It’s no surprise that payment delays, avoidance and reduction are tools that health insurance companies use to increase their profit margin. But when this strategy results in a broken promise to pay for contracted medically necessary services, the insurer needs to be held accountable. One of the most effective ways to hold an insurer accountable is through trial in a formal lawsuit or binding arbitration.
While both a trial and an arbitration have the same goal of making the insurer fulfill its contractual obligations, they are slightly different in how they work and looking at this difference is important in determining which is best in any given situation. A lawsuit is where SAC, on behalf of a client, files a formal complaint with a court. The case is assigned to a state or federal judge who then directs the lawyers in the handling of the case by setting deadlines for them to complete their investigation and a date for the trial. The trial is a formal proceeding much like you see on TV.
Arbitration, in contrast, is much less formal than a lawsuit but, in general, it proceeds in a similar manner. An arbitrator is assigned based on input from both sides and he or she then sets deadlines for the attorneys to meet. The hearing is held in a conference room, but proceeds just like a trial would. The biggest difference between arbitrations and trials is that arbitrations are binding with no right to appeal (except in very limited circumstances) and are usually more expensive.
The decision to pursue arbitration or a lawsuit is generally based on the contract between the health insurer and the health care provider that dictates the ways in which the parties may seek to resolve disputes.
Why should you go the distance? Unlike a health care provider, an insurer remains profitable by collecting premiums for many consumers but slowly or not paying claims for a substantial number. Denials and slow payment increase profitability! A health care provider remains profitable by being promptly and accurately paid for providing services to consumers. Obtaining payment for medical services can be frustrated when these opposing business objectives meet. To combat this trend of slow, reduced or lack of payment, providers must be prepared to go the distance. When the insurer has wronged the provider the provider should take action — sue the insurer or, if contracted, follow the dispute resolution steps in the contract and be prepared to proceed to arbitration or trial.
The reluctance by health care providers to go the distance is understandable because of the time involved. Arbitration and trial take time away from primary work responsibilities to deliver medically necessary care to patients and may be costly. Moreover, there is often a scramble to determine which lucky individual is going to testify on the provider’s behalf. But keep in mind that insurers rely on providers’ indecision and unwillingness to attend hearings to escape paying what is owed.
Although the risk of losing is a serious consideration, taking the appropriate case to trial or arbitration is a very good way to send a message to the insurer. Taking a hard stand also pays dividends in creating a track record with the insurer. If you take a case to trial or arbitration, that insurer will know you mean business in future cases and the recovery of future claims becomes easier. This has proven true for many of our clients in the past. Moreover, insurers may deny fewer claims overall and pay more of what they owe before arbitration hearing or trial, which may ultimately result in fewer disputes.
In short, if providers are prepared to take cases to arbitration or trial on stronger cases then they can often obtain better results in most claim disputes.