Health Insurance & Patient Responsibility, Part I

By Deborah Cho

With the implementation of the Affordable Care Act, many consumers can now (or eventually…) head to HealthCare.gov to compare health insurance plans to find one that fits their needs.  Health insurance plans, however, can be complicated and fraught with exceptions and exclusions that consumers learn of only when it is too late and medical bills have already started to pile up.  Consumers are directed to consult member handbooks to learn their plan’s terms and conditions, but these handbooks are often nearly a hundred pages in length and densely packed with information.

Nonetheless, patients are held responsible for understanding and abiding by the terms of their plans, even if those terms are confusing and hard to fully appreciate.  For example, patients are expected to know what types of medical care require prior authorization from their insurance carriers and that they must obtain approval before receiving that care.  If these steps are not taken in the correct order, payment can be denied and the patient may be left to foot the bill for the services.  Similarly, patients must understand that their policies may fully cover only in-network providers and must additionally know who is in-network and who is not.  Because the member handbook and/or benefits document allegedly provide adequate notice, the patient is out of luck if he is not aware of these conditions.

The outcome is similar even when a medical provider or the provider’s staff does something to indicate that the medical care in question is covered by the patient’s insurance plan.  This can be as simple as suggesting a specific procedure to help with the patient’s condition or even merely referring the patient to a particular specialist.  A patient may accept care on the understandable yet incorrect assumption that an action recommended by his treating physician is automatically covered by his insurance plan. Though providers often verify that costly care will be covered by a patient’s insurance in order to ensure proper compensation, the instances when this does not happen can be financially devastating to patients.

So who should be responsible for knowing the ins and outs of these health insurance policies?

On one hand, providers do not have the resources to know the details of each and every patient’s insurance plan. Yet many patients, particularly those in the midst of personal illness or family tragedy, are not in a position to understand and apply the complex terms of their insurance policies.

Though there seems to be no perfect answer to this issue, I propose a potential solution (or a small step in the right direction) in my next post.

[See Part II here]

5 thoughts to “Health Insurance & Patient Responsibility, Part I”

  1. Would be interesting to see examples of how and when the prior authorization burden falls to the patient. In practice, I think such problems are usually handled by the provider. In a PPO, it would be odd for patient to bear liability for care that was provided but not pre-authorized. But oddness happens. (Matt Lawrence here at PFC is working on related issues, I believe.)

  2. Thanks for the comment.
    This issue was actually brought to my attention during my time at a non-profit law firm, where we heard from many clients who, unfortunately, had encountered this precise problem and needed assistance with the resulting medical bills. I am not sure how this plays out in the national context, but it seems to be a problem here in Massachusetts that appears to be solvable at least to some degree. If the patient ultimately can’t pay the bills, then the burden may fall to the provider, but even then, clients do suffer from the hits on their credit score and other harms if the bills end up going to collection.
    As far as I know, most states have not found a duty on providers to provide accurate information regarding a patient’s health insurance (other than the general standard of tort negligence), so my limited experience so far has been that patients end up first trying to negotiate with the provider for a reasonable payment plan and then paying the bill.

  3. Thanks for the comment.
    This issue was actually brought to my attention during my time at a non-profit law firm, where we heard from many clients who, unfortunately, had encountered this precise problem and needed assistance with the resulting medical bills. I am not sure how this plays out in the national context, but it seems to be a problem here in Massachusetts that appears to be solvable at least to some degree. If the patient ultimately can’t pay the bills, then the burden may fall to the provider, but even then, clients do suffer from the hits on their credit score and other harms if the bills end up going to collection.
    As far as I know, most states have not found a duty on providers to provide accurate information regarding a patient’s health insurance (other than the general standard of tort negligence), so my limited experience so far has been that patients end up first trying to negotiate with the provider for a reasonable payment plan and then paying the bill.

  4. Want to add that you are completely right — this happens in odd cases and isn’t normal practice since this wouldn’t be beneficial for providers or for patients. But it does happen and medical bills can turn a patient’s life completely upside-down. In the public insurance context in Mass, for example, this might occur because many patients and providers don’t fully understand our Health Safety Net (it’s not actually insurance, only covers specific care at specific places, etc.).

  5. Want to add that you are completely right — this happens in odd cases and isn’t normal practice since this wouldn’t be beneficial for providers or for patients. But it does happen and medical bills can turn a patient’s life completely upside-down. In the public insurance context in Mass, for example, this might occur because many patients and providers don’t fully understand our Health Safety Net (it’s not actually insurance, only covers specific care at specific places, etc.).

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