The Legal Implications of Writing off Patient Co-Insurance
Educating your staff can boost collections and keep you out of the courtroom
Over the past couple of years a protracted court battle over co-pay collections has been waging between North Cypress Medical Center in Houston, Texas and Cigna Health Insurance. The legal dispute began when Cigna refused to pay the medical center over $40 million dollars in out-of-network charges. The reason? North Cypress Medical Center did not “seriously attempt to collect patient co-insurance payments from patients.”
Cigna’s insurance contract clearly stated that it would not be responsible for payments that the patient was not obligated to pay. At the time of admittance, the medical center staff followed standard protocol by stating that patient would be responsible for any amount not covered by insurance.
Here is where the story gets interesting…
Cigna called North Cypress Medical Center’s bluff and sent out survey letters to 62 of its insured patients. The insurance company wished to seek clarification of the medical center’s co-pay collections. Cigna wanted to ascertain if patients ever felt an imminent threat of being sent to collections. Forty-three percent of those surveyed mentioned that if they were billed at all it was closer to “in-network” rates. The court agreed that the medical center did not seriously attempt to collect co-insurance payments from patients. In the insurance company’s mind, it felt that if the patient is not responsible for payments why should Cigna be responsible?
With the emergence of cost-sharing initiatives there has been an increasing focus on “in-network/out-of-network” payments and insurer’s tactics to discourage out-of-network utilization. Cigna was successful in demonstrating that if North Cypress Medical Center did try to collect, the Houston-based healthcare provider didn’t try enough.
The outcome of this case will decide what responsibility medical providers have beyond creating a bill and sending to the patients. Until the ruling is decided, industry experts recommend being proactive and asking each insurance company what it expects of you.