'I really feel angry': Insured patients hit with massive bills due to liens

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Many hospitals — especially those belonging to large, wealthy health systems — increase revenue by using liens to bypass patients' insurance and collect full charges from accident victims' settlements, according to a Feb. 1 report from The New York Times.

In a hospital context, a lien refers to a claim placed on a settlement payment to ensure a patient pays their entire debt without help from their insurance plan. This allows hospitals to collect money that was allocated to the patient to compensate for the accident, as well as allows hospitals to bypass the significant discounts they are contractually obligated to offer health plans.

This revenue-building practice often comes at the expense of low-income patients; it is most lucrative when wielded against Medicaid patients because the plan pays lower reimbursement rates than private plans. In one instance, Medicaid patient and car accident victim Monica Smith told the NYT that Fort Wayne, Ind.-based Parkview Regional Medical Center ignored her requests to bill Medicaid, which would have paid bills totalling $2,500, and instead placed a lien on her settlement and pursued a $12,856 charge.

Parkview's chief legal officer, David Storey, told the NYT the system no longer places liens against Medicaid patients and that it "has always taken a conservative and fair approach to collections."

Some hospitals hire outside debt collection agencies to search police records for recent accidents to identify which of their patients were in an accident so they can place liens on their settlements, the NYT reported. 

Liens can often tank patients' credit scores, leaving them unable to pay for the follow-up care they need to recover, according to the report.

"I really feel angry. You are going into a fight with the hospital that you don't know the rules of," car accident victim Dennis Denson told the NYT after Atlanta-based WellStar Health System placed a $13,469 lien against his settlement. 

A WellStar spokesperson told the NYT the system only uses liens when patients with private insurance don't provide coverage.

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