Medical Balance Billing: Different Tests For Different Contexts
Those clients who work with us on improving their rate of realization on worker’s compensation billings know that Virginia statute prohibits invoicing a patient with an awarded, work-related injury for any portion of his account for medical services provided. In worker’s compensation, medical providers must channel claims through the administrative process, seeking payment only from employers and their insurers.
The administrative process has historically been very favorable to providers – at least until the General Assembly began eroding provider rights with laws passed over the past three years. One key rule of evaluation adopted by the Virginia Worker’s Compensation Commission has been its emphasis on determining “prevailing community rates” – the statutory standard applicable in the absence of any contractual agreements governing billings – according to what providers charge, and without regard to what insurers want to pay or what compromises might be made. The Commission has affirmed this rule in numerous case decisions limiting prevailing community rate inquiries to studies of charges data, with payment and settlement data excluded from the decision process.
That standard will remain in place at least until January 1, 2018, when the new fee schedule under development is supposed to take effect.
But providers should understand that all of this discussion relates only to the limited context of worker’s compensation claims. When dealing with patients who have more typical billing arrangements (group health insurance, individual policies, self payment, etc.), none of the worker’s compensation rules apply at all.
For the greater number of patients, the standard rules of contract law apply without any special modification for medical billings. The key points to bear in mind are:
- Any time there is an explicit agreement for what charges will be, the courts will enforce that agreement.
- For medical providers, the use of explicit agreements is typically limited to contracts negotiated with health insurers; patients are seldom informed in advance of what rates of charge will be used.
- Health insurance network agreements nearly always limit what a provider may charge to the patient (whether in copays or coinsurance amounts). The patient in this situation is considered a third-party beneficiary of the contract between the provider and the insurer. Any provider who attempts to have a patient sign to confirm liability for balances over and above the permitted amounts is in breach of its contract with the insurance network, and the result of that will almost certainly be that the patient will be excused from any billings that exceed the permissible amounts. It is simply not kosher to attempt to collect amounts your agreement with the insurer requires you to write off from the patients. The only remedy for disgruntlement over insurance company reimbursement amounts is to terminate your agreements with them and seek to renegotiate, or to do without such relationships.
- For self-pay patients (including those who are uninsured or who rely upon health savings accounts), in the absence of any explicit agreements as to rates of charge, courts will undertake inquiries into what charges are reasonable for like services in the geographic area. The provider will not be allowed to recover more than its original invoice, but in an important distinction from worker’s compensation billings, there is no presumption that the billed amounts are reasonable. The court will hear evidence from both sides on that issue.
Currently, the Virginia Supreme Court is considering an appeal of a decision by a trial judge to consider the amounts providers accept as payment for their services when making these determinations. While the Supreme Court sometimes offers surprises, our expectation is that it will uphold the trial court, and make this sort of inquiry standard across the state.