Strategies can take many forms in the handling of one’s case; not just on dealing with the insurance companies and trying to receive the maximum amount of money, but also in trying to RETAIN as much of that money as one can. This can be seen as maximizing both the “front end” of the case [the settlement amount(s) we have negotiated for], as well as the “back end” of the case [the medical billings, subrogation liens, and other expenses]. Many times a case can settle for a decent sum, but then much of what is settled for is given away to lawyers, medical providers, loan providers, etc. Minimizing what is paid to these people is an important part in seeing that the maximum dollars go into your pocket. Realize that EVERYTHING in a personal injury case is negotiable! The entire thing is one big exercise in negotiation. Avoiding using an attorney when not necessary is a start. However, an equally important part is negotiating down (often excessive) medical bills to reasonable numbers.
A rough breakdown of a normal personal injury case is generally 1/3 to the attorney; 1/3 to the doctors and 1/3 to the injured party. A good result is one where an injured party nets 50% or more of the overall settlement. A great result is one where a client nets 2/3 to 3/4 of the overall settlement. This seems almost unfair, where to net even half of the money one receives from a settlement, it takes almost special circumstances; but this is reality. As such, we want to do what we can to bring those circumstances about. Thus, to help maximize the overall net amount realized from a settlement; controlling and negotiating down medical bills are a critical component of this. Medical bills can be reduced or lowered through a variety of methods: negotiation; utilizing vehicle med pay; structuring and using multiple health insurance and supplemental health insurance policies; seeking cash discounts; etc.
Your overall strategy to keep medical costs to a minimum may involve several parts. First and foremost, you may personally have (on your own vehicle policy) medical payments coverage [med pay] or you may be able to avail yourself of the coverage of a borrowed vehicle you are driving or riding in as a passenger. This is good coverage, but in a sense a “premium” coverage (explained below) so we may wish to be judicious in our use of it. Additionally, we may possess health insurance (through ourselves, a spouse or parent) and we may likewise be able to use other healthcare insurance (active duty military, veterans administration, etc.). There can be Medicare or ERISA, Medicaid, supplemental policies, etc. Therefore, we may actually have one, or several ways to pay for medical coverage. This is important, but what is just as important is the ORDER in which we use these. Specifically, which insurance is utilized first and in which order the rest are used. This may not seem to be important, but it is vitally so.
We must remember, just paying the medical bills isn’t enough and isn’t the only thing that matters here. Unlike almost every other situation; we, in effect get to “keep the change” (so to speak) from whatever is paid to the doctors. Whatever is not paid to the physicians out of your settlement, YOU keep. To maximize that amount must be our goal. An example is in order. Let us say that you are riding as a passenger in our friend’s car going to lunch. You are involved in a rear end collision and are injured.
Let us say for the sake of argument, both you individually, as well as your friend, each possess med pay coverage on your respective policies, as well as the driver who hit you. Also, assume that you likewise receive Medicare. You had to treat for your injuries, and you sustained some neck disc damage and had physical therapy, X-rays, doctor visits, medications, had an MRI and a couple of epidural steroid injections in your neck. (This is a totally plausible and common scenario from a rear end accident and the injuries that result) Let us assume the total medical bills at this point are $14,500.00.
There are a number of ways to approach these medical costs. You CAN use both your own medical payments insurance, as well as your friend’s med pay. You cannot use the med pay of the opposing party, the third party/defendant (the “at fault” party). Likewise, you could use your Medicare. Med pay should be used judiciously because, strangely enough, it is so widely accepted and pays well. Most doctors really like it. Med pay policy limit amounts are normally either $1K; $2K; $5K; or $10K increments (sometimes $25K), and pay almost any/all medical bills submitted to them, paying them virtually in full.
Thus, it is very easy to “exhaust” the med pay limits quickly and easily. However, one important consideration is that if all of the medical bills get paid, or at least enough to cover the amount med pay would have covered, then you may submit to the insurance company the paid medical bills and they will “reimburse” you for the medical bills which have already been paid [regardless of by whom] and pay you directly. Some people will submit their medical bills to their health insurance, and when a sufficient amount are paid to cover their policy limits (say, $5K) they then get copies of the paid bills/receipts and submit these to their auto insurance med pay coverage and seek reimbursement. Usually, the med pay will then write the person a check for the $5K. [Normally the remainder of the bills are paid by insurance or by personal injury lien, and then when the case settles these are paid by the plaintiff]. However, if the plaintiff desired, the $5K med pay could also have been sent to pay other unpaid medical bills directly.
Additionally, health insurance often negotiates serious discounts with medical providers; whereby they only pay set “capitated” rates. Essentially these are rates which the insurance companies deem constitute “reasonable and necessary” medical charges for the service provided. Thus, if an MRI exam costs $1,300.00 (retail) and that is what a medical provider would expect from you or I, the insurance company may mandate a payment of $300.00, and this is payment in full, with no other payments to be made (or billed to you, excluding any applicable co-pays). Therefore, your insurance often pays 25% – 50% of a medical bill, and the rest is written off.
This enables you to receive very significant reductions, far more than you could ever negotiate directly with the medical providers yourself. An important point to remember when utilizing health insurance, medical insurance, military or veterans medical benefits or other coverage is that these entities possess “subrogation” rights. This means they have the right to be repaid later if they pay for your medical expenses and you later receive compensation for the accident from a third party or an insurance carrier. Subrogation also (potentially) applies to other areas of your claim, and we will discuss this more later. One important note; there is NO subrogation right when vehicle med pay is used. It is simply free.
Therefore, if we analyze the above factual scenario, we will come up with different results depending on which “billing strategy” we use. Typically, the doctors love to hit your med pay first. (Let us assume that your friend had $2K in med pay coverage and you had $5K in med pay coverage; as well as your Medicare coverage) The doctors would exhaust your friend’s $2K in med pay coverage (as you were a covered “guest passenger”). Next, they would go after your own $5K med pay. Med pay pays whatever the doctor bills them – in full. (Not always, but usually).
Therefore, regardless of which medical provider TREATED you first, it is whoever bills the insurance company FIRST who gets paid; it is a race. As such, if you treated with a total of 6 medical providers, a typical med pay ledger might look something like this [you are entitled to receive, and should request, a copy of this ledger to see who was paid, and in what amounts]: $1,453.26; $562.32; $1,698.72; $849.96; $1,105.67; $1,330.07; respectively, to each of the various medical providers listed next to the charge amounts. This would total the $7,000.00 in med pay ($5K + $2K); thus leaving a $7,500.00 balance. The remaining $7,500.00 is billed under Medicare, and let us say they paid approximately $2,500.00 of this, forcing the medical providers to write off the remainder. As such, in the end we would owe Medicare a subrogation recovery when we later collect something from the opposing party.
There are a couple of problems with this however. First, no single provider is paid in full, usually each has a partial payment and a balance. Second, there have been no reductions! This can be done better. While we will always likely owe SOME subrogation recovery to an insurance company, IT IS ALWAYS BETTER TO TAKE ADVANTAGE OF THE HEALTH INSURANCE COMPANY “BARGAINING POWER”, VIA THEIR NEGOTIATED CAPITATED RATES FIRST! Medicare is in many ways the doctors’ worst nightmare; as they generally have to accept it, and it forces upon them the greatest reductions. (Usual insurance company reductions are in the neighborhood of 25% to 60%; normally paying 40% – 75% of the doctor’s bill. Medicare however, can force reductions of up to 90%, but usually around 60% – 75%. SERIOUS reductions!)
After your co-pays and deductibles are paid, THAT is the extent of your obligation to the doctor! This is an important point to ponder. Many doctors’ offices are less than honest with patients, and seek to bill whatever pays them the most and pays them the fastest; not necessarily what is best for the patient. Whatever will net them the most money. Thus, they virtually always bill med pay first. So, you may wish to be silent about the fact that you have med pay (either just initially, or for the entire claim) for a few reasons. First, you are under NO obligation to either have or use med pay. If you have valid health insurance and the doctor accepts this, let him be happy with this. As soon as they find out you have med pay, they are all too happy to tell you they will “bill it for you.” Some go beyond this, and try to demand med pay, which they have no right to do.
Let us examine things a little differently, re-arranging our billing schedule. If we billed ALL of the $14,500.00 through Medicare, they would probably pay around $4,500.00. The medical providers would have to write off the rest via their insurance reductions/capitation agreements. Now, we would owe Medicare a subrogation reimbursement for what they paid, but it is virtually NEVER at 100% of what they paid. A normal reduction amount is around 1/3, but sometimes more. REMEMBER, everything in a personal injury case can (and should) be negotiated! Depending on the factors: the overall settlement amount, the outstanding medical bills remaining, the net amount you will walk away with, etc., all have a bearing on this negotiation.
THE REASON and rationale behind why the subrogation lien amounts are reduced is simple. In 90%+ of cases, insurance companies pay money and never receive ANYTHING back. Here they receive a windfall of sorts, where they at least get something back in the form of a subrogation payment from a personal injury settlement. Further, they do NOTHING. YOU are required to pursue your case, get a recovery, retain a lawyer if you need to (which alone generally eats up 1/3 of your settlement); and the insurance company just sits back and demands part of that money via “subrogation.” So, it is only considered just and proper by courts that these insurance carriers “participate” in your “costs of recovery” (or PURSUIT) of this matter.
This “participation” of costs is reflected in the reduction of their subrogation lien. Normally, there is a 1/3 reduction, because that is what most people pay their attorneys to GET the recovery. However, sometimes carriers accept a bigger reduction, so bargain hard and start at 50% or less (meaning what you would be willing to repay them, of what THEY paid on your medical bills) and see if they will take this. (Citing all of your unique factors and costs). All they can say is no, and you would be back to the standard 1/3. [33.33% reduction. i.e. $200 repaid by you against $300 paid by them]
If this were ultimately applied to the factual scenario listed above we would likely have the Medicare payment of $4,500.00 erasing all of the medical debt, and then we would maybe pay them $3,000.00 for the release of their subrogation lien. Therefore, we would receive a reduction upon a reduction. From $14,500.00 to $3,000.00 is not bad at all. However, we can make it even better. When we get our billings from each medical provider, we should also get a copy of their “detail bill” and also HCFA 1500 forms (called “hicfahs”). These are industry standardized forms, used by all medical providers and insurance companies, detailing all the services provided, and the all important CPT codes [one for each specific treatment modality as well as the time spent with the patient] and other important data.
These forms will be useful to us later when we compile our demand for the insurance company. However, here and now we can submit the detail bill [which does not usually have the insurance information] to the med pay provider to show that we owe medical bills in excess of the $7,000.00 in med pay, and make a demand for the respective insurance carriers for their med pay policy limits ($2K from one company, and $5K from the other). They can, and DO, make payments directly to you.
However, sometimes med pay wants to see the bills have been PAID (even though this is none of their business, just owing the bills should be enough to invoke med pay). You could inform them that you are, and will be, ultimately responsible for paying all medical bills; [or, if they insist on seeing paid bills, you could wait until after Medicare has paid, and get a second detail bill from the respective providers showing that their bills have been paid in full]. Once the bills are paid, you are owed the med pay money. Period! You should receive the $7,000.00 in med pay money, and YOU would pay the $3,000.00 subrogation lien negotiated by you to Medicare, and anything left would be yours.
You would have done nothing wrong, and simply structured the available coverage to your best advantage. Compartmentalizing information can be, and IS, very useful in a number of ways when handling a personal injury case. Giving out gratuitous information virtually never does anything but harm you or your case. No one, NO ONE, in a personal injury case is your friend or there to help you! Remember this. Every party, from the tortfeasor, to his insurance company, (or even your own), to the medical providers and the medical insurance companies are all (in one way or another) adverse parties to you. So, you would merely provide each respective party with THAT which he needs to know, and no more!
In one fashion or another, every other party in this matter has interests different and divergent from your own. You may very well end up on the opposite end of litigation with any one of them. DO NOT GIVE ANYTHING BUT THE MOST BASIC INFORMATION NECESSARY. They are not there to “help” you or anything else. They represent THEIR companies and THEIR interests, period. YOU represent your interests. That should say it all.
Without trying to make this seem overly difficult or hard (which it is not) you need to really grasp the gist of this. Present to each respective party (without lying to them) that which you wish them to see. Show one facet of the matter at a time; that which is relevant and pertinent to what you are attempting to accomplish with that party, at that time. There is nothing to be gained by giving or offering gratuitous information. Many times and in many ways, the most seemingly harmless and innocuous bit of information has come back in the most amazing ways to hurt or impede a claim, or even to push a matter into litigation. Sometimes, this cannot even be seen or foreseen at the time. It is simply better and wiser to play your cards “close to the vest.” We can dub this careful “information management.” Not allowing information to be seen that we do not wish to be seen, or that will not be of direct benefit to our case.