One common problem with signing a medical lien with a healthcare provider is that some charge way higher than the actual value of that particular medical procedure. Although this is illegal in most states, some healthcare providers do not comply. Some may be too greedy, hoping to get a slice of the settlement amount.
Here is how it works.
Insurance companies usually have contracts with healthcare providers regarding the costs of certain medical treatments. For example, if you need to conduct a particular test and have it paid for by your medical insurer, the original cost (such as a TB test) would be around $100.
Bear in mind that this is the cost of the test if you choose to pay out of pocket. But if the insurance has an agreement with the healthcare provider, they will probably set the price at $80. This means that if you pay through your insurance provider, you may need around $20, assuming the insurance provider will settle the remaining $60.
However, when you sign a medical lien, the situation is slightly different. Since a medical lien is an agreement between you, your attorney, and the healthcare provider, your healthcare insurance is not involved. In other words, the initial contract with the insurance provider does not come into play in such a scenario.
As a result, the healthcare provider will want to charge you the original cost of that procedure, in this case, $100 for a TB test. Bear in mind that the $100 fee is just an example and not the actual cost of this test.
Some healthcare providers do this because they want a share of your settlement award. This tactic is known as “balance billing” and is illegal in most states.
Earlier, we mentioned that most healthcare providers would be willing to negotiate their portion of the settlement. While it might seem they do not mind taking a loss and moving on with their lives, this is not always the case. For example, if the healthcare provider does 'balance billing' but then agrees to settle for a lesser amount, usually what you would have paid through your medical insurance, this is not necessarily a loss.