Reimbursements for Motor Vehicle Accidents

By: Will Love, Director of Denials and Underpayments

Over the previous five decades, motor vehicle accidents (MVAs) have increased emergency department (ED) visits in metro-
area hospitals. While most MVAs cause minimal injury, injured motorists are lawfully entitled to a hospital visit, by
ambulance if needed, following a car crash. With EDs daily treating MVA patients, it is important for hospitals to
understand their options when seeking reimbursement on an MVA claim.

Depending on a hospital’s trauma classification, MVA accounts usually constitute 1 to 3% of a hospital’s A/R. Most
patients will have moderate injuries, requiring only pain medication and an x-ray, MRI, or CT scan to check for internal
injuries. However, a small number of trauma patients will require admission for emergency surgeries, intensive care,
and rehabilitation.

Regardless of severity, MVA patients can be challenging to register. These patients may not have insurance information
on hand, and if they were not at fault, may refuse to bill their own insurance for their treatment. Without an
experienced team to guide the patient through the reimbursement process, hospitals risk these accounts falling into
self-pay and inflating bad debt. Below are tips for maximizing returns on MVA accounts:

Understand the risks and opportunities of MVA reimbursement

• • A core distinction between accident payers and managed care payers is that hospitals will typically have no contracts with the former.
  • With no contracts to govern reimbursement rates, hospitals may collect high rates of reimbursement, even 100%, depending on the policy limits compared to the billed charges.
  • However, hospitals will not have the same collection rights as contracted payers. The accident policy may exhaust before the bill is paid and may not pay directly to the hospital without the member’s consent.
  • Thus, while accident insurance can fetch higher rates of return, it may also fetch minimal or no reimbursement if not carefully vetted.

Comply with your state’s regulations

• • Each state has different laws regarding MVA-related medical bills. Most states are tort-based “at-fault” states, where the person deemed at-fault for the injury will be responsible for compensating the injured party.
  • A few states, however, are “no-fault” states, where each injured party is expected to pay for their own injuries, regardless of who was at fault.
  • Whether or not your hospital resides in an at-fault or no-fault state will determine your reimbursement methods on MVA accounts.

Pursue both first- and third-party benefits

• • First-party benefits are paid out by one’s own accident insurance; whereas third-party benefits are paid out by someone else’s accident insurance.
  • In a no-fault state, a patient’s first-party PIP (personal injury protection) will be the primary insurance responsible for the claim. Depending on the state’s regulations, PIP may pay the entire claim, regardless of charges, or may exhaust it before the claim is paid in full.  When PIP exhausts, hospitals maintain rights to bill the remaining balance to a secondary insurer.
  • In an at-fault state, patients and hospitals will have more options when coordinating benefits. A patient may carry optional first-party medical benefits on their auto insurance which can pay as primary.  However, if patients carry no such benefits, the hospital can bill the patient’s managed care or submit a lien against a patient’s third-party personal injury settlement.

Utilize your lien rights

• • Many states permit hospitals to pursue reimbursement through a lien on a patient’s personal injury settlement. A lien will require the insurer or the patient to reimburse the hospital before the personal injury claim is settled.
  • Liens can be filed when either the patient does not carry or elects not to bill commercial health insurance.
  • When filing a lien, hospitals will need to understand their state’s regulations, including how to legitimize or “perfect” the lien, and how their reimbursement will be calculated.
  • Hospitals will also need to follow up with the insurance and/or patient regularly to check on the status of the settlement and negotiate a reduction if warranted.

When collecting on an MVA account, hospitals should be aggressive but measured in their pursuit of reimbursement.  Patients may be incentivized to hide their accident benefits from the hospital, as those benefits can pay to the patients directly.   If not careful, hospitals can spend time discovering and billing accident insurance only to receive little to no reimbursement.  However, a hospital should also remember that MVA patients may have severe and/or permanent injuries from their accident, giving them legitimate reasons to keep a large portion of their benefits.    In the end, common courtesy should prevail to ensure that a hospital receives fair and reasonable reimbursement for its services without depriving the patient of funds needed to make them whole from their MVA injury.

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