If a patient does not have liability for a particular expense, the insurer is similarly absolved of responsibility.

The June 14 issue of RACmonitor focused in part on Anthem’s policy regarding coverage of ED services. The relevant article suggested that insured patients should not face responsibility for emergency room bills. To understand why that is permissible, it is necessary to understand how the law views insurance.

An insurer has a legal obligation to pay any expense that an insured person or entity incurs, as long as that expense is covered by the policy. In essence, the insurer stands in the shoes of the policyholder and is responsible for any obligation they would otherwise have. As a result, a basic principle of insurance law is that if, say, a patient does not have liability for a particular expense, the insurer is similarly absolved of responsibility.

The insurer’s duty to pay derives entirely from the patient’s obligation. If a healthcare organization says to the patient, “you are not responsible for this expense,” in most cases the organization has functionally made the same promise to the insurer.

For example, a number of courts have held that if a healthcare organization advertises that it will accept insurance as payment in full without any co-payments or deductibles, or otherwise promises not to charge the patient, the insurer is not obligated to make payment.

Yet the article asserts that you may tell a patient that if the insurer denies ED care, you won’t charge the patient. How can these statements both be true? The answer is that in the case of these emergency department services, what you are telling the patient is that if the services were not necessary, neither the insurer nor the patient is responsible for them. In essence, if the services were not medically appropriate, no one is required to make a payment.

That promise is also consistent with the terms of the implied contract created when a patient presents to a doctor. When most people receive healthcare, there is little discussion about price. In that case, the law imposes what is called an implied contract.

The terms of that “contract” are that the medical organization is to submit a reasonable charge, and the patient is required to pay it. If, for any reason, the services provided by the hospital are unreasonable, the patient does not have a legal obligation to make a payment. In other words, for emergency services, there are two possibilities: either both the patient and the insurance company should be responsible for the cost, with the patient responsible for any deductible and co-insurance, and the remaining balance falls to the insurance company, or, alternatively, neither the insurer nor the patient are responsible.

Legal issues can arise when you treat the patient and the insurer differently. (There are still a few other exceptions where it is possible to absolve the patient of liability while requesting payment from an insurer. For example, waiving beneficiary liability for a patient who has a legal claim is likely defensible.) However, if the insurer asserts that it isn’t responsible for the cost of care, there is little risk if you extend a courtesy discount to the patient.

Program Note:

Listen to David Glaser every Monday on Monitor Mondays, 10-10:30 a.m. EDT.


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