May 23, 2017

If you’ve ever caused a fender bender, you may have weighed the option of asking someone to settle with you rather than going through your insurance company. While it might make sense when the damage is limited to a vehicle, it’s much riskier when a person’s health and wellbeing are involved. Still, some employers choose to pay for seemingly minor medical care out of pocket, without involving their workers’ comp carrier. In these employee/provider small-claim arrangements, the employer signs a formal, binding contract making them directly responsible to pay for the services rendered. The employer also submits the insurance carrier’s contact information to the health care provider. The provider then sends all medical bills directly to the employer, as well as a “for information only” copy to the insurance carrier.

While the law allows small-claim arrangements, they are not always in employers’ best interests.

Employers may be paying for non-compensable claims Insurance carriers investigate accidents to determine whether claims are compensable (claims eligible for compensation) under the Texas Labor Code. By paying for claims out of pocket, employers do not give carriers the opportunity to conduct investigations. Consequently, employers may be paying for non-compensable claims. They may also be paying for co-existing conditions the carrier would have uncovered during an accident investigation.

The law allows health care providers to bill employers their usual and customary fees. Insurance carriers, conversely, reimburse providers according to the Texas Department of Insurance, Division of Workers’ Compensation medical fee guidelines, which are typically much lower than usual and customary fees.

Many insurance carriers also offer workers’ compensation health care networks. In these networks, carriers negotiate rates with providers and those rates are generally lower than usual and customary charges.

Minor injuries can get worse Assume an employee cuts his finger. After the accident, he goes to the doctor, gets five stitches and returns to work the next day. What if a week later, the employee gets a secondary infection that requires a hospital stay?

The point is that minor injuries can get worse, and their associated costs can skyrocket. If the policyholder reports the accident to the carrier, the carrier will manage the claim and act on the policyholder’s behalf. If not, the employer’s costs could pile up quickly.

Employees could be denied care If an employer owes a provider for a previous claim, the provider may turn away the employer’s injured workers until the employer pays the bill. An injured worker’s health is always the first priority after an accident, and this is an obstacle that could keep them from getting the care they need.

Policyholders assume an administrative burden Under the Medicare, Medicaid and State Children’s Health Insurance Program (SCHIP) Extension Act (MMSEA), carriers that provide liability, no-fault and workers’ compensation insurance, as well as employers who pay their own claims, must identify the Medicare beneficiary status of claimants and report claim data quarterly to the Centers for Medicare & Medicaid Services.

Insurance carriers comply with MMSEA requirements on employers’ behalves. Employers who pay claims out of pocket are responsible for complying with the requirements. This added administrative burden leaves less time for running a business.

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