How Does The Patient Protection & Affordable Care Act ("Obamacare") Affect Injury Claims?

Most readers would be surprised to learn that the new Patient Protection and Affordable Care Act might have a big affect on injury claims.

Right now, hospitals typically have at least two tiers of rates that they charge.   They have a list price that they charge uninsured people.  And then they have “real rates” that they have negotiated with health insurance companies, Medicare, etc.

The differences in these rates may be staggering.  For example, I recently resolved a case where a hospital’s list price or rack rate for the my client’s surgery was $40,515.61.  The real price, which they charged my client’s health insurance, was $6,925.00.

These disparities cause problems in a number of personal injury cases.  If a client doesn’t have insurance, then the client is stuck with the large amount.  In most routine cases, those substantial bills dwarf the amount of insurance that might be available, meaning most of the recovery goes to the hospital instead of to the injured person.

Even when the client has health insurance, some hospitals aren’t happy about getting the reduced rate so they will refuse to submit the bills to health insurance and then seek to collect the full amount from the client.

The new Patient Protection & Affordable Care Act may limit that problem in many cases.   One of the unheralded provisions of the Act is 26 USC section 501(r)(5).  This section requires any hospital that seeks 501(c)(3) non-profit status to limit the amounts it charges to patients eligible for assistance under the hospital’s financial assistance policy  to no more than the amounts the hospital “generally billed to individuals who have insurance covering such care.”

This change to the law will help keep hospitals from exploiting injured individuals and will allow injured persons to keep more of the funds received for their claims.