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A woman who thought she was paying four figures for elective spinal fusion surgery filed suit when her provider demanded six figures.

A recent legal decision from the Colorado Supreme Court demonstrates that if patient financial responsibility forms are not clear and understandable to the patient, then it may cost you.

The case is French v. Centura Health Corporation, et al.; after many years of litigation and appeals, the Colorado Supreme Court rejected a hospital’s right to balance-bill an out‑of‑network patient for elective surgery charges. In particular, the Court held that the patient never consented to pay the facility’s billed charges, and that the hospital’s standard template agreement, which required the patient to be responsible for all charges not covered by insurance, was insufficient to incorporate by reference to the hospital’s chargemaster. 

Instead, the Court found that the patient and the hospital did not agree to the price of services, and that it was up to the jury to determine what a reasonable price should have been, under the circumstances.

The dispute between the patient, Lisa Melody French, and Centura Health Corporation, arose from a spinal fusion surgery. Before performing the procedure, Centura reviewed the patient’s insurance and informed her that she would be responsible for an in‑network out‑of‑pocket cost‑sharing payment of $1,337. After services were rendered, Centura realized that it had misread Ms. French’s insurance card and that she was actually out‑of‑network. The hospital then billed her the difference of the billed charges for the services and the payment for out-of-network benefits, which amounted to a whopping $229,112.

Ms. French refused to pay. Centura then sued her for breach of contract, based upon her agreement to pay for any charges for her care not covered by insurance. In that regard, Ms. French had signed hospital service agreements (HSAs) stating, in relevant part, that she agreed to pay “all charges of the hospital,” which Centura argued included the chargemaster rates.  

The Colorado Supreme Court disagreed with Centura. Noting that neither the HSAs or the Patient Bill of Rights forms mentioned the chargemaster or included an expressed price term, the Court concluded that the chargemaster was not incorporated by reference into the patient’s agreement to pay for services.  

The Court held that for incorporation by reference to be effective, “it must be clear that the parties to the agreement had knowledge of and assented to the incorporated terms.” Because it was unclear whether Ms. French “had knowledge of (or) assented to” paying Centura’s chargemaster rates, it could not be incorporated into the health services agreement by reference.

As the chargemaster rates did not apply, the Colorado Supreme Court concluded that there was no price term agreed to between the patient and the hospital. Accordingly, the Court held that Ms. French was only required to pay $767 to the hospital, which is the amount that the jury had determined to be a reasonable value of the services provided in its 2018 verdict.  

It is important to note that many of Centura’s arguments attempted to shift the burden to the patient. In that regard, Centura asserted that the patient failed to avail “herself of the resources afforded by the Colorado statutes addressing transparency of hospital pricing.” However, the Court was not persuaded, and held that the statutes did not place a burden on patients, but instead placed the burden on hospitals to disclose facility charges to patients. Centura also argued that it had no responsibility to “understand the patient’s insurance better than the patient does,” but the Court didn’t agree. 

What is the takeaway? That for hospitals and providers, ignorance is not bliss.  

While an extreme example of a balance billing nightmare, this case underscores the importance of the federal No Surprises Act, which became effective on Jan. 1, 2022, and prohibits surprise out-of-network bills for emergency and some non-emergency medical services.  

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Brianna Santolli

Brianna Santolli is currently an attorney at Kelley Drye & Warren LLP. She specializes in litigation and health law and is known for her public speaking.

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