On March 6, 2013, the Florida Supreme Court in Geico General Insurance Co. v. Virtual Imaging Services, Inc. In case of Heard arguments orally from Virtual Imaging Services.
Virtual Imaging billed Geico under a PIP policy to obtain payment for medical services provided to the patient. However when Virtual Imaging received its payment from Geico, the check was much smaller than expected.
Florida's PIP statute requires insurance companies to pay 80% of an insured's reasonable medical expenses up to $10,000. The PIP statute as amended in 2008, however, allows two different methods for determining what is "reasonable".
Under one option, an insurance company may pay 80% of all reasonable medical expenses, while another option under the statute allows the insurance company to pay 80% of the maximum allowable amount under Medicare Part B, 200%.
The problem for medical providers is that the allowable fees paid under Medicare are much less than what medical professionals typically charge for the same services.
For example in this case, two MRIs for which Virtual Imaging billed Geico a total of $3,600.
\Under Option A—the net 80% rule—Virtual Imaging would be entitled to receive $2,880 for its services. However under Option B, virtual imaging would receive only 80% of the statutorily allowed limit under Medicare—or $1,989.57.
The Florida PIP statute, as originally written, allowed insurance companies to choose which calculation method they wanted to use to pay their medical providers.
As Geico and many other insurance companies throughout Florida have shown time and time again, they are generally willing to go with Option B.
So if the law allows these "pick and choose" methods of payment, why are we debating about it? Well, the real issue presented in this case is that Geico never told anyone that they wanted to go for the cheaper option. In fact, their own explanation of benefits states that they will pay medical providers PIP benefits of "80% of medical expenses" and defines those medical expenses as "reasonable expenses for medically necessary services."
Based on this language, it sounds like Geico's PIP insurance policy promises to pay 80% of any bill it receives from a medical provider, as long as the total bill is reasonable and the services are medically necessary.
Yet instead of following their policies, Jiko chose to pay a lesser amount based on another statutory option.
So the question to be decided by the Florida Supreme Court is: If an insurance company chooses to exercise Option B under Florida's PIP statute, are they required to make a specific election of that option in the insurance policy? Hope the answer is yes.
The concern of not requiring insurance companies to disclose their methods of bill calculation is that it may limit the insured's access to quality medical care and treatment.
If medical providers are not aware of how the amount paid for their services will be calculated, they may be inclined to perform only the minimum treatment so that they are not billed for services that are covered by insurance. Companies refuse to pay.
The danger here is that hospitals and doctors are providing only minimal services, for serious internal issues such as spinal cord and traumatic brain injuries.
Additionally, if insurance companies are not required to disclose their payout calculation decisions, those insured under these policies will not know what type of coverage they actually have in case of an accident.
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