Last week’s discussion of the ethical and contractual considerations when patient copayments are routinely forgiven left on unanswered question: “What efforts to collect coinsurance payments are required of you, in keeping with you obligations to the patient and the insurance plan.” In a recent case filed in Houston federal court, North Cypress Medical Center v. Cigna, 4:09-cv2556, an insurance plan refused to pay between $20 million and $30 million in out-of-network hospital charges because the medical center did not seriously attempt to collect coinsurance payments from patients.
The controversy centered on language in the insurance contract to the effect that Cigna would not be obligated to pay any amount for which the patient was not obligated to pay. At the time of admissions, the medical center informed patients that the patient would remain responsible for any amounts which were not covered by insurance. In other words, the patient actually incurred the debt and was obligated to pay it. However, Cigna sent out 62 survey letters to patients and 27 reported that if they were billed at all, the amount of the bill was closer to the “in-network” rates. Cigna argued that it does not matter that some patients sign forms stating they are responsible for the bill, if in reality, the patient was never under any serious threat of collection activities. The court sided with Cigna and the case is being appealed.
The court did not state what collection efforts would have changed the outcome, but seemed to be persuaded by two factors:
1. The medical center ignored the “in-network/out of network” cost-savings structure of the health plan. Cigna wrote the plan in a way to discourage out-of-network utilization. The medical center appears to have frustrated this plan provision. If the medical center did attempt to collect, Cigna successfully argued it attempted to collect too little.
2. The specific evidence persuaded the courts that patients were never in any imminent danger, in the real world, of being required to pay the bill.
So what must you do, in the real world so to speak, in addition to creating a bill and sending it to patients? Until a more solidly developed body of case law exists, the best course of action is to simply ask each insurance company to tell you what is expected of you. This places the insurance company in a somewhat delicate position. If the insurance company is too harsh, demanding, for example, that you turn each patient over to collection agencies or worse, file a lawsuit, this might have negative consequences for the insurance company. People might not wish to do business with such a company.
Hopefully, the insurance company has already though of an answer and will be happy to tell you what it is.