Medical billing expert witness work in California in matters involving personal injury, medical malpractice, and payor provider disputes requires an understanding of the collateral source rule. The leading case on the “actual amount paid” approach is the California case of Howell v. Hamilton Meats & Provisions, Inc., 257 P.3d 1130 (Cal. 2011). Howell v Hamilton Meats and other case law require an understanding of the difference between charges and health plan payments. A ‘collateral source’ such as insurance is often not allowed as a basis for the value of healthcare. Instead, a medical billing expert witness Howell knowledgeable professional needs to be able to opine on Usual, Customary, and Reasonable or UCR costs for care by understanding what providers charge in the local geography. National pricing perspectives are also important. Medical billing expert witness Howell engagements should also consider the fact that while insurance may not be a collateral source for the cost of care, that under the Affordable Care Act (ACA) any insured person with a conforming health plan has an out of pocket maximum for the cost of their care.
Appellate courts in fifteen (15) states and the District of Columbia have held that the injured plaintiff may recover the amount billed, and bar the defendant from presenting evidence of the lower amount that the health care provider accepted to satisfy the bill. Most of these courts ground their decision on the common law CSR. The “billed only” rule applies in Arizona, Colorado, Delaware, District of Columbia, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Massachusetts, Mississippi, Oregon, South Carolina, South Dakota, Virginia, and Wisconsin. In these states, it is essential to use expert testimony from a medical billing expert witness to opine on the true usual customary and reasonable amount of billings.
Medical necessity may also need to be factored in by considering the opinion of a medical expert and or what diagnosis codes and correlating procedure codes are generally billed for similar services in the market. A medical billing expert witness should have a strong basis for their opinion demonstrating an understanding of medical coding, provider market charges, national charges and various billing models used by providers. For example, inpatient billing uses different codes (DRGs, ICD-9, ICD-10 CM, ICD-10 PCS). The Inpatient Prospective Payment System is essntial to understand because it also affects how charges are billed. The Outpatient Prospective Payment System (OPPS) is important as are physician fees billed using CPT codes. Ambulance charges are billed using HCPCS codes. If the patient is a Medicare insured, National Coverage Determinations (NCDs) and Local Coverage Determinations (LCDs) are used. Even though insurance may not be used in a particular metter, the underlying necessity of the service is also deliniated in coverage determinations, though these can vary by region.
In determining the amount of damages to be presented as evidence in a personal injury trial, judges are often called on to decide whether to admit as evidence the higher, billed amount, the lesser amount actually paid as the cost of services rendered after the write-off, or both. They must also decide what final amount the injured plaintiff is entitled to recover as an element of damages. The result is a very awkward collision between the realities of today’s health insurance industry, modern medical billing, and a 200-year-old legal rule known as the Collateral Source Rule (CSR). Medical billing expert witness Howell should understand CSR.
Collateral Source Rule (CSR)
Medical billing expert witnesses should understand that many states have a collateral source rule.
The Collateral Source Rule (CSR) has been called one of “the oddities of American accident law.” John G. Fleming. The Collateral Source Rule and Loss Allocation in Tort Law, 54 CAL. L. REV. 1478 (1966). CSR doctrine states that if an injured party who sues in a civil lawsuit receives benefits from an insurance policy or some other source independent of the third-party tortfeasor (defendant), such “collateral” benefits cannot be revealed to the jury. Damages paid by a collateral source are sometimes referred to by the tort reform advocates as “phantom damages.” The Restatement of Torts, Second, defines the CSR in § 920A(2):
§ 920A Effect of Payments Made to Injured Party
(1) A payment made by a tortfeasor or by a person acting for him to a person whom he has injured is credited against his tort liability, as are payments made by another who is, or believes he is, subject to the same tort liability.
(2) Payments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor’s liability, although they cover all or a part of the harm for which the tortfeasor is liable.
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