A large portion of personal injury settlements involve compensation for past or future medical expenses. That is because a person injured by another’s wrongful conduct is entitled to recover from the wrongdoer the reasonable value of medical care and services reasonably required and attributable to the wrongful conduct. Usually, past medical expenses can be proved by submitting unpaid medical bills, paid receipts, or Explanations of Benefits (EOB forms) to the insurance company. If your doctor believes you will need care in the future — e.g., an additional back surgery — then a report from your doctor stating the estimated costs will be helpful to prove your future medical expenses caused by the accident.
Increasingly, liability insurance companies for car accidents, slip and falls, and other accidents are requesting more information about your medical expenses before making settlement offers. You may be asked for ICD codes, CPT codes, or CMS-1500 forms. The CMS-1500 form is the official standard Medicare and Medicaid health insurance claim form required by the Centers for Medicare & Medicaid Services (CMS) of the U.S. Department of Health & Human Services. Even though it was developed for Medicare and Medicaid, the CMS-1500 form is used by many private health insurance companies to process healthcare payments. That is why the CMS-1500 form is also referred to as the Health Insurance Claim Form 1500. What makes the Health Insurance Claim Form 1500 important is that it contains ICD codes (short for “International Classification of Diseases”) or CPT codes (short for “Current Procedural Terminology”). ICD codes are maintained by the World Health Organization. CPT codes are maintained by the American Medical Association. These codes are often referred to as diagnostic and treatment codes, and they are used by health insurance companies to determine medical care costs.
If the liability insurance company adjuster is asking for ICD codes, CPT codes, or the CMS-1500 form, it is likely because the insurance company is using computer software to calculate the “reasonable value” of your medical care costs. Insurance companies like Allstate and USAA, for example, use a software program called Colossus. The insurance companies claim to use software like Colossus “to improve objectivity and consistency” in their claims processes. On its surface, it seems reasonable for liability insurance companies to use the same data as health insurance companies to determine the cost of your treatment. However, there’s a catch.
When your health insurance company pays for in-network treatment, the costs are based on pre-negotiated reimbursement rates. The health insurance companies and the healthcare providers negotiate the costs for each procedure. If the healthcare providers choose to see patients covered by that health insurance company, then they must accept the negotiated prices for treatment. If the healthcare provider does not wish to accept those prices, then the patients with that insurance plan will need to go to a different healthcare provider or else pay full price for out-of-network care. As a patient, going in-network works just fine for routine checkups, but not necessarily for traumatic injuries from accidents. When you are transported by ambulance to the emergency room, the ambulance driver does not ask you which healthcare provider is in your health insurance network. When you need followup care by a specialist so that you can return to work and take care of your family, you don’t always have time to find an in-network specialist with immediate availability.
Liability insurance companies increase their profits when they make lower settlement offers. If adjusters use a computer program that says the reasonable cost of your care is less than what you were billed, they can arguably justify their lower settlement offers. However, a personal injury settlement is final. If you settle your case and it turns out that your healthcare providers will not accept what the insurance company’s computer program deemed reasonable, you do not get to re-open your claim and ask for more money.
Do not give up your leverage when you are injured in an avoidable accident. If the insurance company will not make a fair and adequate settlement offer, your option is to file and serve the lawsuit against their insured. In trial, the factfinder — i.e., the jury — decides what the reasonable cost of your healthcare is. Juries don’t plug ICD and CPT codes into a computer to make this determination; instead, they look at the evidence as to what you paid and what you owe for your treatment, and they listen to what the medical experts have to say. If you were injured in an accident, contact a Los Angeles Trial Lawyer who can help to maximize your recovery from the insurance company by way of settlement or trial.