One of the most common anxieties clients express during the process of treatment after a significant injury is the accumulation of huge medical bills that can appear quite daunting. Many clients are deservedly worried about this expense and wonder whether they will be able to receive any net recovery after the medical bills are paid.
Here are a couple things to keep in mind. Medical bills are almost always reduced, often quite significantly. These reductions come in two forms for those with PIP (personal injury protection—your required auto medical coverage), Medicare, or some health insurance plan.
First, most plans have negotiated rates that enable them to pay significantly less than the total billed charge. If PIP pays first, you will notice that they pay out a significantly reduced amount against the billed charge and often involve write-offs against what is not paid. The patient gets the benefit of both reductions. We often see surgical bills of $60,000 or $70,000 being satisfied by an insurance payment of 10 percent of the billed amount. Of course this will vary with each plan.
Second, all health insurance plans, including Medicare, are entitled to be reimbursed from a potential settlement for the amount they paid on the injured party’s behalf. Once our office negotiates a final settlement amount that has been accepted by our client, we begin negotiating to reduce the amount Medicare or the insurance plan is requesting for reimbursement.
Medicare, for instance, has a formula that takes into account the percentage of the recovery our client is paying us as attorney fees. In most cases, Medicare is going to reduce their reimbursement request according to their formula by approximately one-third of the lien amount. Other insurance companies will not have a standard formula but typically will agree to a reduction of their lien amount regardless of the size of the settlement. When there is a small settlement and a big lien, they usually reduce even further.
Our goal always is to work to get the largest reduction of the reimbursed medical expense possible. We never settle a case in which we take a larger amount in attorney’s fees than the client receives as a net recovery.
A couple of cases will illustrate this point. We recently settled a case involving very substantial surgical bills. Even though the medical bills were larger than the settlement, our client ended up with more than half of the total settlement in net recovery. Another recent case had a similar result in that our client’s total medical bills came to nearly $100,000. We, however, managed to negotiate what was paid back to the insurance company to nearly 50 percent of the requested amount.
The upshot of the story is this: Don’t panic over sizeable initial medical bills. Also, don’t let them make you think you could not get a net recovery or that your case is not worth pursuing.