Medical Bills: Reductions and Adjustments

with Jeff Cosby

What a medical provider bills is not necessarily what the patient is ultimately required to pay. While a medical provider has the ability to charge whatever amount they see fit for the services they provide, there are reductions and adjustments that can, and sometimes must, be taken on medical bills.

One category of these reductions we typically see in personal injuries resulting from a motor vehicle accident are those under the patient’s PIP/no fault coverage. Every driver in the State of Florida who is insured carries no fault insurance. This is for payment of medical services pursuant to injuries from the accident regardless of who is at fault. The minimum and maximum amount of PIP coverage in Florida is $10,000. Many times when a provider accepts PIP payments from an insurance carrier, they will also adjust or reduce the balance based on the PIP payment as required under the applicable Florida Statute; 627.736. It is important to review the automobile policy of insurance if it is a policy outside Florida as some states have much higher PIP limits and some states do not require or have PIP coverage.

Another category of reductions are those based on a patient having private health insurance or receiving Medicare/Medicaid. When a medical provider is “in network” with a particular private health insurer, there are contracted rates for the services provided that the insurer agrees to pay for. For example, if a service is billed at $1,000 and the health insurance contract calls for reimbursement of $400, the medical provider submits the bill, accepts the $400 in payment, and adjusts or writes-off the remaining $600 balance under the health insurance policy. This is the same for the reimbursable rates for services under the Medicare Fee Schedule.

Another category of reductions that are seen in personal injury automobile insurance cases are for patients who are uninsured or cash paying. Medical Providers may have a standard across the board percentage amount that they will reduce bills for those that are cash paying or uninsured. For example, if there is a $1,000 bill and the medical practice has a standard policy that they accept 20% of what is billed, they would accept $200 for these services and adjust or write-off the remaining $800 balance.

Finally, medical providers can agree to voluntarily reduce a patient’s bill. This occurs sometimes as a business decision of the medical provider or based on discussions and negotiations that the attorney for the patient has with the medical provider.