When speaking with healthcare providers and insurance carriers I find that few of them know much about the other’s organizations and how they operate. This blog post is an attempt to help those working in healthcare to understand the liability insurance industry.
What are expense and loss payments?
Let’s start with a loss payment for a bill submitted to a provider through the Claim Connector platform.
Most liability insurance policies have policy limits. In Texas an auto liability policy requires a minimum of $30,000 for bodily injury liability per individual and $60,000 per accident as well as $25,000 for property damage. From the carrier’s point of view reimbursement of a provider’s bill is not legally owed until the court says it, which is one of the reasons that reimbursement for a third party claim can take over 200 days. Carriers want to make sure they are liable for your bills. Once fault is determined, 95%+ of claims do not go to court and are settled without a trial.
Additionally, insurance carriers are going to consider expense payments. These are payments which represent additional resources carriers need to run their organization. For example, when a hospital accepts a client they use an EHR (electronic health record) to register their patient’s information. That EHR would be like a carriers expense payment because it has nothing to do patient care. It exists to make the hospital’s job easier and more efficient.
Why are these payments important?
When a payor chooses a DER (discounted early resolution) they have a choice between a DER that works for them and is considered an expense payment or a DER that works for the hospital and is considered a loss payment.