How to reduce medical bills in your personal injury settlement?
To frame this piece, let’s consider the following situation using John Doe as the example. John Doe was hit by a vehicle while riding a scooter on his way to work (this happens a lot in Chicago). After consulting with attorneys, John Doe selects legal representation and decides to move forward in pursuing a personal injury case in order to be compensated for medical expenses and the pain and suffering as a result of this accident. Sound familiar?
The responsibility you have to settle or pay off medical debt is a critical part of the settlement process. In many cases, your provider or insurance company have the legal right to be reimbursed for expenses they have already paid so don’t act too quickly in spending your settlement money. You might owe a portion of it back or may need a substantial part of your settlement proceeds for ongoing treatment, continued pain and suffering, or to offset daily living costs which come as a result of losing employment from your accident.
3 Quick Reasons Why Medical Bill Review is Important
1. Liens may be placed on your settlement
Plaintiff beware. Depending on your situation, a lien may be placed on your settlement for medical bills already paid by your provider or health insurance carrier. In this case, a lien will be placed for reimbursement of charges already accrued and will be expected to come out of your settlement award. You or your legal representation can generally negotiate the amount of a lien so it’s a fair trade for all parties involved but be careful, a swift and quick adjustment to this debt needs to be reviewed with a fine-tooth comb to ensure accuracy and proper billing.
Healthcare Provider: John Doe immediately visits the Emergency Room following his accident. He has insurance but in many personal injury cases, the plaintiff does not. In accordance to state law, the hospital places a lien on his accident insurance settlement in exchange for providing care. Now, John Doe must return a certain percentage of his settlement back to the hospital, who filed the lien so they can be reimbursed for their services.
Health Insurance Carrier: Same example, different scenario. In John Doe’s case, his health insurance company paid for the bills stemming from his personal injury claim. Instead of the hospital, his insurance company places a lien on his settlement to be paid back from the proceeds of his case. After all, your insurer did pay for claims that were actually the responsibility of the defendant and just simply want to be compensated for their expenses. This process, which is almost always included in your insurance contract is called subrogation or the right to reimbursement.
Quick Tip: The health insurance industry is large and robust and has a deep history in overpaying for inaccurate and inflated medical bills. According to a 2013 article by HealthcareITNews, between $68 and $226 billion is lost annually to Fraud, Waste and abuse (FWA). Any inaccuracy in the original bill amount may cause your insurance company to overpay, greatly affecting your personal cut of the settlement when it comes time for their reimbursement. The same applies to Medicare and Medicaid as well, who is reimbursed according to federal and state statutes.
2. Medical Billing Error and Overpricing
Here’s some potentially shocking information you need to know. Medical debt is the leading cause of bankruptcy and collections in the United States, with a reported 80% of all medical bills containing some type of error. As previously indicated in this piece, claims inaccuracy in the forms of Fraud, Waste and Abuse have become an epidemic, responsible for billions of lost costs each year. Pair that with significant changes in the healthcare landscape following the Affordable Care Act, and you might find yourself with a shocking bill. More shocking than you originally anticipated.
A 2014 NerdWallet Health Study released the following data points:
- 56M Americans under 65 will have trouble paying medical bills.
- Over 35M American adults (ages 19064) will be contacted by collections agencies for unpaid medical bills.
- Over 15M American adults will use all their savings to pay medical bills.
- Over 11M American adults will take on credit card debt to pay off hospital bills.
- Despite having year-round insurance coverage, 10M insured Americans ages 19-64 will face bills they are unable to pay.
- A predicted three in five bankruptcies in 2014 were due to medical bills.
Shocking right? Raise your hand if you’ve ever had a medical bill you didn’t understand or didn’t think was accurate? The fact is, not all medical debt is the result of billing error or overpricing. However, changes to the Affordable Care Act have placed more responsibility for payment of services on patients than ever before. As a result, it has become imperative to always verify the accuracy of your charges, particularly in cases where your provider or health insurance carrier is expecting reimbursement from your settlement.
3. You deserve the maximum settlement
Let’s revisit the situation of John Doe. After consulting with his attorney, a proposed settlement of $20,000 was reached. However, John Doe owes $9,000 to the hospital where he received treatment and ⅓ of his settlement to his attorney, leaving very little settlement funds left over for John Doe.. A thorough medical bill review, auditing, and negotiation process might determine that John’s medical bills were improperly coded, as the case with many Emergency Room bills, leaving an adjusted medical balance of $4,000. This quick but critical process means that more of the settlement is now available for John Doe.
How to Find savings
Ask your legal counsel if medical bill review and negotiation is part of the settlement process? A well trained and equipped legal support staff often includes medical bill negotiation as part of their service offering. However, results vary greatly by firm size, expertise, and convenience. Is negotiation just a part of their process or do they employ a dedicated coding team to analyze claims? Sure, they might perform basic negotiation but is identifying error and overpricing in medical bills core to their business. Probably not.
Through our engagement in personal injury cases, we often find that while negotiation can result in savings, particularly when a lien is placed on your settlement by a hospital or provider, a much greater percentage of savings exists when a true medical bill review and audit takes place. True savings are not only identified through negotiation but through a detailed and line-by-line analysis of medical bills to ensure proper coding, accurate pricing, and insurance application. Don’t just accept a reduction that is “fair” for all parties when greater savings exist by working with a third-party expert. Let your legal counsel focus on the critical aspects of your case and leave your medical bills to the experts!
Third-Party Medical Bill Review
A trained and experienced medical billing advocate has knowledge beyond even well equipped and staffed attorney’s whose focus should be on the procedural and legal aspects of your case. The job of a medical billing advocate is to ensure that your medical bills were properly coded and priced, taking advantage of insurance and self-pay, uninsured discounts. Again, 80% of all medical bills contain error and billing practices vary greatly from practice to practice. We highly suggest that a detailed medical bill review, audit, and negotiation process takes place prior to any settlement to ensure that you receive the maximum amount of savings.
Wrapping it Up
At DisputeBills.com, we don’t simply negotiate a reduced bill. We try to understand if your bills are accurate in the first place and audit every single line item of every single bill in order to verify accuracy and provide leverage in negotiating. Our team of experienced coders, claims examiners, and clinical support staff averages a 60% reduction in over 70% of all active cases. These types of returns ensure that the maximum settlement is placed in your pocket, and not in the form of a debt you are required to pay a provider, hospital, or insurance company. Our personal injury team works exclusively on contingency, meaning if our audit and negotiation process yields no savings, you’re not out a dime! If you’d like to get more out of your personal injury settlement or save money for your clients schedule time with our team to discuss your case.