What Good is Health Insurance if the Hospitals Don’t Bill It for Your Procedures?

We all grumble a little bit about paying our insurance premiums, until we get hurt or sick – and then those premiums don’t seem so bad. HealthCare.gov tells us that the average cost of a 3 day stay in a hospital is about $30,000, or $10,000 a day. So when you are seriously injured or ill, knowing that your health insurance will pick up the majority of that cost can ease some of your worries.

Unless your health insurance never receives a bill from the hospital – which is exactly what happened to a young woman in North Carolina, and the reason we wanted to talk about a controversial insurance practice taking place in states across the country.

In sum, this is what happened. Jessica Mounce was rear-ended by another car, and she “flew to the other side of the highway” as a result, as she told WSOCTV. She went to the hospital, but the hospital never billed her health insurance company. Instead, they went after Jessica herself, even putting a lien against her and threatening her with collections.

To understand why the hospital is allowed to do this, you need to know more about balance billing.

How health insurance pays a hospital bill

Insurance policies vary from customer to customer, but one of the things they do have in common is how they work with hospitals and doctors. This is called “balance billing,” and in very, very general terms, it works like this.

Let us say that ABC Hospital charges $200 to fix a broken leg. XYZ Insurance Company tells the hospital that they would love to contract with them, but they are only willing to pay $150 for a broken Leg. ABC Hospital agrees. Then, XYZ Insurance company tells you that they will only pay (based on your policy) for 50% of the costs to fix your broken leg – in this example, $75. You agree to this.

You break your leg, go to ABC Hospital, who then bills XYZ Insurance Company for $150. XYZ covers $75, so the hospital bills you for the additional $75. In that way, the total cost of $150 is paid in full.

Now, if you’re wondering what happened to that other $50 – it’s gone. The insurance won’t pay for it, so hospitals are supposed to chalk that up as the cost of doing business; after all, by accepting the insurance and whatever the policy will pay, the hospital stands to gain more patients and thus more revenue.

What the hospital did instead

Instead of billing Jessica’s healthcare insurance provider, the hospital – looking to recoup all of its money – sought payment from the auto insurance carrier for the driver that hit Jessica, placing a lien on any settlement or recovery, and threatening to turn her over to collections. They never billed her healthcare provider at all. If it seems unfair, it is – but it also may be perfectly legal in most states. WSOCTV reports that there are lawsuits pending in similar cases in Colorado, Ohio, Missouri, Arkansas and North Carolina right now, and there could be more in other states, too. Indiana, on the other hand, has passed laws that prohibit hospitals from not going through a person’s healthcare insurance provider first.

We urge you to review both your health insurance and auto insurance policies to make sure you have enough coverage, and to make sure that your health insurance is billed for any medical treatment that you receive. At the Gilbert Firm, we protect policyholders at risk of being taken advantage of. To make an appointment with Clint Scott or Brandon McWherter, please call 731-664-1340, or fill out our contact form. With offices in Nashville, Chattanooga, Memphis, Jackson and Knoxville, you can always find an experienced Tennessee bad faith attorney nearby when you need help.