There are many reasons why a healthcare provider may NOT recover unpaid medical bills from a state, county or local entity. One reason may be the failure to file a government claim. This claim is generally filed with the public entity that failed to pay the bill. The failure to properly and timely file a government claim will usually prevent a healthcare provider from ever receiving payment from these entities.
Despite the requirement to file a government claim, many of our hospital providers spend a very long time trying to informally resolve claims with government payors. Hospitals utilize phone calls and numerous written appeals to try and obtain payment but fail to file a formal claim. Although it is important to comply with the applicable contractual and/or administrative appeals process, filing a government claim is equally and sometimes more critical because it preserves the hospital’s right to receive payment. If hospitals are not prepared to file government claims on their own behalf, they must refer these claims quickly to their counsel. In California, the statutory deadline to file a government claim is generally one year from the ”incident,” which courts have conservatively interpreted to mean the date the claim was initially denied or underpaid. Clearly, if providers spend over a year trying to resolve the claims without filing a government claim, then they may be forever barred from receiving payment.
So what are some things a healthcare provider must be aware of to comply with claims filing statutes?
- Identify Government Payors: Providers must know the difference between a payor and a third party administrator of claims. A third-party administrator is a company that the payor may hire to verify benefits, issue payments or respond to appeals. These third-party administrators may fulfill many functions, but may not be responsible for payment. It is only after the payor has been properly identified that a provider can inquire whether it is a government payor.
- File Timely: There are two critical deadlines that providers should be aware of when evaluating claims denied by government payors. The first one is the deadline for filing the government claim itself and the second deadline is the one for filing a civil action after denial or rejection of the government claim. The deadline for filing a government claim is generally one year from the date of the “incident.” The most conservative interpretation of “incident” is the date the claim was denied or underpaid. If the public entity rejects the claim, it will issue a right-to-sue letter, which includes statutory language stating that the claimant has 6 months from the date of the letter to file its lawsuit. However, if the right-to-sue letter does not contain this language or the public entity fails to issue a determination, then the deadline to file a civil action is two years from the “incident.”