Patients and hospitals are finding one huge hurdle in the Affordable Care Act era! Commercial health plans are passing along a chunk of the financial liability to consumers via higher co-pay and deductibles, especially in plans with lower monthly premiums. However, California law is providing a revenue opportunity to providers and financial relief to patients through the use of liens against recoveries in third party liability situations.
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 over the past 11 years. Many thought the Affordable Care Act, with a goal of universal coverage for all U.S. residents, may be the final nail in the third party liability (“TPL”) coffin for hospitals with a goal of health coverage for all Americans. However, the reality is that the ACA provided an opportunity for hospitals, as well as consumers/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 rise in even higher deductibles, with already 18 percent of patients having a deductible of $2,000 or higher.
Since 1999, workers share of health premiums has soared 212 percent, nearly four times greater than the wage growth nationwide, according to a Kaiser Family Foundation survey. This means more of a family’s disposable income is now required to be 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 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.
California hospitals may assert a lien under California Civil Code section 3045 et seq. County hospitals are given a first lien and are required to reduce their liens under Government Code section 23004.1. However, Cal. Civ. Code section 3045.3 limits a hospital lien recovery to 50 percent of the third party recovery, less any prior liens, such as patient’s attorney’s lien and costs.
It should be noted that the ACA 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. That means the Foundation found that only 8 million of the eligible 28.6 million Americans took advantage of the ability to buy health insurance.
Hospital liens may be filed where the patient does not have any health coverage in place at the time services were rendered. It is 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.
Consumers who do have coverage with a health plan may wish to have their large co-pay or deductible paid for by a third-party liability tortfeasor if involved in an accident. The patient should either directly contact that hospital/physician with the auto insurance information or have their attorney send a letter to the providers with the necessary information for the medical bills to be protected and paid by a hospital lien.
The hospital must remember that a Third-Party Liability lien under the California Hospital Lien Act must comply with the statute 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.