NEW YORK – According to a news story on nytimes.com, some hospitals are engaging in a practice of circumventing insurance companies to overcharge car accident patients by filing liens against the victim’s automobile accident settlement. Some consumer advocates believe this strategy to collect on medical bills specifically targets the poor.
The news article discusses how one woman who had Medicaid thought Medicaid would pay for her medical bills following a car accident caused by another driver. The woman showed her Medicaid insurance card to EMS, who took her to a hospital by ambulance. The woman spent two nights in the hospital.
However, the hospital did not send her hospital bills to Medicaid, which would have completely paid off her hospital bill. Instead, the hospital rejected her requests to bill Medicaid. Instead, the hospital hiked up her bill five times the amount due and placed a medical lien on her auto accident settlement.
The victim was hurt twice, and she is not alone. According to the news report, hundreds of prosperous hospitals have turned to hospital lien laws to increase profits. In many cases, they are targeting low-income accident victims. The hospital lien attaches a claim to a settlement to ensure that the debt is repaid before the patient receives their accident settlement check.
According to the article, some hospitals disregard the deep discounts a hospital may be contractually obligated to extend to health insurers but instead pursues “full charges.” The difference in cost is tremendous. For example, the woman in the article, Medicaid would have paid the agreed amount of $2,500. However, by pursuing a medical lien, the hospital was able to collect $12,856 directly from the accident victim.
According to Christopher Whaley, a healthcare economist with RAND Corporation, it is shocking to believe that Medicaid patients might be charged the full-priced medical bill.
The woman said that she felt there was an error in her registration when the hospital did not bill her Medicaid for her accident injury treatment. However, the hospital never billed her Medicaid insurance.
According to interviews and court records, the practice of circumventing Medicaid health insurance to collect “full charges” from auto accident victims’ settlements has grown into a standard practice in many major health systems throughout the United States. The practice is much more profitable when practiced against low-income accident patients who have Medicaid. This is because Medicaid usually offers a lower reimbursement rate than private health plans.
The news report states that one Washington State hospital generated an estimated $10 million per year after implementing this practice.
States that permit hospital lien laws have allowed some hospitals to take advantage of these laws in methods that injure accident victims. According to the New York Times, wealthier hospitals tend to be engaging in this form of collection practice. The New York Times states that many of those hospitals received “hundreds of millions of dollars in federal bailout funding during the pandemic are among the most aggressive in pursuing payment through hospital liens.”
Fortunately, the victim in the article received her full auto accident settlement in 2020.
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