Billed v. Paid Medical Expenses: The Retail Price Isn’t Always the Fair and Reasonable Value of Medical Services

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Phil Puccio

In Nebraska, it is important in each case of medical malpractice to verify what is being billed as a medical expense versus what was actually accepted as payment in full for those medical expenses, including the patient’s deductible. The level of reimbursement for medical expenses is the fair value of the medical services rendered. Stanek v. Swierczek, 209 Neb. 357, 307 NW2d 807 (1981). Plaintiffs’ attorneys frequently invoke a provision of the Nebraska hospital lien to assert that their clients are entitled to recover amounts billed from healthcare providers, regardless of whether the providers paid an amount less than full payment for the services rendered have accepted. See Neb. Rev. Stat. §§ 52-401. This provision provides, in connection with the calculation of hospital liens, “The measure of damages for medical expenses in personal injury claims is the private party rate, not the reduced amount.” This abuse of hospital liens could result in an enormous windfall for personal injury plaintiffs.

The fair value of medical expenses is the fair standard by which a plaintiff must prove their damages for the cost of medical treatment. See Steinauer vs. Sarpy County217 Neb. 830, 843, 353 NW2d 715, 724 (1984) (providing that a person who suffers personal injury as a result of “the negligence of another” is entitled to compensation reasonable value of medical care and cost arose up to the time of the hearing” as well as reasonably certain to arise in the future) (emphasis added). When the amount of medical expenses is disputed, the reasonableness of those amounts becomes a matter for the jury. race v moser, 241 Neb. 623, 634 (1992). In order to claim personal injury, such damages must be fair and reasonable. NJI2d Civ. § 4.01, the general compensation regulation, obliges the jury to only “2. The fair value of the medical (hospital, nursing and similar) care and supplies reasonably needed and actually provided by the claimant (and which will almost certainly be needed and provided in the future).”

Evidence of the amounts accepted as payment by providers is necessary to establish this element of damage, as the amount charged almost never represents the fair value of these services. Changes in the delivery and financing of health care services have greatly impacted medical billing over the past several decades. While healthcare providers’ ability to set their own fees remains, the ability to collect the total amounts charged, known as “fee master rates,” has decreased dramatically. Michael K. Beard and Dylan H. Marsh, Arbitrary Healthcare Pricing and the Misuse of Hospital Lien Statutes by Healthcare Providers, 38 Am. J. Trial Advocate. 255 (2014); Michael K. Beard, The Impact of Changes in Health Care Reimbursement Systems on Medical Expense Recovery in Personal Injury Claims, 9 p.m. J. Trial Advocate. 453 (1998). The frequency with which patients are charged full rates has declined significantly in recent years, and figures that were once based on fact are now largely based on fiction. In fact, fee rates are so inflated that even hospital officials admit that the rates now represent little more than the starting point from which hospitals negotiate with insurers about the level of agreed fees. The courts have also recognized the exorbitant and arbitrary nature of the fee rates. Information from studies conducted by the Center for Medicare and Medicaid Services (CMS) was recently released to bring transparency to fee rates. According to the studies, these rates often vary greatly for no apparent reason, even between neighboring hospitals. Bart, 38 p.m. J. Trial Advocate. at 256 (emphasis added); see also, Howell v Hamilton Meets & Provisions, Inc.257 P.3d 1130, 1142-43 (“For this reason too, one cannot say in general that the full invoices from the providers represent the true value of their services, nor that the discount payments they accept from private insurers are just arbitrary cuts”) .

It is important to write down the question of what is the fair and reasonable value of a medical service and ask that the jury decide this by considering both. The retail amount should not be the deciding factor in determining the amount of damages. The amount accepted as full payment is better evidence of the fair and reasonable value of the medical services rendered.

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Original Source: https://www.ldmlaw.com/2022/06/billed-v-paid-medical-expenses-the-retail-price-isnt-always-the-fair-and-reasonable-value-of-medical-services/
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