#9 The Downside to Billing Health Insurance

QUESTION: What is the downside to billing a patient’s health insurance for injuries due to a car accident?

ANSWER: One of the lesser-known problems with billing health insurance companies for motor vehicle collisions is that their medical insurance policies have what is called “Future Penalty Clauses.” If your patient’s health insurance pays for any medical treatment related to their car accident, once they’re reimbursed from the settlement they receive, they will not pay for future medical treatment related to the collision.

Initially, it seems to make sense to bill health insurance for treatment caused by an accident after PIP is exhausted. Unfortunately, there can be unseen problems billing health insurance.

One of the lesser-known problems with billing health insurance companies for motor vehicle collisions (especially with Moda and Providence) is that their medical insurance policies have what is called “Future Penalty Clauses.” What does that mean? If your patient’s health insurance pays for any medical treatment related to their car accident, once they’re reimbursed from the settlement they receive, they will not pay for future medical treatment related to the collision.

Let’s say, your patient has a neck injury, PIP has been exhausted, and their health insurance policy covers a total of 12 visits a year – and the insurance company pays for those visits. After the claim settles and the insurance company is paid back for the bills they paid — they’re not going to pay for any future medical treatment — until they have proof that your patient has spent all the settlement money on their medical care.

This can cause significant problems for your patient, especially when PIP is exhausted and they’re close to being done treating. In this situation, it may be best not to bill health insurance. When the care you’re providing is related to ongoing treatment from an accident — that your patient is not at fault for causing, there are a number of factors to consider before you bill their health insurance. Clearly, the more treatment your patient needs for a full recovery, the more it may make sense to bill health insurance. For example, if they need surgery, MRI, or another diagnostic testing, billing health insurance will likely be necessary.

There is a way for your patient to get around the future penalty clause. If they’re able to change insurance companies, the penalty clause will not apply! Not everyone has this option. That being said, it’s good to know there is a workaround.

If you have any questions about billing insurance for your patient, consider talking with a personal injury attorney who can evaluate these complex dynamics and give advice to help protect your patient.