A Third Party Liability Collections program is an intensive endeavor with the goal of maximizing reimbursement for medical services rendered, while at the same time providing excellent patient care by helping to alleviate unnecessary medical debt.  A Third Party Liability program approaches each and every patient account with one question in mind: Why are we, the medical provider, subsidizing a legally responsible insurance company? 

The program’s success hinges on the ability to find and pursue reimbursement opportunities.  Creativity and diligence are important as these opportunities are not always obvious.  In fact, many patients are unaware of their own insurance coverage and the insurance industry has become accustom to the subsidies given by the medical community and is not always forthcoming in regards to reimbursement responsibility.  Although a patient may have commercial health insurance coverage, it does not and should not absolve responsibility from a third party.  A carefully planned and organized TPL program will not only decrease the number of private pay accounts but it will also increase reimbursement rates on individual accounts.  Reimbursement at 100% of account charges becomes common. 

As a medical provider you have the unique opportunity to advocate on behalf of your organization as well as on behalf of the patient.  A TPL program is the foundation for this advocacy.  A well structured TPL program begins with competent and knowledgeable account managers.  The account manager is the conduit between payment obstruction and reimbursement.  Comprehension of legal statutes, application of case law and the ability to stay current with administrative and revised codes is imperative to a successful program.  Knowledge of damage issues and how they are applied for reimbursement can have a wide range of effects upon the amount of reimbursement owed to the patient and medical provider. Personal Injury Protection, MedPay, Bodily Injury liability, First and Third party coverage all have positive and negative effects dependent upon the order in which they are applied and utilized, hence the importance of capable account managers. 

To take full advantage of all reimbursement opportunities, the first objective of a TPL program is to screen all patient accounts, regardless of dollar amount.  Each account is thoroughly screened for possible third party liability by reviewing account information, such as reason for admit.  If there appears to be a potential reimbursement source, the account manager then begins his investigation.  The investigation may include patient interviews, review of medical documentation such as medical records, acquisition of law enforcement reports and insuring agreements.  With this documentation in hand the account manager is able to identify:

• Act that caused the liability exposure
• Target Defendant or Tort-feasors
• Indemnification coverage supported by the insuring agreement for the tort-feasor who committed the liable act

Upon completion of these steps, properly securing funds for reimbursement is essential whether by the use and implementation of a protective medical lien, filing a lawsuit or entering into inter-company arbitration. 

The use of a medical lien is simple but elemental.  According to Washington State law, any medical provider who rendered services for any person who has received a traumatic injury has the right to file a protective medical lien upon any potential settlement received as direct result of the treated injury.  The lien gives the hospital the ability to collect reimbursement directly from a patient’s settlement or award, rather than relying on the patient to satisfy their own debt. With that said, and as previously stated, it is crucial to have trained and experienced account managers when securing funds for reimbursement.  Familiarity with state law and the medical lien process is vital.  If filed incorrectly, the lien may have no legal standing, thus inhibiting the collection of proper reimbursement. 

Enforcement of the lien may also be necessary.  A creditor’s action can be taken against an insurance carrier who has refused or neglected to honor the medical lien.  One Washington State hospital recently had success with the filing of a creditor’s action in Superior Court.  The liable insurance company in this matter failed to honor the lien by paying the policy limits to the patient’s estate.  Through the successful use of the creditor’s action, the insurance company was required to pay the statutory amount due to the hospital as well as all attorney fees and related costs incurred to enforce the lien. 

The use of inter-company arbitration is also an important aspect of any TPL program.  Inter-company arbitration is a group of approximately 3500 signatory members.  All members have agreed to wave any formal appeal, injunction, or other litigation tactic, with the goal of settling a disagreement over damages and liability in a cost effective and time efficient manner.  The same Washington State hospital referenced above also recently had success with inter-company arbitration.  The liable tort-feasor, in this matter, originally denied all liability and refused payment.  The hospital’s TPL program manager filed inter-company arbitration.  Both parties presented their positions, and the three-person arbitration council declared the tort-feasor 20% negligent.  The hospital was awarded several thousand dollars as a result of this decision.  The patient in this case was eligible for Washington State Medicaid; however with the successful use of inter-company arbitration, the hospital was able to secure a higher reimbursement from the proper payer, while saving the State of Washington thousands of dollars. 

The increasing numbers of private pay accounts and the decreasing health insurance compensation rates are common yet disconcerting problems within the medical community.  In regards to third party liability, the insurance industry has succeeded in creating an environment of ignorance and has profited from it.  Their profit is directly related to the medical community and its acceptance of private pay accounts and low reimbursement rates.  With a well structured TPL program you, as a medical provider, can gain the knowledge needed to pursue the insurance industry.  The money is out there, it is up to you to pursue it.