June 22, 2011
Imagine that you have been paying your health insurance premiums faithfully for the past few years, always on time, and God forbid, you get into a motorcycle accident. Because you have been paying your health insurance premiums, your health insurance company pays all your medical bills and expenses. Because you were the victim in a motorcycle accident, you recover against the at fault driver who hit you.
Let's say the settlement is for the state minimum of $15,000.00 and there are no additional assets or first party insurance coverage. But before you get your settlement check, you find out that the hospital where you were treated is now asking for more money. How could that be? Didn't your health insurance company pay the entire bill, so why is the hospital now asking for more money? They can't do that, or can they?
The answer to all those questions is that even though your insurance company has paid your hospital bill, the hospital can try to collect against your insurance settlement by the process know as "balancing billing". The hospital plays the balancing billing game with insurance companies and government payors such as medicare and medicaid (AHCCCS). They have a contract with those payors that they will pay a set rate for treatment of victims. If there is no lawsuit then that is all the hospital will get, but once the hospital finds out there is a lawsuit, that is when the so-called "balance bill" with true cost of treatment rears its ugly head. The true cost can include widely inflated expenses to justify the hospitals much larger balance bill.
The statutory basis of the lien are found is Arizona Revised Statutes 33-931 et seq. The person or entities entitled to a healthcare provider lien under the statute are those who operate a healthcare institution or provide healthcare services, licensed in Arizona, or any political subdisvision or private entity with ambulances,operated, licensed, or registered in Arizona. Absent an indemnification agreement with the defendant or his insurance company, no action may be taken against the injured victim to enforce the lien.