Travel Insurance File

Nov. 26, 2007

Canadian travellers and their out-of-country health insurers are being sued by American hospitals for underpaying their bills for emergency medical services provided in the United States. According to hospital cost-containment experts, the legal actions could lead to more foreign travellers being required to pay deposits directly to hospitals when treated, or being billed for remaining balances after they return home.

The hospitals, among them Holy Cross in Fort Lauderdale, Palms of Pasadena in St. Petersburg, Bay Medical Centre in Panama City, all in Florida, and Edinburgh Medical Center in south Texas, have named Royal & SunAlliance Insurance Company of Canada and its emergency assistance and cost containment representative Global Excel Management, based in Quebec, as defendants in actions brought in the Ontario Superior Court of Justice. The initial claims total well over $1 US million, but could soar to many multiples of that if the actions grow to class action status in the U.S. courts.

These and other hospitals contend that cost containment companies representing foreign insurers routinely underpay and in some cases adopt a “take it or leave it” attitude to bills submitted for treating non-resident patients. Cost containment companies, whose job it is to negotiate hospital fees for their foreign clients the way domestic insurers negotiate for American insurers, say tough bargaining is necessary as American hospitals routinely over-charge, over-treat, cost-shift, and generally charge whatever traffic will bear to remain profitable.

The truth lies somewhere in between. Though the vast majority of hospitals in the United States are non-profit institutions, they are required to keep a close eye on their bottom line as there is no government bail-out if they lose money. And because of the large numbers of uninsured, approximately 5 to 6 percent of hospital expenses on average are attributable to bad debt or uncollected bills.

All hospitals in the U.S. are required by law to treat medical emergencies regardless of the patient’s ability to pay or whether or not the patient is insured. That does not mean, however, they can’t ask a foreign patient for credit card approval to pay a deposit, at least until they can verify insurance coverage.

The result, according Dr. Colin Plotkin, a British Columbia-based cost containment expert who negotiates settlements between U.S. hospitals and foreign insurers, is that more and more Canadian travellers are likely to be faced with demands for up-front payments upon admission to U.S. hospitals and are also more likely to be billed for outstanding balances left behind by cost containment companies that sometimes pay only 15 to 30 percent of a hospital’s submitted bill.

If you have been required to put up a deposit before treatment or have been balance billed by a U.S. hospital when you thought your medical costs were to be fully covered, we would like to hear from you. We’d like to stay on top of this situation.

© TravelinsuranceFile.com 2007