The Fifth Circuit, following other circuits, recently held that a hospital that provided emergency care to an uninsured patient who later became eligible for Medicaid, may elect to forgo the certainty of billing and collecting reimbursement from Medicaid for the care provided, and attempt to recover a greater amount by collecting its charges from the patient's recovery from a third-party tortfeasor. However, the court cautioned that once a provider has billed Medicaid, it may not "balance bill" either the patient or a third party for the difference between its charges and the Medicaid reimbursement, nor may it "substitute bill" the patient or the tortfeasor by attempting to return the Medicaid payment in order to recover its customary charges. Miller v. Wladyslaw Estate, 5th Cir., No. 07-30378 (Oct. 23, 2008).
In this case, Baton Rouge General elected not to seek Medicaid reimbursement and, instead, chose to bill the patient. While payment from the tortfeasor wasn't guaranteed nor was it as immediate as Medicaid reimbursement, the hospital correctly concluded that it could recover more against the tortfeasor. As a result, the hospital filed a statutory lien for its charges and intervened in the patient's lawsuit against the tortfeasor.
The patient filed suit against the hospital, alleging that the hospital was required to file a Medicaid claim, and that only the state could pursue a portion of the recovery pursuant to the Medicaid "pay and chase" third-party liability program. The patient was clearly hoping to increase his portion of the settlement by the difference between the hospital's charges and the lower Medicaid reimbursement rates.
Providers should make a calculated choice whether to seek the certainty of Medicaid reimbursement or the higher charges available from a patient or the tortfeasor before billing the Medicaid program.