After an air ambulance crew swoops a patient away from a traumatic accident, they stabilize the individual and rush them to the nearest trauma center. The race to care often means the patient survives, but recovery may take weeks. The bills for that highly expensive care could be covered by a small but critical area of coverage: third-party liability insurance. Understanding the complexities of third-party liability can mean the difference between revenue protected or revenue lost for providers.
Third-party liability insurance coverage is the primary responsible payer for patients admitted to the hospital because of an auto accident or an injury on the job. For providers, this can be a complicated area to get reimbursement for care that is delivered.
The primary payer for the care of someone injured in a car accident is the auto insurance policy of the at-fault driver or, in some cases, optional med-pay insurance or Personal Injury Protection (PIP) insurance, some level of which is required in 16 states. Once certain limits are reached, then a secondary insurance, often the patient’s health insurance, takes over.
In the event of a claim from an on-the-job injury, the primary payer for that care is the workers’ compensation insurance policy held by the employer.
Collecting on third-party liability claims requires tracking down liability to the responsible party’s insurance. Providers also need to understand the compliance issues for the particular state where the auto insurance and workers’ comp policies were written.
Complications arise when a patient has a policy written in a no-fault state. Under no-fault laws, an insurance company will pay the policyholder’s claim in a car accident, no matter who was at fault. Twelve states presently have some version of no-fault laws: Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kansas, Kentucky, Massachusetts, Minnesota, North Dakota and Utah.
Outside those 12 states, the at-fault driver’s insurance is the primary payer. All states, with the exception of New Hampshire, require drivers to have insurance in order to meet cost obligations related to an auto accident.
Some patients involved in auto related accidents carry med-pay insurance, which covers medical costs due to an accident for the drivers or passengers in the policyholder’s car, or PIP insurance, which can cover medical costs and lost wages.
“Compliance with third-party liability requires an understanding of state laws,” says Dianne Pittman, Unit Manager, Parallon Revenue Point Solutions. “The various third-party liability insurance coverages are complex and in situations where there are at-fault parties, legal options can exist for applying a lien to protect the hospital’s interest in accident related recoveries..”
Understanding the complexities of conditional billing health insurance in auto accident related claims is also key to protecting a provider’s revenue. These complexities include understanding and staying in compliance with CMS MSP regulations and in the case of Oregon, modifying your approach to CMS’s ‘prompt period’ rule.
For Parallon, its presence in 23 states and deep understanding of insurance liability coverage gives it an advantage over competitors.
“While this patchwork system of payment for car accidents or workers’ compensation claims may represent a small portion of a provider’s accounts receivable, it can be critical income to trauma hospitals in particular,” Pittman says. “Success requires that you have the ability to track down the myriad of details about specific automobile and employer insurance policies and their coverages, as well as applicable state laws for the patient.”
Parallon’s ability to get to this level of detail, early in the claim cycle, helps protect our client’s revenue and resolve a patient’s concerns during what can be a challenging time. We believe recovery and clinical wellness should be the focus of our client’s patients, while we focus our expertise on resolving complex claims in the most compliant manner.