CLIENT ADVISORY March 5, 2013

Submission of Claims to Healthcare Providers and Assignment of Benefits to Obtain Motor Vehicle Expense Coverage

Billing and reimbursement specialists This experience gave rise to local choice federal employee for healthcare providers should be Senator McEachin introducing plans, and ERISA plans are aware of the passage of SB 707 legislation in the 2012 General included in the definition. Excluded dealing with the submission of Assembly Session and after being from the definition of “health care claims to health insurance carriers approached by the healthcare policies” are coverages provided and HB 1655 dealing with the community, he agreed to allow the under Medicare, Medicaid, TriCare, assignment of benefits (AOB) to stakeholders to work over the subscription contracts for dental obtain medical expense coverage summer of 2012 to find a solution. or optometric services, certain under motor vehicle insurance After many stakeholder meetings disability or accident policies, policies. Both pieces of legislation involving the Medical Society of disability policies, long-term care have passed the Virginia General Virginia, the Virginia Hospital & insurance, plans providing limited Assembly and are awaiting action Healthcare Association, the Virginia healthcare insurance, TriCare by the Governor prior to his Trial Lawyers Association, the supplements, Medicare supplements, March 25 deadline. health insurance carriers and workers’ compensation or medical others, an agreement was reached expense coverage under a motor Senator Donald McEachin (D- which was reflected in the vehicle policy. Henrico) introduced SB 707 after introduction of SB 707 in the 2013 encountering a situation involving General Assembly Session. Next attention must be given to one of his personal injury clients. which healthcare providers the new Specifically, the client reported to a Of interest, the new requirements statutory requirements apply. The hospital subsequent to a motor on healthcare providers were not application of the statute is limited vehicle accident. The client had included in the insurance section of to those healthcare providers who health insurance coverage with a the Code but instead were included are in-network providers, meaning major carrier. The client underwent in Title 8.01 so the Bureau of that they are employed by or have significant healthcare treatment Insurance would not have to entered into a provider agreement and, unfortunately, succumbed to assume responsibility for regulatory with the health insurer which has his injuries leaving a hospital bill oversight. issued a healthcare policy as well into the six figures. The defined under the statute. The hospital elected not to bill the The foundation of the bill is statute does not apply to out-of- patient’s health insurance carrier centered on what is “a health care network providers. but instead sought to recover full policy.” Since health insurance can charges from the wrongful death be provided under a number of Paragraph B of Va. Code § 8.01-27.5 settlement from the motor different vehicles, some private and establishes the new requirements vehicle accident. After extensive some public, attention was drawn for in-network providers providing communications with Senator categorizing what constitutes “a healthcare services to a covered McEachin, the hospital decided to health care policy” and what does patient under “a health care policy.” write off the outstanding balance as not constitute “a health care Specifically, if the covered patient the time period to file the claim with policy.” Coverage provided under has provided the in-network the health insurance carrier had indemnity policies, PPO’s, HMO’s, provider with information required expired. the state employee insurance plan, under the plan documents,

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including information required to the healthcare services that have healthcare provider following a verify the covered patient’s been provided, and (iii) the motor vehicle accident for fear that eligibility, and such information is in-network provider shall be the report of the claim will cost provided more than 21 business prohibited from recovering medical their insurance premiums to go up, days before the deadline of the in- expense coverages under the could cause coverage to be network provider to submit claims patient’s motor vehicle liability denied, or may somehow impact to the health insurance carrier insurance policy. their litigation. For patients who under the provider agreement, refuse to provide this information then the in-network provider is If the in-network provider submits a and refuse to respond to compelled to abide by the claim to the health insurance subsequent follow-ups, the obligations of the statute. If the in- carrier in accordance with the plan application of SB 707 will mean network provider complies with the documents and after the covered that the patient still bears full obligations, certain rules of the patient has provided the necessary responsibility for payment of the road are established. If the in- information to verify eligibility with healthcare services as they do network provider fails to comply, more than 21 days remaining on today. Likewise, for providers who certain consequences will flow. the timeframe to submit a claim, choose not to bill health insurance then the health insurance carrier is after a patient has timely provided If an in-network provider fails to obligated to pay for the healthcare information to verify eligibility and submit its claim to the health services in accordance with the attempt to seek reimbursement insurance carrier in accordance provider agreement and the plan from the personal injury or with the plan documents and after documents. wrongful death action, the effects the patient has provided the of this statute will mean that those necessary documentation to verify Since self-insured or self-funded providers will be barred from eligibility with more than 21 plans under ERISA may provide recovery from the patient for any business days before the deadline for alternative means of claim amount that the patient would not of the provider to submit claims, submission, then in-network have owed otherwise and in the then (i) the covered patient shall providers are permitted to submit event the health insurance carrier have no obligation to pay for the claims and coordinate benefits in fails to process a claim from a healthcare services for which the accordance with those provider healthcare provider that is filed provider was required to submit a agreements and plan documents. after the timeframe permitted claim, (ii) the provider shall not under the provider agreement, the have the benefit of any of the liens It is not uncommon for patients provider will be left with no means that are established under to refuse to provide their health of recourse. § 8.01-66.2 and 8.01-66:9 regarding insurance information to a

HB 1655: Recovery of Medical Expense Under Motor Vehicle Insurance Policies Through Use of An Assignment of Benefits

Patients presenting to emergency healthcare services relating to a motor vehicle insurance carriers as rooms commonly are asked to motor vehicle accident. Payment to to whether the patient should be execute a number of documents the patient is obligated regardless paid the medical expense coverage including a general AOB. It is of whether the patient has health or whether the payment should be common for healthcare providers insurance or other means of forwarded to the healthcare to use the AOB to seek payment payment. provider pursuant to the AOB. from the patient’s motor vehicle insurance carrier if the patient A growing number of disputes Delegate Terry Kilgore (R – Gate carries medical expense coverage. have arisen over patients who City) introduced legislation in the Typically, medical expense have been in motor vehicle 2012 Session of the Virginia coverage is coverage offered to a accidents, who execute an AOB, General Assembly regarding the patient as a rider on their motor their healthcare provider seeks use of AOB’s to access medical vehicle insurance policy and reimbursement from the motor expense coverage from motor obligates the motor vehicle vehicle insurance carrier with the vehicle insurance carriers. The insurance carrier to pay the patient AOB, and once the patient hires stakeholders from the healthcare usual and customary charges for counsel, counsel attempts to community approached Delegate medical bills incurred from revoke the AOB or litigate with Kilgore and requested an

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opportunity to work over the the notice. The statements and the administrative requirements summer of 2012 to find agreeable notices required by the section previously discussed. Specifically, language and to also address the must be provided in a font type no upon receipt of certain issue of a number of health smaller than 8 point type. The documentation, a motor vehicle insurance policies governed by notice required by this section is insurance carrier is obligated to ERISA plans and others that enumerated in the statute and take action. The documentation require healthcare providers to must read as follows: required by the motor vehicle coordinate benefits prior to insurance carrier will be a copy of submitting claims. After many Notice: Automobile Accident the AOB form satisfying the stakeholder meetings with the Patients. If you have been in requirements discussed above, motor vehicle insurance carriers, an automobile accident, you and an explanation of benefits or the Medical Society of Virginia, the may be entitled to payment remittance advice or a bill, claim Virginia Hospital & Healthcare from your automobile insurance form, or documentation from the Association, the Virginia Trial if you have medical expense healthcare provider advising that it Lawyers Association, and the benefits coverage. By signing has been represented to the Virginia Association of Health this assignment of benefits healthcare provider that the patient Plans, language was agreed upon form, you are giving your does not have health insurance or and HB 1655 was introduced by healthcare provider the right to is covered by an ERISA plan Delegate Kilgore in the 2013 receive some or all of that which requires medical expense Session of the General Assembly. payment directly from your coverage to be primary, then such automobile insurance company. motor vehicle insurance carrier The legislation amends Va. shall pay directly to the healthcare Code § 38.2-2201 which is the If you have health insurance provider any medical expense medical expense statute that has and your healthcare provider is benefit available to the patient been law in Virginia for many in-network: As long as you under the policy. years. It sets forth the framework provide information necessary to establish which AOB’s are to verify your health insurance If the patient is covered under “a valid and appropriate, what coverage, the healthcare health care policy” (same definition requirements must be met by provider may only bill the as in SB 707) and the healthcare healthcare providers seeking to amount you owe for any provider is an in-network provider execute AOB’s, and establishes co-payment, co-insurance, or and the provider has submitted its rules of the road for payment of deductible to your automobile claims to the health insurance medical expense benefits pursuant insurance and you will be carrier for the healthcare services, to an AOB by motor vehicle entitled to any remainder of then the amount of any insurance carriers. your automobile insurance co-payments, co-insurance, or benefit. If you do not provide deductibles owed by the patient to There are a number of information necessary to the healthcare provider as requirements that AOB’s must verify your health insurance evidenced on an EOB, remittance meet in order to be valid. coverage, do not have health advice or other similar Specifically, a copy of the AOB insurance, or your provider documentation will be paid. must be executed by the is not in your health insurance healthcare provider and the patient provider network, your healthcare If the patient is not covered by “a must be provided specific notice provider may bill their full health care policy” or the patient is enumerated in the statute. The charges to your automobile covered by a self-insured or form must be in writing, dated and insurance. self-funded ERISA plan, which executed by the patient. The form requires medical expense must contain a conspicuous You may want to consult your coverage to be primary, or the statement that the patient is not insurance agent or attorney healthcare provider is not an in- required to execute the AOB form. before signing or initialing this network provider, then the The form must include a notice to form. You are not required to amounts of coverage for costs of the patient and the patient must sign or initial this form to the services shall be paid to the sign, initial, or otherwise mark near receive care. healthcare provider as the usual the notice provision to and customary fee for the acknowledge that the patient has Next, the statute gives direction to community in which healthcare read or had the opportunity to read motor vehicle insurance carriers services are rendered. receiving an AOB that satisfies

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Motor vehicle insurance carriers patient has health insurance and, if vehicle insurance policies to the are held harmless under this so, what type. The practice of extent such amounts exceed co- statute for payments made seeking reimbursement for full insurance, co-pays or deductibles. pursuant to the requirements of the charges from a patient’s medical new statutory provision. For those expense coverage under a motor If you have questions about what patients entitled to benefits under vehicle insurance policy when the this recent change means for Medicare, Medicaid or other state patient also has health insurance your organization, please contact or federal assistance programs, coverage will also be prohibited Scott Johnson ([email protected]), nothing in this statute will prohibit after July 1 to the extent any Mary Malone ([email protected]) the payment of medical expense reimbursement is in excess of co- or Emily Towey ([email protected]). benefits by motor vehicle pays, co-insurance, or deductibles They can also be reached insurance carriers directly to such or non-covered services. by phone at (866) 967-9604. programs. Additional information about In conclusion, SB 707 will operate Hancock, Daniel, Johnson & The practical change that healthcare to require the timely filing of health Nagle, P.C., is available on the providers will experience with insurance claims from those firm’s website at www.hdjn.com. passage of this legislation largely patients involved in motor vehicle will center upon making sure the accidents and coupled with the AOB forms comply with the passage of HB 1655 will limit administrative and technical providers from seeking full requirements of the statute and recovery from a patient’s medical also determining whether the expense coverage under motor

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel, Johnson & Nagle, PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this infor- mation may not apply to a given factual situation and can become outdated. Individuals desiring legal ad- vice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel, Johnson & Nagle, PC be liable for any direct, indirect, or consequential damag-

es resulting from the use of this material.

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