California case law highlighted by Parnell v. Adventist Health System (2005) and punctuated with Olszewski v. Scripps Health (2003) had eroded the hospital revenue stream of third-party liens during the past 11 years. Many thought the Affordable Care Act (ACA) may be the final nail in the Third Party Liability (TPL) coffin for hospitals with a goal of health coverage for all Americans.
But the reality is that the ACA has provided an opportunity for hospitals as well as patients to utilize the California Hospital Lien statute to deal with the frightening rise in high dollar deductibles and co-pays many patients are now facing.
According to Tara Sigel Bernard in The New York Times, even more employees will be taking on high-deductible insurance in 2015. “Just as employers replaced pensions with retirement savings plans, more large companies appear to be in a similar cost-sharing shift with health plans,” said Bernard. “Next year, nearly a third of large employers will offer only high-deductible plans – up from 22 percent in 2014 and 10 percent in 2010.”
The rise in deductibles for patients is nothing new. Since 2009, the average employee deductible has risen 47 percent to $1,217 annually, per The Los Angeles Times. More concerning is the fact that 18 percent of patients now have a deductible of $2,000 or higher.
This means more of a family’s disposable income is now used to pay for health care coverage. Even a patient with a health plan paying for their services may find it difficult to pay a provider the large co-pay and deductibles owed
In California, the exchanges offered by Covered California feature plans with average deductibles of $2,275 (Silver plans) to $4,986 (Bronze plans). The Catch-22 is that the less a patient pays in premiums, the higher the deductible. The reason these plans are chosen is that the subscriber often cannot afford a higher level plan and often does not possess the means to pay a large patient share of cost without setting up a long-term payment plan with a provider.
It should also be noted that the ACA’s goal of coverage for all has yet to be achieved, with only 28 percent of those people eligible to utilize an insurance exchange signed up to use them, according to the Henry J, Kaiser Family Foundation. In other words, only 8 million of the eligible 28.6 million American took advantage of the ability to buy health insurance. This means that there will be many uninsured patients receiving medical care.
The increase in the amount of the deductibles and the fact that the ACA has thus far fallen short of its goal to significantly expand the number of insured patients points out the importance of exploiting other avenues of protecting the patient. One way is through the pursuit of TPL by the assertion of hospital liens. Hospital liens may be filed where the patient does not have health coverage to cover the services rendered. This includes reimbursement for co-pays and deductibles. It is therefore advisable that a provider capture as much third-party liability information during the patient’s admission, including the name of any attorney, the tortfeasor’s auto insurance policy and a cell phone number to reach the patient.
The provider must also remember that a Third Party Liability lien under the California Hospital Lien Act must comply with the statutory requirements for proper delivery as well as timing. Once a patient or attorney has settled the claim or civil case with an insurance company, it is too late for a provider to file a lien..