A heart attack. A stroke. A bad car accident. These things aren’t your fault. They are just part of life. It’s a good thing you listened to your mother’s advice years ago and got health insurance. You can hear her voice in your head as you lay in the hospital bed: “Imagine the cost of surgery and a week-long stay in the hospital if you had to pay that yourself.” It helps you relax knowing that your insurance covers this. You think, “I have great insurance. I have the best plan they offer. I pay $1,500 per month in premiums for this great coverage. After my low deductible, copay, and out-of-pocket maximum, I am covered 100% for these bills.” You go back to enjoying that bowl of lime jello.
A month later you receive mail from your insurance company and an explanation of benefits (EOB). The EOB details the days you were in the hospital and the care you received. A disclaimer at the top says, “This is not a bill.” The grand total for your medical procedure is $150,000. But you have great cause for concern when you see the line marked “Patient Responsibility” and the number reads $100,000. “But this is not a bill,” you say to yourself to calm down. You hope this was a mistake.
A few weeks later you receive mail from the hospital. You read the paperwork and almost fall over. This time at the top it says “Total Due” and the number reads $100,000. This is a bill. And this bill is due within 30 days. “But this can’t be right. I have great insurance. My insurance is supposed to cover this!” You don’t pay the bill because you don’t have $100,000.
The unpaid bill is referred to collections. Bill collectors are sending demand letters with FINAL NOTICE to pay within 30 days or else. Your credit score drops 100 points because all your medical bills are referred to collections.
You get mad at the hospital and call the billing information number. You find out that your insurance company refused to cover $100,000 of your claim. The person on the other end of the line refers you back to the EOB as to why the charges were not covered.
You dig out that EOB from your medical file because your mother also told you never to throw away unpaid bills. You comb through the EOB and see several line items that list the service provided by the hospital, the charge by the hospital, the amount paid by the insurance company (not 100%!!!), and the amount you will owe to the hospital. You also see a little alphanumeric code next to the amount you owe. You find the matching alphanumeric code at the bottom of the EOB. And now you want some answers from the insurance company.
The alphanumeric code might list one of the following
- The patient has not met the deductible.
- The patient has not met the al out-of-pocket maximum.
- The charged amount exceeds the usual and customary local charge for the service.
- Charges are for treatment or procedure that is classified as experimental, investigative, or cosmetic.
You start matching the services by the hospital with the denial of benefits by the insurance company. You find that the insurance company paid nothing on perfectly legitimate charges, like a room in ICU. Your insurance company claims the hospital “over charged” on its prices. You closely read your insurance policy. Your insurance company has reserved the right to determine the appropriate charge for medical services.
Since the insurance company is only going to pay what it believes the charges are worth, and the hospital wants to collect on its full bill, guess who’s left holding the bag. “But if this is a dispute between the insurance company and the hospital over how much to charge for services, why am I the one getting the bill? Shouldn’t the hospital be collecting from the insurance company?” You thought you were protected, or insured, from this very thing happening.
Here is what likely happened behind the scenes. You went into the hospital. There was a charge for every service, from surgery, to the surgical supplies, to the operating room, to the recovery room, to the medication, to blood draws, to lab work, to the doctor checking on you every few hours, to the nurse taking your vitals every hour, to the appointment with rehab, etc. You get the picture.
Each of these costs was tallied up by the hospital for your total medical bill. Think of putting groceries on the conveyor belt at the checkout. Your (very abbreviated) list could look something like this:
- 01/01/2016 Emergency Room – $2000
- 01/01/2016 Angiography – $230
- 01/01/2016 Doctor Visit – $100
- 01/01/2016 Catheter – Artery – $900
- 01/01/2016 Room – ICU – $1500
- 01/02/2016 Doctor Visit – $100
- 01/02/2016 Blood Draw – $20
- 01/02/2016 Lab Work – $50
- 01/02/2016 Room – ICU – $1500
- 01/03/2016 Doctor Visit – $100
- 01/03/2016 EKG – $3000
- 01/03/2016 Room – General – $750
- 01/04/2016 Doctor Visit – $100
- 01/04/2016 Room – General – $750
- 01/04/2016 Blood Draw – $20
- 01/04/2016 Lab Work – $50
Often times these medical bills are ongoing because your rehabilitation and follow up appointments can last for months. This bill is sent to the insurance company for payment.
You look at the medical bill again. You read the disclaimer that says, “You are responsible for payment of this bill even if you have insurance. We are not responsible for any disputed claims. Any bills that are not paid within 100 days will be referred to collections.”
Deflated. You now realize that the hospital is going to keep coming after you for a medical bill of $100,000 and there is nothing your insurance company is doing to protect you. That is until you read the fine print.
Each insurance company is obligated by law to provide its insureds (the people who pay insurance) with an administrative review process. You have a right to send your thoughts and complaints to the insurance company and ask that they reconsider the denial of benefits. The administrative review process is controlled completely by the insurance company. They set the guidelines and deadlines. You may have anywhere from 60 to 180 days from the date you received the EOB to file a formal appeal. You will have to file the appeal on the form provided by the insurance company. You will have to include some documentation to support your argument.
“And what if they deny me?” Then you can continue your fight with a review by the State Insurance Commissioner. You can lodge a complaint and have the state agency investigate. You can file a lawsuit for breach of the insurance policy (breach of contract).
There are many reasons why people buy insurance. Peace of mind in case of an accident. The financial security that you only need to budget a certain number per month for insurance premiums instead of squirreling away money to cover a major medical bill. Assurance that medical claims will be paid promptly by the insurance company. Freedom from being hassled by bill collectors. You have enough to worry about with getting healthy. Why should you stress about whether your insurance company is going to cover your medical bills?
If you find yourself in this situation, feel free to contact the attorneys at SW&L. Nathan Severson and I handle cases against health insurance companies. If you would like to speak to us about your situation, feel free to contact the office at 701-297-2890 or email us below.