Adam Woodrum was out for a bike ride with his wife and kids on July 19 when his son, Robert, who was 9 at the time, crashed.
"He cut himself pretty bad, and I could tell right away he needed stitches," says Woodrum.
Because they were on bikes, he called the fire department in Carson City, Nev.
"They were great," says Woodrum. "They took him on a stretcher to the ER."
Robert received stitches and anesthesia at Carson Tahoe Regional Medical Center. He's since recovered nicely.
Then the denial letter came.
The patient: Robert Woodrum, covered under his mother's health insurance plan from the Nevada Public Employees' Benefits Program
Total bill: $18,933.44, billed by the hospital
Service provider: Carson Tahoe Regional Medical Center, part of not-for-profit Carson Tahoe Health
Medical service: Stitches and anesthesia during an emergency department visit
What gives: The Aug. 4 explanation of benefits (EOB) document said the Woodrums' claim had been rejected and their patient responsibility would be the entire sum of $18,933.44.
This case involves an all-too-frequent dance between different types of insurers about which one should pay a patient's bill if an accident is involved. All sides do their best to avoid paying. And, no surprise to Bill of the Month followers: When insurers can't agree, who gets a scary bill? The patient.
The legal name for the process of determining which type of insurance is primarily responsible is subrogation.
Could another policy — say, auto or home coverage or workers' compensation — be obligated to pay if someone was at fault for the accident?
Subrogation is an area of law that allows an insurer to recoup expenses should a third party be found responsible for the injury or damage in question.
Health insurers say subrogation helps hold down premiums by reimbursing them for their medical costs.
About two weeks after the accident, Robert's parents — both lawyers — got the letter informing them of the insurer's decision.
The note also directed questions to Luper Neidenthal & Logan, a law firm in Columbus, Ohio, that specializes in helping insurers recover medical costs from "third parties," meaning people found at fault for causing injuries.
The firm's website boasts that "we collect over 98% of recoverable dollars for the State of Nevada."
Another letter also dated Aug. 4 soon arrived from HealthScope Benefits, a large administrative firm that processes claims for health plans.
The claim, it said, included billing codes for care "commonly used to treat injuries" related to vehicle crashes, slip-and-fall accidents or workplace hazards. Underlined for emphasis, one sentence warned that the denied claim would not be reconsidered until an enclosed accident questionnaire was filled out.
Adam Woodrum, who happens to be a personal injury attorney, runs into subrogation all the time representing his clients, many of whom have been in car accidents. But it still came as a shock, he says, to have his health insurer deny payment because there was no third party responsible for their son's ordinary bike accident. And the denial came before the insurer got information about whether someone else was at fault.
"It's like deny now and pay later," Woodrum says. "You have insurance and pay for years, then they say, 'This is denied across the board. Here's your $18,000 bill.'"
When contacted, the Public Employees' Benefits Program in Nevada would not comment specifically on Woodrum's situation, but a spokesperson sent information from its health plan documents. She referred questions to HealthScope Benefits about whether the program's policy is to deny claims first, then seek more information. The Little Rock, Ark.-based firm did not return emails asking for comment.
The Nevada health plan's documents say state legislation allows the program to recover "any and all payments made by the Plan" for the injury "from the other person or from any judgment, verdict or settlement obtained by the participant in relation to the injury."
Attorney Matthew Anderson at the law firm that handles subrogation for the Nevada health plan says he can't speak on behalf of the state of Nevada, nor can he comment directly on Woodrum's situation. However, he says his insurance industry clients use subrogation to recoup payments from other insurers "as a cost-saving measure" because "they don't want to pass on high premiums to members."
Despite consumers' unfamiliarity with the term, subrogation is common in the health insurance industry, says Leslie Wiernik, CEO of the National Association of Subrogation Professionals, the industry's trade association.
"Let's say a young person falls off a bike," she says, "but the insurer was thinking, 'Did someone run him off the road, or did he hit a pothole the city didn't fill?'"
Statistics on how much money health insurers recover through passing the buck to other insurers are hard to find. A 2013 Deloitte consulting firm study, commissioned by the Department of Labor, estimated that subrogation helped private health plans recover between $1.7 billion and $2.5 billion in 2010 — a tiny slice of the $849 billion they spent that year.
Medical providers may have reason to hope that bills will be sent through auto or homeowner's coverage, rather than health insurance, as they're likely to get paid more.
That's because auto insurers "are going to pay billed charges, which are highly inflated," says attorney Ryan Woody, who specializes in subrogation. Health insurers, by contrast, have networks of doctors and hospitals with whom they negotiate lower payment rates.
Resolution: Because of his experience as an attorney, Woodrum felt confident it would eventually all work out. But, he says, the average patient probably wouldn't understand the legal quagmire and might not know how to fight back.
"I hear the horror stories every day from people who don't know what it is, are confused by it and don't take appropriate action," Woodrum says. "Then they're a year out with no payment on their bills." Or, fearing for their credit, they pay the bills.
After receiving the accident questionnaire, Woodrum filled it out and sent it back. There was no liable third party, he said. No driver was at fault.
His child just fell off his bicycle.
HealthScope Benefits reconsidered the claim. It was paid in September, two months after the accident. The hospital received less than half of what it originally billed, based on rates negotiated through his health plan.
The insurer paid $7,414.76 of the cost, and the Woodrums owed $1,853.45, which represented their share of the deductibles and copays.
The takeaway: The mantra of Bill of the Month is don't just write the check. But also don't ignore scary bills from insurers or hospitals.
It's not uncommon for insured patients to be questioned on whether their injury or medical condition might have been related to an accident. On some claim forms, there is even a box for the patient to check if it was an accident.
But in the Woodrums' case, as in others, it was an automatic process. The insurer denied the claim based solely on the medical code indicating a possible accident.
If an insurer denies all payment for all medical care related to an injury, suspect that some type of subrogation is at work.
If you get an accident questionnaire, "fill it out, be honest about what happened," says Sean Domnick, secretary of the American Association for Justice, an organization of plaintiffs lawyers. Inform your insurer and all other parties of the actual circumstances of the injury.
And do so promptly.
That's because the clock starts ticking the day the medical care is provided and policyholders may face a statutory or contractual requirement that medical bills be submitted within a specific time frame, which can vary.
"Do not ignore it," says Domnick. "Time and delay can be your enemy."
Dan Weissmann, host of the podcast "An Arm and a Leg," reported the radio interview of this story. Bill of the Month is a crowdsourced investigation by KHN and NPR that dissects and explains medical bills. Do you have an interesting medical bill you want to share with us? Tell us about it!
MARY LOUISE KELLY, HOST:
Every month, NPR and Kaiser Health News take a close look at medical bills that you send us. Well, today we're going to hear about a particular kind of bill that can be alarming to receive. It involves lawyers. Dr. Elisabeth Rosenthal is here to break it down for us. She's the editor-in-chief of Kaiser Health News.
Hey there, Elisabeth.
ELISABETH ROSENTHAL, BYLINE: Hi.
KELLY: So a medical bill and lawyers - I feel my blood pressure going up already.
KELLY: Tell us what's going on here.
ROSENTHAL: Well, this one involves what seems to be a growing problem - different types of insurers arguing about which one should cover your medical costs. And of course, the patient is caught in the middle. If you've been injured in a car crash or your kid has broken an arm, requiring a trip to the ER, you might just get a legal document in the mail asking for more information before your health insurance will pay the bill.
KELLY: All right. I'm intrigued but already stressed out because you're in a stressful medical situation, and then you're getting these, you know, letters from lawyers asking you to fill out forms.
ROSENTHAL: That's right - a yikes moment. Adam Woodrum, who lives in Carson City, Nev., got one of those letters concerning his 9-year-old son. But he and his wife are both lawyers, and so they knew something was up.
KELLY: All right. So let's - we're going to hear what happened to Adam Woodrum and his son. We're going to get that story from Dan Weissmann of the podcast "An Arm And A Leg." Elisabeth Rosenthal, stay with us. Let's listen in.
DAN WEISSMANN, BYLINE: One Sunday last July, Adam Woodrum and his wife and their two kids took off on a bike ride around Carson City, Nev., where they live.
ADAM WOODRUM: I'd mapped out kind of a 10-mile route, and we were just going to kind of make a loop of the city.
WEISSMANN: But a couple miles in, their 9-year-old son hit a snag.
WOODRUM: We were navigating through some big tree planters, and his handlebar caught. And it just - almost instantaneously, he was on the ground crying, bleeding. And I'm no doctor, but, you know, right away, you can tell that this is a stiches situation.
WEISSMANN: At the ER, they actually had to put the poor kid under.
WOODRUM: He was cut in sort of a personal area. Let's just say that.
WEISSMANN: A few weeks later, Adam's insurance company writes him. The total charges are $19,000, and, they say, you are on the hook for all of it.
WOODRUM: It's just ridiculous. It's a ridiculous place to start from.
WEISSMANN: And in the fine print, it said, we're denying this claim, but we could reconsider. Quote, "You will receive an accident questionnaire in a separate mailing," or you may go to website blah, blah, blah, or call this 800 number or email subrogationlnlattorneys.com with any additional questions.
WOODRUM: And it's clear as mud, right?
WEISSMANN: But to Adam, it makes sense. The insurance company is trying to see if there's a way out of paying this bill. See, Adam's a personal injury lawyer. Accidents, insurance claims - this is his everyday professional world.
WOODRUM: I mean, this LNL Attorneys - I work with them probably once or twice a month. I have their email addresses. I mean, I know who they are.
WEISSMANN: And he knows what subrogation is. For the rest of us, it's sub, like substitution. The insurance company thinks maybe somebody else should be on the hook for this bill and sub out for them in paying 'cause there's been an accident.
WOODRUM: It's basically a contractual right.
WEISSMANN: Like, if you were rear-ended, the other driver or their insurance should be responsible. So the health insurance company's trying to get Adam on the record. What happened? Is there somebody else maybe on the hook? Please sign here. Health insurance companies hire law firms like this LNL outfit in Ohio to make sure you jump through the hoops. The law firm sends out their own letter with the questionnaire. Adam kept an eye out for it, filled it out right away.
WOODRUM: I knew exactly what to expect, and I knew exactly how to handle it because I know how to operate the system. But I, from experience, know that other people do not know how to operate the system.
WEISSMANN: Other people like his clients.
WOODRUM: People just simply have no clue what subrogation is or what that - you get a letter from a lawyer in Ohio that says, hey, we need you to come to our website and fill out some paperwork or we're not going to release your claims to be paid. And you go, well, nuts to you. I don't have any idea who you are or what this is.
WEISSMANN: So people ignore those letters, and their insurance doesn't pay the medical bills. And they end up in collections. He thought sending in his bill would be a good way to give more of us a heads-up.
For NPR News, I'm Dan Weissmann.
KELLY: Oh, wow. What a story.
ROSENTHAL: (Laughter) Yes.
KELLY: All right. Elisabeth Rosenthal is still with us, listening in. First, how is Adam's son? Is he OK?
ROSENTHAL: Yeah, he's great. He's back on his bike.
KELLY: That is the good news. What about, though, this bill - $19,000? What happened next?
ROSENTHAL: Well, they knew how to handle it, and insurance paid, so they only owed their normal deductible. But remember, they understood the game that was going on here.
KELLY: Yeah. The dad is a personal injury lawyer married to another lawyer. I'm sure that helps. What should the rest of us do?
ROSENTHAL: For the rest of us, it's important to learn a lesson from them. While the insurers are duking it out over who will pay, the hospitals and doctors are often sending patients bills and threatening them and maybe even threatening collections.
So I think for patients, the first is our perennial lesson - don't just pay the bill. Take action. Fill out the forms they send you. Be clear about what happened. This was just a kid who fell off a bike. And let the hospital and doctors know why you're not paying the bill so they won't go after you.
Also, if you have to fill out your own claims forms, beware of that little box we often see that says, was this caused by an accident? What that means to an insurer may be, hey, maybe we don't have to pay, which is not what you're thinking when you check that box.
KELLY: Well, I'm glad there was a happy ending to this particular story and wise words for the rest of us. Elisabeth Rosenthal, thank you for being here.
ROSENTHAL: Thanks for having me again.
KELLY: And if you have a perplexing bill that you would like us to take a look at, go to NPR's Shots blog and tell us about it. Transcript provided by NPR, Copyright NPR.