A burgeoning problem is developing for out of-network healthcare providers that systemically fail to collect deductibles and coinsurance from patients. Insurance companies often seek to deny insurance coverage to subscribers in light of such collection failures, and also seek to recover past payments for services rendered by healthcare providers. In some instances, particularly where the healthcare providers failed to disclose the waiver of collecting deductibles and coinsurance, the insurers have attempted to cast that conduct as fraudulent and have invited state criminal and civil investigations.
In order to understand the problem, a brief discussion of the contracts between healthcare providers and insurance companies is appropriate. Generally speaking, under in-network contracts with insurance carriers, the provider agrees to accept a negotiated sum as payment-in-full for services rendered to the carrier’s patients (also referred to as subscribers). Participating provider names are published in carrier directories, and subscribers who see one of the in-network providers do so without any financial obligation beyond a small, fixed co-payment. For subscribers who choose not to use the in-network providers, most insurance plans and policies also provide benefits for services rendered by healthcare providers who have not contracted with the insurer to accept negotiated rates for services. Deemed out-of-network, these providers have made no agreements with the carrier regarding their fees, and are free to set their own schedule of fees for services rendered. Carriers universally limit reimbursement for out-of-network providers, and hold subscribers responsible for payment of a pre-determined percentage of the allowed amount, which varies according to subscribers’ plans.
Originally published in NEW JERSEY LAWYER | February 2013.
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