Perils of 3rd Party Payment: Coast to Coast
By: John R. Graham
12.11.2007 5:03:00 PM
Who Pays the Health Care Bills When We Don't Know the Debtor? Suppose a patient needs an expensive surgery and his health plan pre-authorizes it on December 11. The surgeon does the procedure on January 11, and sends the health plan a claim. The health plan denies the claim, explaining that the patient quit the health plan on December 31. Who should pay the bill? To me, the anwer is pretty obvious: the patient. Unfortunately, in most cases it is unlikely that providers will be able to collect from the patient. The result is conflict between the health plan and the hospital and physicians. In cases where the patient was insured individually, and the health plan has rescinded the policy (after authorizing the treatment) due to misrepresentation, it has long been the law that the health plan has borne responsibility for the claim. Fair? Maybe, but the California Medical Association (CMA) did not believe this went far enough. Suppose the patient has health insurance through his employer, quits his job, but the employer does not tell the insurer in a timely fashion? Should the insurer still be liable? Maybe not so clear, is it?
The CMA is a little misleading on this issue, conflating individual rescission with bureaucratic lag in group health insurance. The CMA supported a recently passed California bill (AB 1324) that erases the distinction. According to the CMA, the new law is meant “to confirm that this overreaching practice has long been illegal in this state.” Indeed, that’s what the bill states: “…..it is not the intent of the Legislature to instruct a court as to whether these provisions make a change to existing law.” What is the point of passing a bill that does not change the law? Clearly, there’s mischief afoot. On the other hand, the Medical Society of the State of New York (MSSNY) has lobbied that state to overturn United Healthcare’s policy requiring hospitals to inform the insurer within 24 hours that a patient has been admitted. This conflict is surely applicable to every state, and looks to me like another case of providers who “want their cake and eat it, too.” If they expect insurers to pay claims for patients whose policies have been cancelled, it takes a lot of nerve to turn around and deny the responsibility of informing the insurer when a patient’s admitted, in a timely manner. Who should pay a claim when there’s confusion about coverage? How quickly should a hospital tell an insurer when it’s admitted a patient? I don’t know, but both of these questions are solvable by contract between insurers and providers, and it’s distressing that providers prefer to run to state legislatures to get what they want instead of negotiating on an even playing field. It’s a recipe for spiraling health costs.
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