September 23, 2014
Question: I have been having problems with one insurance provider. Depending on the patient they sometimes send the check to the member. I really wouldn't mind but this has led to several situations where the member has decided to pocket the money ignoring my attempts to collect. Is there any way to get the insurance company to stop this practice? I tried to report it as insurance fraud to them once but they said it was not their problem.
Answer: This can be very frustrating for a practice, but, we need to understand the basics of medical care. There is information that is missing from this question and that information is whether the doctor contracted with the insurance company or out of network with the insurance company? If we knew this we could better understand what is happening in this situation, but this situation is very common and highly misunderstood.
Patients obtain health insurance either their employer who enters into a contract with an insurance company or directly from the insurance company themselves. This contract is between the patient and their insurance company. If the doctor is out of network or non-participating, then the insurance company is most likely complying with the contract that they have with the patient, their member. The claim that the doctor sends to the insurance company is NOT the doctor's claim. It is the patient's claim. The doctor is submitting it as a courtesy to the patient. It is the patient's claim to have their contracted health benefit paid so when the patient's insurance processes and pays the patient's claim, they are completing their contractual obligation to send the benefit payment to their contracted member. So technically when the insurance company sent the check to the patient, they did nothing wrong. They did what they were supposed to do according to a legal and binding contract.
Now, another piece of information that we are not provided is this. Did the patient sign an Assignment of Benefit (AOB) form and did the provider/medical biller send a copy of the signed AOB to the insurance company?
What is an AOB? In simplistic terms an AOB is a permission slip. It is a request from the patient to have the payment of their health benefit sent to a designated person such as the doctor, however, the insurance company is not obligated to accept or honor this request unless State law requires them to accept it.
What we also don't know is about the claim form itself. Did the medical biller check block 27, Accept Assignment, on the claim form? If not, then this will tell the insurance company that the doctor doesn't accept assignment, and if this block is left blank or the block No is checked, then the insurance company will send the check to the patient, not the doctor.
When the insurance company fulfills their contractual obligation by sending a check to their member, they don't care what the patient does with that check because this is now an issue between the doctor and their patient. They've done everything that is needed to be done on their end. However, where does that leave the doctor? What options are left? There are many and most are not popular. One is to file a lawsuit in small claims court, but many providers don't wish to pursue this option because it could potentially cause problems with their relationships with their patients and cause the patient to seek medical care from a more financial friendly provider. Even if a judgment is awarded to the doctor, the judgment can disappear if the patient files for bankruptcy. Another is to collect copays, coinsurance, and deductibles at the time of service, but some providers or a provider's staff may not wish to confront a patient with payment demands. The provider can send the account to a debt collection agency and if the patient disputes the debt (which is their right to do so) the fact that the patient received and cashed the insurance check can be proof to resume the debt collection process. The debt collection agency can report the debt to the different credit bureaus such as Experian, and Equifax, so that this shows on their credit report and may reduce the patient's credit score.
A short story, we had an insurance company send their member a check even though we had an assignment of benefit form. The insurance company showed us the patients' policy which prohibited the patient from assigning their benefit to anyone. The insurance company also denied the claim stating that only the patient was allowed to send the claim, so, because the patient did not send the claim, it was given an additional denial of timely filing. Their denials were appealed to where the insurance company issued a check but, they sent the check to the patient. The patient cashed the check and sent us a letter stating they he was displeased with the medical care he received, so he wasn't going to pay the bill. His account was sent to the debt collection agency. They reported the debt to the credit bureaus and placed the debt on his credit score. He tried to obtain credit to refinance his home. The loan was denied due to the bill he owed the doctor. He hired a lawyer to have the debt removed from his credit report, but, he failed to tell his lawyer that he received a check from his insurance company. Long story short, his lawyer sent us a letter saying he no longer represented his client. The patient lost his home because he refused to pay his mortgage payments and he couldn't obtain a loan to get him out of hot water. The credit reports stayed with him because we fought all his disputes with proof that he received and cashed the insurance check. The moral behind this is Karma is the B word.
Can you terminate the patient-provider relationship because the patient doesn't pay the bill? This is not advisable and if you do terminate, you have to do so through a process that protects you from being charged with patient abandonment. I would suggest speaking with a health care lawyer for advice on legal actions that you can take. Another suggestion is to speak with the patient regarding a payment plan. That check may have purchased much needed food for the family, so, you want to show you understand their situation as well as to be paid for your services. Cash is King, so maybe a $5 per month payment is a workable solution and you show that you do care about your patient.
Having an established practice financial plan is also a huge help. That plan educates the patient about money. You can address scenarios of when they receive a check, payment plans and many more things. This can prevent embarrassing situations for you and your patient. Patients want to see a doctor who is in control of their finances and their practice as well as a doctor who doesn't look at the patient as a private piggy bank.
Last thing: Did you provide medical care in good faith? Yes. Did you send a claim as a courtesy to the patient? Yes. Can you revoke that courtesy when you are non-par or out of network? Yes, if State law permits this. Is it illegal for the patient to cash the check and keep the money? My State insurance law has no language which addresses this and I haven't seen this addressed in other State insurance laws, but a lawyer might know if another law has jurisdiction such as a Theft of Service State law or an insurance fraud law. Again, I'm not a lawyer, so I don't know legal. I have had insurance checks sent to me and I did cash them, but I did pay the doctor bill when it came in, but, that's me.
Steve Verno, CMBSI, CMSCS, CEMCS, CPM-MCS is a certified medical billing specialist instructor, a healthcare coding specialist instructor, a certified emergency medicine coding specialist, a certified multispecialty coding specialist, and certified practice manager-medical coding specialist. His specialties include emergency medicine, family practice, internal medicine, pediatrics, ERISA, ICD-10-, AR Recovery, Insurance Claims resolution, and training. He is a member of the Medical Association of Billers, the Professional Association of Healthcare Coding Specialists, National Healthcare Leaders Association and medical economics committee of the Florida College of Emergency Physicians and a speaker with The Coding Institute and Regent Surgical Health. He is a retired American Red Cross Health and Safety Instructor Trainer and a retired professor of coding and billing at Everest University. He is the co-author of the Medical Office Guide to the Employee Retirement Income Security Act and has additional books on AR recovery and Insurance Claim Resolution in development. He spends his free time rescuing abandoned cats, and a local patient advocate with coding and billing issues. Should you have any questions about this or other articles Steve has written you can email him at firstname.lastname@example.org.