Adam Woodrum was out for a bike ride with his wife and kids on July 19 when his son, Robert, who was 9 at the time, crashed.
"He cut himself pretty bad, and I could tell right away he needed stitches," says Woodrum.
Because they were on bikes, he called the fire department in Carson City, Nev.
"They were great," says Woodrum. "They took him on a stretcher to the ER."
Robert received stitches and anesthesia at Carson Tahoe Regional Medical Center. He's since recovered nicely.
Then the denial letter came.
The patient: Robert Woodrum, covered under his mother's health insurance plan from the Nevada Public Employees' Benefits Program
Total bill: $18,933.44, billed by the hospital
Service provider: Carson Tahoe Regional Medical Center, part of not-for-profit Carson Tahoe Health
Medical service: Stitches and anesthesia during an emergency department visit
What gives: The Aug. 4 explanation of benefits (EOB) document said the Woodrums' claim had been rejected and their patient responsibility would be the entire sum of $18,933.44.
This case involves an all-too-frequent dance between different types of insurers about which one should pay a patient's bill if an accident is involved. All sides do their best to avoid paying. And, no surprise to Bill of the Month followers: When insurers can't agree, who gets a scary bill? The patient.
The legal name for the process of determining which type of insurance is primarily responsible is subrogation.
Could another policy — say, auto or home coverage or workers' compensation — be obligated to pay if someone was at fault for the accident?
Subrogation is an area of law that allows an insurer to recoup expenses should a third party be found responsible for the injury or damage in question.
Health insurers say subrogation helps hold down premiums by reimbursing them for their medical costs.
About two weeks after the accident, Robert's parents — both lawyers — got the letter informing them of the insurer's decision.
The note also directed questions to Luper Neidenthal & Logan, a law firm in Columbus, Ohio, that specializes in helping insurers recover medical costs from "third parties," meaning people found at fault for causing injuries.
The firm's website boasts that "we collect over 98% of recoverable dollars for the State of Nevada."
Another letter also dated Aug. 4 soon arrived from HealthScope Benefits, a large administrative firm that processes claims for health plans.
The claim, it said, included billing codes for care "commonly used to treat injuries" related to vehicle crashes, slip-and-fall accidents or workplace hazards. Underlined for emphasis, one sentence warned that the denied claim would not be reconsidered until an enclosed accident questionnaire was filled out.
Adam Woodrum, who happens to be a personal injury attorney, runs into subrogation all the time representing his clients, many of whom have been in car accidents. But it still came as a shock, he says, to have his health insurer deny payment because there was no third party responsible for their son's ordinary bike accident. And the denial came before the insurer got information about whether someone else was at fault.
"It's like deny now and pay later," Woodrum says. "You have insurance and pay for years, then they say, 'This is denied across the board. Here's your $18,000 bill.'"
When contacted, the Public Employees' Benefits Program in Nevada would not comment specifically on Woodrum's situation, but a spokesperson sent information from its health plan documents. She referred questions to HealthScope Benefits about whether the program's policy is to deny claims first, then seek more information. The Little Rock, Ark.-based firm did not return emails asking for comment.
The Nevada health plan's documents say state legislation allows the program to recover "any and all payments made by the Plan" for the injury "from the other person or from any judgment, verdict or settlement obtained by the participant in relation to the injury."
Attorney Matthew Anderson at the law firm that handles subrogation for the Nevada health plan says he can't speak on behalf of the state of Nevada, nor can he comment directly on Woodrum's situation. However, he says his insurance industry clients use subrogation to recoup payments from other insurers "as a cost-saving measure" because "they don't want to pass on high premiums to members."
Despite consumers' unfamiliarity with the term, subrogation is common in the health insurance industry, says Leslie Wiernik, CEO of the National Association of Subrogation Professionals, the industry's trade association.
"Let's say a young person falls off a bike," she says, "but the insurer was thinking, 'Did someone run him off the road, or did he hit a pothole the city didn't fill?'"
Statistics on how much money health insurers recover through passing the buck to other insurers are hard to find. A 2013 Deloitte consulting firm study, commissioned by the Department of Labor, estimated that subrogation helped private health plans recover between $1.7 billion and $2.5 billion in 2010 — a tiny slice of the $849 billion they spent that year.
Medical providers may have reason to hope that bills will be sent through auto or homeowner's coverage, rather than health insurance, as they're likely to get paid more.
That's because auto insurers "are going to pay billed charges, which are highly inflated," says attorney Ryan Woody, who specializes in subrogation. Health insurers, by contrast, have networks of doctors and hospitals with whom they negotiate lower payment rates.
Resolution: Because of his experience as an attorney, Woodrum felt confident it would eventually all work out. But, he says, the average patient probably wouldn't understand the legal quagmire and might not know how to fight back.
"I hear the horror stories every day from people who don't know what it is, are confused by it and don't take appropriate action," Woodrum says. "Then they're a year out with no payment on their bills." Or, fearing for their credit, they pay the bills.
After receiving the accident questionnaire, Woodrum filled it out and sent it back. There was no liable third party, he said. No driver was at fault.
His child just fell off his bicycle.
HealthScope Benefits reconsidered the claim. It was paid in September, two months after the accident. The hospital received less than half of what it originally billed, based on rates negotiated through his health plan.
The insurer paid $7,414.76 of the cost, and the Woodrums owed $1,853.45, which represented their share of the deductibles and copays.
The takeaway: The mantra of Bill of the Month is don't just write the check. But also don't ignore scary bills from insurers or hospitals.
It's not uncommon for insured patients to be questioned on whether their injury or medical condition might have been related to an accident. On some claim forms, there is even a box for the patient to check if it was an accident.
But in the Woodrums' case, as in others, it was an automatic process. The insurer denied the claim based solely on the medical code indicating a possible accident.
If an insurer denies all payment for all medical care related to an injury, suspect that some type of subrogation is at work.
Don't panic.
If you get an accident questionnaire, "fill it out, be honest about what happened," says Sean Domnick, secretary of the American Association for Justice, an organization of plaintiffs lawyers. Inform your insurer and all other parties of the actual circumstances of the injury.
And do so promptly.
That's because the clock starts ticking the day the medical care is provided and policyholders may face a statutory or contractual requirement that medical bills be submitted within a specific time frame, which can vary.
"Do not ignore it," says Domnick. "Time and delay can be your enemy."
Dan Weissmann, host of the podcast "An Arm and a Leg," reported the radio interview of this story. Bill of the Month is a crowdsourced investigation by KHN and NPR that dissects and explains medical bills. Do you have an interesting medical bill you want to share with us? Tell us about it!
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