's new mandatory MED-PAY statute, there is a minimum five thousand dollars ($5,000.00) of automatic MED-PAY sold as part of every insurance policy and renewal. The only way a policy will not have at least the minimum coverage ($5,000.00) is if it is waived in writing by the policyholder. Most, if not all insurance companies will offer optional additional MED-PAY coverage, such as ten thousand ($10,000.00) or even twenty five thousand dollars ($25,000.00). For the first 30 days after notice to the insurance company of an auto accident, five thousand dollars ($5,000.00) of med-pay must be held by the insurance company to pay any hospitals or ambulance companies who might present a bill. After 30 days, the money frees up and can be used to pay any injury related medical bill.

Advantage: It pays any medical bills related to any auto accident related injuries. Also, as of the time your policy renews in 2009, there is no repayment requirement. This means that whatever care is paid by this source DOES NOT have to be paid back when you reach a settlement or jury verdict.

Disadvantage: These coverage limits are generally small. There is usually no more than $5,000-$10,000 of coverage. That amount of money will pay the emergency room, the ambulance and little else. Even at the higher limits coverage of $25,000, any major surgery or long term care will quickly exhaust these limits.

MEDICAL LIENS:
If you are uninsured and in need of medical care, there are several private programs that will direct you to qualified physicians and therapists. At the time of settlement or jury verdict, the medical lien company will seek reimbursement from your settlement proceeds.

Advantage: Care is provided without any money paid by you up front. It provides an avenue of care for uninsured persons who might otherwise go without much needed care.

Disadvantage: The payback terms can be exorbitant. Because these companies are assuming a risk that the case might not result in settlement, they charge huge mark-ups on the care. An outpatient knee surgery, which normally may cost $5,000, may end up costing you $40,000. There is usually some negotiation with these companies at the end of the case. However, an uninsured person will need to settle their case for as much as 3 or 4 times the value of an insured person's case to net equal amounts of money after everything is paid back.

RIGHT APPROACH:
Let's start with the answer: Yes, when hurt in an accident, you should always use your health insurance and insist that all doctors, clinics and therapists send their medical billing to your health insurance as your primary coverage. If you also have MED-PAY, you should treat it as a secondary insurer to reimburse your co-pays and deductibles. We recommend that you or your attorney send a letter to your MED-PAY insurer early in the case telling them that you want to be consulted and be permitted to authorize specific payments under this coverage. The worry is that without you informing your insurance company that you want to maintain control over the disbursement of these proceeds, your insurance company might simply send money on any occasion when a health care provider sends them an invoice. Since this is coverage you are paying a premium to have, we feel it is your property and you have a right to control its use, if not entirely, at least after the first thirty days when the hospital and ambulance reserve-time expires. Attorney's call this process of analyzing and best using multiple insurance coverages for the benefit of their clients, BENEFITS COORDINATION. Any attorney you hire for your injury accident should be willing and in fact eager to do that for you.

WRONG APPROACH #1:
Some doctor's offices will try and convince accident victims to use all their MED-PAY coverage through their auto insurance first, and only after the policy limits are depleted, utilize health insurance. This is the wrong approach. Doctor's offices prefer to send their billing to MED-PAY because the auto insurer will simply pay the bill until the coverage is depleted. That is an important consideration because health insurance will take a bill and ratchet down payment, called "re-pricing," often substantially, from what the doctor's office has billed. With health insurance the doctor cannot bill the client for the balance. Thus, the motivation for the doctor is evident. For the injury victim, once the MED-PAY is exhausted, the patient will be paying out-of-pocket co-pays and deductibles. That can be unjustifiably expensive.

WRONG APPROACH #2:
Some doctor's offices will encourage patients with insurance not use their insurance at all and instead simply sign a lien agreement, entitling the doctor to be paid out of the settlement proceeds at the end of the case. This can be great for the doctor in that his elevated bills will not be re-priced by the health insurance company. However, the patient is going to have to payback substantially more at the end of the case to the clinic on lien than they would ever pay back to an insurance company in subrogation. Basically, this option is great for the doctor-bad for you.

CAVEAT:
Please note that doctors that take cases and wait to be paid back are rare and are doing the work of angels. This blog should in no way reflect poorly on doctors who are compassionate enough to treat a person today and perhaps wait years to get paid. There are, however, some misguided professionals in every profession (attorneys as well). The overwhelming majority of physicians and chiropractors and physical therapists who take liens are doing it appropriately as a last resort motivated to assist uninsured injured persons, and should be afforded the respect and admiration of the entire medical, insurance and legal community.

CONCLUSION:
At the end of the case, it is not the settlement amount that matters. The only really important focus should be what the client gets to keep. At Anderson Hemmat, we always strive to remember how important it is that our clients end up with as much as possible in their hands. Consider calling us and setting up a consultation if you have any questions about anything related to this or any topic covered in our blog. Our attorneys would be happy to go through all of these issues with you on a one-on-one basis, and we never charge you for that first consultation.