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What is Assignment of Benefits in Medical Billing?
by Gene Hooks
An assignment of benefits is the act of signing documentation authorizing a health insurance company to pay a physician directly. In other words, the insurance company can pay claims without the direct involvement of the patient in the process. There are other situations where AOBs can be helpful, but we’ll focus on their use in relation to medical benefits.
If there isn’t an assignment of benefits agreement in place, the patient would be responsible for paying the other party directly from their own pocket, then filing a claim with their insurance provider to receive reimbursement. This could be time-consuming and costly, especially if the patient has no idea how to file a claim.
The document is typically signed by patients when they undergo medical procedures. The purpose of this form is to assign the responsibility of payment for any future medical bills that may arise after the procedure. It’s important to note that not all procedures require an AOB.
An assignment of benefits agreement might be utilized to pay a medical practitioner the patient didn’t choose, like an anesthesiologist. The patient may have picked a surgeon, but an anesthesiologist assigned on the day of the procedure might issue a separate bill. They’re, in essence, signing that anyone involved in their treatment can receive direct payment from the insurance carrier. It doesn’t have to go through the patient.
This document can also eliminate service fees surrounding processing. As a result, the patient can focus on medical treatment and recovery without being bogged down with the complexities of paying medical bills. The overall intent of an assignment of benefits agreement is to make the process more manageable for the patient, as they don’t need to haggle directly with their insurer.
List of Providers and Services
When the patient signs an AOB agreement, they give a third party right to obtain payment for services the provider performed, and medical billing services are a prime example of where they may sign an AOB agreement.
- Ambulance services
- Medical insurance claims
- Drugs and pharmaceuticals
- Diagnostic and clinical lab services
- Emergency surgical center services
- Dialysis supplies and equipment used in the home
- Physician services for Medicare and Medicaid patients
Services of professionals other than a primary care physician, which includes:
- Physician assistants
- Clinical nurse specialists
- Clinical social workers
- Clinical psychologists
- Certified registered nurse anesthetists
Information Commonly Requested on Assignment of Benefits Form:
- Signature of patient or person legally responsible
- Signature of parent or legal guardian
How AOBs Affect the Medical Practitioner
A medical provider or their administrative staff may feel overwhelmed by the sheer number of forms patients must fill out prior to treatment. Demanding more paperwork from patients may be seen as an added burden on the managerial staff, as well as the patient. However, getting a signed AOB is vital in preserving the interests of everyone involved.
In addition to receiving direct payment from the insurance company without needing to go through the patient, a signed assignment of benefits form will help medical providers appeal denied and underpaid claims. They can ask that payments be made directly to them rather than through the patient. This makes the process more manageable for both the doctors and the patient.
Things to Bear in Mind
The patient gives their rights and benefits to third parties under their current health plan. Depending on the wording in the AOB, their insurer may not be allowed to contact them directly about their claims. In addition, the patient may be unable to negotiate settlements or approve payments on their behalf and enable third parties to endorse checks on behalf of the patient. Finally, when the patient signs an AOB, the insurer may sue the third parties involved in the dispute.
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- Main content
What is an assignment of benefits agreement?
How does assignment of benefits work.
- Assignment of benefits example
Assignment of benefits for homeowners
Assignment of benefits in healthcare, pros and cons of an aob agreement, canceling an aob agreement, the bottom line, an assignment of benefits contract lets someone else bill an insurance provider on your behalf.
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- An assignment of benefits is a contract that lets a service provider bill your insurance company directly.
- These agreements are often used in industries like healthcare and home repair.
- Assigning your benefits to someone else can streamline payments, but may increase fraud risk.
When you obtain insurance, whether for your health or your home , you're probably thinking about what the coverage will pay for, not how the payments will be made.
Policyholders who sign an assignment of benefits agreement allow their insurance benefits to go directly to the service provider. Usually, this eliminates the headache of dealing with an insurance company's claims department. But it can also open you up to potential fraud.
An assignment of benefits (AOB) agreement is a contract that a policyholder signs to allow a third party to receive their insurance benefits.
"An assignment of benefits is designating who's going to receive the payment that the insurance company issues after a claim is received," explains Lauren Winans, chief executive officer and principal HR consultant at Next Level Benefits , an HR consulting firm that helps companies navigate employee benefits including insurance.
Without an AOB agreement in place, the policyholder would pay the other party out of their own pocket, then file a claim with their insurance company to get reimbursed.
For example, if you go to a doctor, you might sign an AOB agreement so that their billing department can deal with the insurance provider directly. Ideally, that would prevent you from having to get involved with the claims department at your insurance company.
That said, there can still be circumstances where you have to get involved, even with an assignment of benefits agreement — for example, if you owe the difference between what your doctor charges and what the insurer pays.
These AOB agreements can vary depending on factors like the type of insurance policy, the provider, and state laws. In some cases, an AOB happens automatically. If you go to an in-network doctor, they're under contract with that insurance company. That contract states that the provider will handle billing and receive payment directly from the insurance company, Winans says. But with out-of-network providers you might sign an AOB agreement as part of standard check-in paperwork. That way the doctor can still receive at least some payment directly from the insurance company, and then bill you for the remainder.
Similarly, with property insurance, a contractor or other type of service professional might ask you to sign an assignment of benefits for repair work. When that happens, the service provider would be able to file a claim on your behalf and receive reimbursement from the insurance company.
The exact terms of an AOB agreement vary based on who's asking you to sign. Some agreements might be specific to one type of repair or project, whereas others might cover several. Some agreements go beyond an assignment of benefits and give the contractor full power of attorney rights, says Angel Conlin, chief insurance officer at Kin Insurance , a home insurance provider. Insurers can also differ in how they handle these agreements. A 2019 Florida law, for example, enables insurers to offer policies that restrict the right to use an assignment of benefits agreement, as long as the policy is offered at a discount. Conlin says Kin Insurance policyholders who waive their assignment of benefits right save an average of 5% on their policy. "The good news is they get a discount for giving up a right they probably never knew they had and never really want to use," she says.
For homeowners' insurance, an AOB agreement could be used if a contractor wants to get paid directly from the insurer. In many cases, says Conlin, that happens in a high-pressure situation.
"You discover that there's a water leak and your house is flooding. So you quickly call the fastest place you can find," she says. "Then you're standing there with some papers on a clipboard in front of you to sign so they can start sucking the water out. Oftentimes, there's an assignment of benefits included in there."
In healthcare, an AOB agreement might be used to pay a medical professional that you don't necessarily choose, like an anesthesiologist, Winans says. You may have chosen a surgeon, but the anesthesiologist that gets assigned to you the day of the surgery might bill separately. So, you might be asked to sign an assignment of benefits when you check in. "You're essentially signing that anyone who sees me today can accept payment directly from the insurance company, it doesn't have to go through me as the patient," Winans adds.
An AOB agreement can make the claims and payment processes easier at times, but there are also some downsides to note. Much depends on the situation, so consider factors like what your insurer allows and what the service provider is specifically asking for.
Here are some general pros and cons to consider:
Even though an AOB agreement can streamline the claims and payment processes, there can be downsides that come with transferring benefits to another party, particularly with property insurance. "Because they now stand in the shoes of the insured, they can do everything without asking the insured's permission," Conlin says. For example, a vendor could inflate a claim and commit fraud, she says, causing the claim to get denied and leaving the homeowner unable to get their home repaired. Or, the vendor could sue the insurance company on your behalf for payment on an inflated claim. "So then the insured doesn't have any idea that all of a sudden they have a lawsuit on their record," Conlin adds.
In Florida, these types of lawsuits became an issue due to a state law that helped contractors get attorney's fees paid for by the insurance company. That incentivized some attorneys to work with contractors to obtain AOB agreements and then sue insurers. "That way, the vendor gets to inflate the amount they're demanding, and the attorney gets attorney's fees. So it was this sort of symbiotic partnership between them," Conlin says. A 2022 Florida law removed this allowance, but contractors are trying to fight it in court .
Depending on the circumstances, including laws where you live, policyholders might have some flexibility to cancel an assignment of benefits agreement. For example, in Florida, homeowners have at least 14 days to back out of an agreement without any penalties.
Once the grace period passes, there isn't much recourse. For example, a vendor might file a lawsuit long after the period passes where you can rescind the agreement. In that case, the assignment of benefits agreement stands.
An AOB agreement can make it easy for you to receive insurance benefits without dealing with the claims department at your insurance company. But not all agreements look the same, so read carefully before signing. In some cases, like healthcare, the agreement could work well for all parties. But in other cases, such as home repairs, it might be benefitting the vendor more than the policyholder. If you're unsure about what an assignment of benefits agreement means for you, consider talking to a professional. Your insurer should be able to explain what's allowed in your situation, and external experts, like an attorney, might help you make a more informed decision.
What is an assignment of benefits?
The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.
This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .
What is an assignment of benefits?
An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.
Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.
Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.
How an AOB works
The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.
Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says “assignment of benefits” across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?
According to Dr. David Berg of Redirect Health , the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”
With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.
“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.”
Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:
- You and your contractor draw up an AOB clause as part of the contract.
- The contract stipulates the exact work that will be completed and all necessary details.
- The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.
- The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.
After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.
Example of an assignment of benefits
If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”
In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.
When would you need to use an assignment of benefits?
An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.
An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.
Assignment of benefits for health insurance
As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other.
Assignment of benefits for car owners
If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.
Assignment of benefits for homeowners
When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.
When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.
The fraud factor
No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.
In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.
State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.
The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:
- File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.
- Don’t pay in full upfront. Legitimate contractors do not require it.
- Get three estimates before selecting a contractor.
- Get a full written contract and read it carefully before signing.
- Don’t be pressured into signing an AOB. You are not required to sign an AOB.
Pros and cons of an assignment of benefits
The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.
Pros of assignment of benefits
With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.
- An AOB frees you from paying for services and waiting for reimbursement from your insurer.
- Some people appreciate not needing to negotiate with their insurer.
- You are not required to sign an AOB.
Cons of assignment of benefits
As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.
- Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay.
- An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south.
- Any AOB you do sign is legally binding.
An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.
It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.
EDITORIAL DISCLOSURE : The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends ™ editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.
What is Assignment of Benefits in Medical Billing
The health care industry has a wide network of health care insurance payers that make payments on behalf of patients having insurance plans. Without insurance plans, many patients would not be able to seek medical services. Whenever a patient visits a doctor for the treatment he/she needs to ensure that the insurance payer makes the payment for all the medical benefits he/she may have received. This is where the assignment of benefits comes in.
Definition of Assignment of Benefits
The term assignment of benefits (AOB) may be referred to as an agreement that transfers the health insurance claims benefits of the policy from the patient to the health care provider. This agreement is signed by the patient as a request to pay the designated amount to the health care provider for the health benefits he/she may have received. On the patient’s request the insurance payer makes the payment to the hospital/doctor.
Understanding of Assignment of Benefits
The assignment of benefits is generally transferred by designing a legal document— for which, the format may vary across medical offices. This document is called the ‘Assignment of Benefits’ form. While signing the form, the patient also authorizes the insurance company to release any and all written information that is required by the hospital for reimbursement purposes. This also means that any medical billing and collection company hired by the hospital is free to use the released information for billing purposes. In addition to this, the patient agrees to appoint anyone from the hospital as a representative on his/her behalf to seek payment from the insurance payer. In other words, once the document has been signed, the patient is no longer required to deal directly with the insurance company or its representative, unless asked to do so.
It is important to note that the assignment of benefits occurs only when a claim has been successfully processed with the insurance company/payer. However, the insurance company may not always honor and accept the request for AOB. The acceptance or rejection of AOB depends on the patient’s or member’s health benefits contract and/or the State Law. Therefore all three parties— patient, health care provider, and the insurance company must stay updated with the State Law and also, review the patient’s health benefit plan thoroughly. This will help in saving time and unnecessary paperwork if the chances of the insurance company rejecting the AOB seem to be high.
Following are some providers or medical services that use AOB:
- Ambulance services.
- Ambulatory surgical center services.
- Clinical diagnostic laboratory services.
- Biological(s) and drugs.
- Home dialysis equipment and supplies.
- Physician services for patients having Medicare and Medicaid plans.
- Services of medical professionals other than a primary physician, including certified registered nurse anesthetists, clinical nurse specialists, clinical psychologists, clinical social workers, nurse midwives, nurse practitioners, and physician assistants.
- Simplified billing roster for vaccines, such as— influenza virus and pneumococcal.
AOB plays an important role in medical billing by establishing direct contact with the patient’s health care insurance payer. The purpose is to increase the chances of reimbursement and accelerate the process without contacting the patient additionally..
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One of the most frequently litigated issues in reimbursement cases brought by in- and out-of-network healthcare providers against insurers is provider standing, or a provider’s right to file a lawsuit to recover for services it provided to its patients. This is because the health insurance industry bases the rights and responsibilities that one party owes to another on contract law. While network contracts often dictate that insurers pay in-network providers directly for services, providers who do not participate in the networks have no independent legal right to payment from the insurer as such providers do not share a contractual relationship with the plan.
Accordingly, these providers must ensure that patients assign their rights to benefits under the health insurance plan to the non-participating provider via an assignment of benefits (“AOB”). Under a valid AOB, the provider “steps into the shoes” of the patient with respect to the contract between the patient and the insurer and may pursue the same benefits that the patient would have been able to pursue him or herself. Without a valid AOB, courts have been clear that the provider has no legal standing to sue the health insurer for payment.
Additionally, participating providers should also obtain and maintain irrevocable AOBs from their patients, despite network contractual language directing payment. Possessing a valid AOB is often a legal prerequisite to submitting a claim, even under the participation agreement, and participation status may change. Moreover, providers may not be participating with all insurers and assignments provide an alternative basis for recovery.
However, the road to recovery on claims is not as simple as merely executing an AOB: insurers frequently challenge the scope of AOBs, requiring courts to analyze them and determine whether the language sufficiently confers standing on the provider to assert a claim. The case law on assignments is, therefore, constantly evolving. The following article explores some of the common issues surrounding crafting and obtaining valid AOBs from patients as well as alternative avenues to survive a standing challenge where plans contain anti-assignment clauses.
What Kind of Language Should the Assignment of Benefits Contain?
An AOB should be “broadly specific”: It should be broad enough to cover all conceivable rights and claims the provider could bring under the plan, but specific enough in that it enumerates the rights in order to survive challenges of overbreadth. These enumerated rights should include, but are not limited to: the right to appeal, the right to request plan documents, the right to pursue claims for benefits, and the right to pursue claims for equitable relief/breaches of fiduciary duties.
The below examples provide AOB language ranked in order from least likely to confer standing to most likely.
- Least Likely to Confer Standing : “I authorize insurance payments to be made to [PROVIDER] for services provided at [PROVIDER’S FACILITY].”
This AOB simply authorizes payments to be made, but does not give the provider any right to pursue payment or other remedies. Therefore, this language would likely be insufficient to confer legal standing.
- Improved language : “I authorize [PROVIDER] to appeal to my insurance company on my behalf . . . . I hereby assign to [PROVIDER] all payments for medical services rendered to myself or my dependents.”
This language would, at least, give the provider the right to sue for payment under ERISA Section 502(a). However, the language is still lacking as it does not give the provider the right to pursue claims for equitable relief or for breaches of fiduciary duties.
- An example of even better, (albeit not perfect) language : “I voluntarily consent to the collection and testing of my specimen, and all future testing, performed by [the Laboratories] or [their] affiliated laboratories unless I give written notice that I have revoked my consent. I authorize my insurance company to pay and mail directly to [the Laboratories] or [their] affiliated laboratories all medical benefits for payment of services rendered. I also authorize [the Laboratories] or [their] affiliated laboratories to endorse any checks received on my behalf for payment of services provided. I hereby irrevocably assign to [the Laboratories] or [their] affiliated laboratories all benefits under any policy of insurance, indemnity agreement, or any collateral source as defined by statute for services provided. This assignment includes all rights to collect benefits directly from my insurance company and all rights to proceed against my insurance company in any action, including legal suit, if for any reason my insurance company fails to make payment of benefits due. This assignment also includes all rights to recover attorney’s fees and costs for such action brought by the provider as my assignee.
The language here is “broadly specific” in that it enumerates with specificity a myriad of rights the provider seeks to have the patient assign. One federal appeals court found that similar assignment language clearly applied to claims against fully-insured health insurance plans, and at least arguably applied to self-funded plans. The court sent the case back to the trial court for further discovery on whether this language applied to self-funded plans. Health care providers can remove this uncertainty up front by having their assignment of benefit forms specifically refer to self-funded plans.
When Should the Provider Require the Assignment to Be Executed?
The best time to have a patient execute an assignment of benefits is at or before the time that services are provided. This is because it is often difficult to track down patients later when a provider must submit a large volume of claims that have gone unpaid. Ideally, these forms are executed together with other intake forms, such as consent for treatment and privacy policies/releases.
If the AOB is not obtained prior to the services, courts will still generally permit assignments that are executed after treatment, at least absent a showing of prejudice to the insurer. Furthermore, although logistical challenges may sometimes ensue where a patient is incapacitated or deceased, courts have upheld the validity of AOBs executed by spouses of such patients.
Navigating Anti-Assignment Provisions in Plans
Some patient plans contain anti-assignment language that prohibits the patient from assigning his or her benefits. This language is a challenge to a provider’s ability to establish standing. Courts are however, split on the issue. Some courts hold that an unambiguous anti-assignment clause is enforceable and can invalidate a patient’s assignment. In these cases, the courts have focused on the freedom of contracting parties.
Other courts hold that an anti-assignment clause is not, in and of itself, dispositive of whether a provider has standing. Anti-assignment clauses are subject to traditional contract defenses, such as fraud, misrepresentation, and unconscionability. For example, if a clause is buried in illegible “fine print” or if it was plainly neither intended nor likely to be read by the other party, those circumstances might support an inference of fraud. Other considerations include: ambiguity in the clause, the scope of the clause, course of dealing, and waiver or estoppel arguments.
An example of anti-assignment language that is completely prohibitory would be: “The benefits of the Contract or Certificate are personal to the Subscriber and are not assignable by the Subscriber in whole or in part to a Non-Member hospital or provider, or to any other person or entity.”
Another example of language that permits assignment only with consent would be: “You may not assign your Benefits under the Plan to a non-Network provider without our consent.”
Providers may, however, still recover in circumstances where the plans contain valid anti-assignment provisions. Recently, for example, the Third Circuit, in American Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield , 2018 BL 173478 (3d Cir., No. 17-1663, 5/16/18), recognized an alternative basis under which health care providers may obtain standing to sue in federal court. Where a patient grants a valid power of attorney to a health care provider, the Third Circuit has now recognized that a health care provider may pursue a claim for reimbursement on the patient’s behalf, even if the ERISA plan contains a valid and enforceable anti-assignment clause. The court explained that, whereas a plan can limit a beneficiary’s ability to assign claims as a matter of contract law, an anti-assignment clause does not prevent the beneficiary from assigning the health care provider to act as the beneficiary’s agent, any more than it would strip the beneficiary of his or her own interest in the claim.
In sum, while there is no “one size fits all” approach, a simple direction of payment often does not survive scrutiny and will likely be challenged by insurers. Thus, prudent providers will want to work with experienced healthcare counsel to craft assignment language to encompass all of the patient’s rights under the plan and, if applicable, take advantage of the Third Circuit alternative basis for standing by including language that creates a valid power of attorney.
Anthony P. La Rocco is the Managing Partner of K&L Gates’ Newark office. He leads a national health care team involved in significant reimbursement litigation matters on behalf of health care providers against various insurance companies’ health benefits plans and their third party administrators related to under-payment and non-payment of claims for a variety of covered medical testing procedures conducted across the United States. Tony can be reached at [email protected] .
George P. Barbatsuly is a Partner in K&L Gates’ Newark office. His health care and ERISA disputes experience includes representing health care providers in disputes with payer insurance companies, health benefits plans, and third party administrators. George can be reached at [email protected] .
Stacey A. Hyman is an Associate in K&L Gates’ Newark office. She focuses her practice on commercial disputes and insurance coverage, specifically insurance reimbursement recovery. Stacey can be reached at [email protected] .
Alyssa F. Conn is an Associate in K&L Gates’ Newark office. She focuses her practice on a range of complex commercial litigation and insurance coverage disputes in federal and state courts, including healthcare and ERISA disputes. Alyssa can be reached at [email protected] .
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Medicare Assignment: Everything You Need to Know
- Providers Accepting Assignment
- Providers Who Do Not
- Billing Options
- Assignment of Benefits
- How to Choose
Frequently Asked Questions
Medicare assignment is an agreement between Medicare and medical providers (doctors, hospitals, medical equipment suppliers, etc.) in which the provider agrees to accept Medicare’s fee schedule as payment in full when Medicare patients are treated.
This article will explain how Medicare assignment works, and what you need to know in order to ensure that you won’t receive unexpected bills.
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There are 35 million Americans who have Original Medicare. Medicare is a federal program and most medical providers throughout the country accept assignment with Medicare. As a result, these enrollees have a lot more options for medical providers than most of the rest of the population.
They can see any provider who accepts assignment, anywhere in the country. They can be assured that they will only have to pay their expected Medicare cost-sharing (deductible and coinsurance, some or all of which may be paid by a Medigap plan , Medicaid, or supplemental coverage provided by an employer or former employer).
It’s important to note here that the rules are different for the 29 million Americans who have Medicare Advantage plans. These beneficiaries cannot simply use any medical provider who accepts Medicare assignment.
Instead, each Medicare Advantage plan has its own network of providers —much like the health insurance plans that many Americans are accustomed to obtaining from employers or purchasing in the exchange/marketplace .
A provider who accepts assignment with Medicare may or may not be in-network with some or all of the Medicare Advantage plans that offer coverage in a given area. Some Medicare Advantage plans— health maintenance organizations (HMOs) , in particular—will only cover an enrollee’s claims if they use providers who are in the plan's network.
Other Medicare Advantage plans— preferred provider organizations (PPOs) , in particular—will cover out-of-network care but the enrollee will pay more than they would have paid had they seen an in-network provider.
The bottom line is that Medicare assignment only determines provider accessibility and costs for people who have Original Medicare. People with Medicare Advantage need to understand their own plan’s provider network and coverage rules.
When discussing Medicare assignment and access to providers in this article, keep in mind that it is referring to people who have Original Medicare.
How to Make Sure Your Provider Accepts Assignment
Most doctors, hospitals, and other medical providers in the United States do accept Medicare assignment.
Provider Participation Stats
According to the Centers for Medicare and Medicaid Services, 98% of providers participate in Medicare, which means they accept assignment.
You can ask the provider directly about their participation with Medicare. But Medicare also has a tool that you can use to find participating doctors, hospitals, home health care services, and other providers.
There’s a filter on that tool labeled “Medicare-approved payment.” If you turn on that filter, you will only see providers who accept Medicare assignment. Under each provider’s information, it will say “Charges the Medicare-approved amount (so you pay less out-of-pocket).”
What If Your Provider Doesn’t Accept Assignment?
If your medical provider or equipment supplier doesn’t accept assignment, it means they haven’t agreed to accept Medicare’s approved amounts as payment in full for all of the services.
These providers can still choose to accept assignment on a case-by-case basis. But because they haven’t agreed to accept Medicare assignment for all services, they are considered nonparticipating providers.
Note that "nonparticipating" does not mean that a provider has opted out of Medicare altogether. Medicare will still pay claims for services received from a nonparticipating provider (i.e., one who does not accept Medicare assignment), whereas Medicare does not cover any of the cost of services obtained from a provider who has officially opted out of Medicare.
If a Medicare beneficiary uses a provider who has opted out of Medicare, that person will pay the provider directly and Medicare will not be involved in any way.
Physicians Who Have Opted Out
Only about 1% of all non-pediatric physicians have opted out of Medicare.
For providers who have not opted out of Medicare but who also don’t accept assignment, Medicare will still pay nearly as much as it would have paid if you had used a provider who accepts assignment. Here’s how it works:
- Medicare will pay the provider 95% of the amount they would pay if the provider accepted assignment.
- The provider can charge the person receiving care more than the Medicare-approved amount, but only up to 15% more (some states limit this further). This extra amount, which the patient has to pay out-of-pocket, is known as the limiting charge . But the 15% cap does not apply to medical equipment suppliers; if they do not accept assignment with Medicare, there is no limit on how much they can charge the person receiving care. This is why it’s particularly important to make sure that the supplier accepts Medicare assignment if you need medical equipment.
- The nonparticipating provider may require the person receiving care to pay the entire bill up front and seek reimbursement from Medicare (using Form CMS 1490-S ). Alternatively, they may submit a claim to Medicare on behalf of the person receiving care (using Form CMS-1500 ).
- A nonparticipating provider can choose to accept assignment on a case-by-case basis. They can indicate this on Form CMS-1500 in box 27. The vast majority of nonparticipating providers who bill Medicare choose to accept assignment for the claim being billed.
- Nonparticipating providers do not have to bill your Medigap plan on your behalf.
Billing Options for Providers Who Accept Medicare
When a medical provider accepts assignment with Medicare, part of the agreement is that they will submit bills to Medicare on behalf of the person receiving care. So if you only see providers who accept assignment, you will never need to submit your own bills to Medicare for reimbursement.
If you have a Medigap plan that supplements your Original Medicare coverage, you should present the Medigap coverage information to the provider at the time of service. Medicare will forward the claim information to your Medigap insurer, reducing administrative work on your part.
Depending on the Medigap plan you have, the services that you receive, and the amount you’ve already spent in out-of-pocket costs, the Medigap plan may pay some or all of the out-of-pocket costs that you would otherwise have after Medicare pays its share.
(Note that if you have a type of Medigap plan called Medicare SELECT, you will have to stay within the plan’s network of providers in order to receive benefits. But this is not the case with other Medigap plans.)
After the claim is processed, you’ll be able to see details in your MyMedicare.gov account . Medicare will also send you a Medicare Summary Notice. This is Medicare’s version of an explanation of benefits (EOB) , which is sent out every three months.
If you have a Medigap plan, it should also send you an EOB or something similar, explaining the claim and whether the policy paid any part of it.
What Is Medicare Assignment of Benefits?
For Medicare beneficiaries, assignment of benefits means that the person receiving care agrees to allow a nonparticipating provider to bill Medicare directly (as opposed to having the person receiving care pay the bill up front and seek reimbursement from Medicare). Assignment of benefits is authorized by the person receiving care in Box 13 of Form CMS-1500 .
If the person receiving care refuses to assign benefits, Medicare can only reimburse the person receiving care instead of paying the nonparticipating provider directly.
Things to Consider Before Choosing a Provider
If you’re enrolled in Original Medicare, you have a wide range of options in terms of the providers you can use—far more than most other Americans. In most cases, your preferred doctor and other medical providers will accept assignment with Medicare, keeping your out-of-pocket costs lower than they would otherwise be, and reducing administrative hassle.
There may be circumstances, however, when the best option is a nonparticipating provider or even a provider who has opted out of Medicare altogether. If you choose one of these options, be sure you discuss the details with the provider before proceeding with the treatment.
You’ll want to understand how much is going to be billed and whether the provider will bill Medicare on your behalf if you agree to assign benefits (note that this is not possible if the provider has opted out of Medicare).
If you have supplemental coverage, you’ll also want to check with that plan to see whether it will still pick up some of the cost and, if so, how much you should expect to pay out of your own pocket.
A medical provider who accepts Medicare assignment is considered a participating provider. These providers have agreed to accept Medicare’s fee schedule as payment in full for services they provide to Medicare beneficiaries. Most doctors, hospitals, and other medical providers do accept Medicare assignment.
Nonparticipating providers are those who have not signed an agreement with Medicare to accept Medicare’s rates as payment in full. However, they can agree to accept assignment on a case-by-case basis, as long as they haven’t opted out of Medicare altogether. If they do not accept assignment, they can bill the patient up to 15% more than the Medicare-approved rate.
Providers who opt out of Medicare cannot bill Medicare and Medicare will not pay them or reimburse beneficiaries for their services. But there is no limit on how much they can bill for their services.
A Word From Verywell
It’s in your best interest to choose a provider who accepts Medicare assignment. This will keep your costs as low as possible, streamline the billing and claims process, and ensure that your Medigap plan picks up its share of the costs.
If you feel like you need help navigating the provider options or seeking care from a provider who doesn’t accept assignment, the Medicare State Health Insurance Assistance Program (SHIP) in your state may be able to help.
A doctor who does not accept Medicare assignment has not agreed to accept Medicare’s fee schedule as payment in full for their services. These doctors are considered nonparticipating with Medicare and can bill Medicare beneficiaries up to 15% more than the Medicare-approved amount.
They also have the option to accept assignment (i.e., accept Medicare’s rate as payment in full) on a case-by-case basis.
There are certain circumstances in which a provider is required by law to accept assignment. This includes situations in which the person receiving care has both Medicare and Medicaid. And it also applies to certain medical services, including lab tests, ambulance services, and drugs that are covered under Medicare Part B (as opposed to Part D).
In 2021, 98% of American physicians had participation agreements with Medicare, leaving only about 2% who did not accept assignment (either as a nonparticipating provider, or a provider who had opted out of Medicare altogether).
Accepting assignment is something that the medical provider does, whereas assignment of benefits is something that the patient (the Medicare beneficiary) does. To accept assignment means that the medical provider has agreed to accept Medicare’s approved fee as payment in full for services they provide.
Assignment of benefits means that the person receiving care agrees to allow a medical provider to bill Medicare directly, as opposed to having the person receiving care pay the provider and then seek reimbursement from Medicare.
Centers for Medicare and Medicaid Services. Medicare monthly enrollment .
Centers for Medicare and Medicaid Services. Annual Medicare participation announcement .
Centers for Medicare and Medicaid Services. Lower costs with assignment .
Centers for Medicare and Medicaid Services. Find providers who have opted out of Medicare .
Kaiser Family Foundation. How many physicians have opted-out of the Medicare program ?
Center for Medicare Advocacy. Durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) updates .
Centers for Medicare and Medicaid Services. Check the status of a claim .
Centers for Medicare and Medicaid Services. Medicare claims processing manual. Chapter 26 - completing and processing form CMS-1500 data set .
Centers for Medicare and Medicaid Services. Ambulance fee schedule .
Centers for Medicare and Medicaid Services. Prescription drugs (outpatient) .
By Louise Norris Louise Norris has been a licensed health insurance agent since 2003 after graduating magna cum laude from Colorado State with a BS in psychology.
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When a patient sees a provider, the patient signs an “assignment of benefits” contract with the provider, assigning the patient’s legal rights to recover benefits from the insurance company to the provider so that the provider can be directly reimbursed for the services rendered to the patient. When the provider is in-network, this process is executed with little fanfare. However, for an out-of network provider, the road to reimbursement is not always as smooth. Not all states expressly permit assignment-of-benefits clauses, and as a result, insurers send the reimbursement to the beneficiary rather than the provider. The beneficiary is then supposed to forward the reimbursement onto the provider, which many of them do. However, if they do not, providers are put in the uncomfortable and difficult position of suing the patient, which has an uncertain likelihood of success. Given this arduous task, some providers contend that insurance companies have begun to utilize direct payment to patients in retaliation against providers for refusing to join the insurer’s networks.
In fact, in 2015, providers of inpatient and outpatient substance abuse and/or mental health treatment to chemically-dependent individuals filed suit against a group of insurers that includes several Blue Cross entities for this exact practice. In Dual Diagnosis Treatment Center, Inc., et al. v. Blue Cross of California, et. al., the providers alleged that defendants purposefully ignored valid assignments of benefits and instead directly reimbursed providers’ patients in order to punish the providers for being a few of a small number of providers who had not joined the insurers’ networks.
In their defense, the insurers stated that some of the plans contained anti-assignment provisions, prohibiting beneficiaries from entering into assignment-of-benefits contracts with providers. The original complaint sought to recover benefits, remove breaching fiduciaries and, against the Blue Cross insurers, injunctive and declaratory relief that Blue Cross’ pattern of denying providers’ assigned claims without reviewing the operative plan document or informing providers of the denial violates the Employee Retirement Income Security Act of 1974 (ERISA), the federal law that regulates employee sponsored retirement and welfare benefit plans. The court granted insurers’ motion to dismiss without prejudice, specifically to allow the providers to amend their complaint to demonstrate that waiver or estoppel would apply to the anti-assignment provisions.
The providers filed a second amended complaint, which was dismissed by the court with leave to amend, and the providers filed a third amended complaint in October 2017. The third amended complaint brought two claims: a claim for plan benefits under ERISA and a state law claim under California law alleging that the Blue Cross insurers misled providers about the assignability of benefits (specifically, misrepresenting that benefits were assignable when they were not and also representing that benefits were not assignable when they were). The insurers filed a motion to dismiss on the state law claim, which the court granted on the grounds of insufficient standing because the providers did not properly allege an economic injury. Specifically, the court held that collection costs, bad debt, preventing the providers from assisting their patients in the administrative appeals process and denying providers the opportunity to make alternate payment arrangements or collect additional money from their patients up front were insufficient to allege that the insurers’ conduct resulted in economic injury to the providers. The providers’ claim for benefits under ERISA still stands. However, there is no date set for hearing at this time.
The outcome of this case will set the stage for future litigation and out-of-network payment strategies. In addition to this and other pending cases, out-of-network providers or those considering an out-of-network strategy should closely monitor proposed legislation in their states of operation regarding direct-pay-to-patient methods. Some states, such as Indiana, have proposed legislation requiring insurers to directly reimburse out-of-network providers for certain services. These types of laws, in combination with litigation, will significantly influence the risk associated with pursuing an out-of-network payment strategy.
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What Is Assignment Of Benefits (AOB) In Medical Billing?
The acronym AOB stands mainly for Assignment of Benefits . This is a form of a legal contract signed by the patient asking their health insurer to send reimbursement checks for medical services used directly to the medical billing company office or doctor. Those who sign the AOB contract would simplify the payment process for patients.
It allows healthcare practices to be paid directly by the patient’s insurer without direct patient intervention. This will enable patients to focus on medical care rather than worrying about payment. It also allows the medical billing companies practice to appeal against denials and underpayments from the patient’s insurer.
What Is The AOB Medical Billing Company Community?
This term refers to insurance payments made directly to a medical professional for medical services received by the patient. As a transfer of benefits (often abbreviated as AOB ), it simply means that the patient requests that payment for their health care be passed on to the doctor to use as payment.
What Is Meant By Assignment Of Benefits?
A benefit is awarded when a patient signs a document that requires their medical and coding company health insurance provider to pay their doctor or hospital directly. AOBs also play a role in other insurance cases, such as home insurance, but here we are defining the term in the medical benefits industry.
How Does AOB Work?
An assignment of benefits (AOB) is an agreement that transfers insurance rights or benefits to a third party, such as a contractor. They request their services and order the insurance to pay them directly, without your involvement.
Important Details To Include On Form AOB
Specific details should be included in the benefit distribution agreement. Without these details, legal proceedings could be affected. Only a healthcare BPO who fully understands how to fill in the parties can help a doctor’s office complete the AOB forms correctly. Some of these essential requirements are as follows:
1. Accurate personal data:
Personal data, such as the exact name of the patient, the health care provider, and the insurer, must be filled inaccurately.
2. Confirmation Conditions:
The term “irrevocable” should be used in the AOB to confirm that the patient cannot revoke this agreement in the distant future.
3. The Patient’s signature:
Patients must sign the performance agreement. Billing personnel should ensure the patient’s signature on the contract to ensure a smooth legal process.
Disadvantages Of Assignment of Benefits
Signing the Transfer of Benefits could be disadvantageous to the parties involved in the following ways:
1. Patient Loses the Power to Negotiate:
In situations such as medical emergencies, OON physicians may need to treat the patient. This would result in the medical bill increasing the payment done by the insurance plan . The excess amount of medical bills would not be covered by the insurance plan or the medical billing companies.
Thus, it becomes the complete responsibility of the patient to pay all the charges. If patients do not wish to sign the AOB contract, the additional amount charged on the surprise bill can be negotiated. Upon signing the AOB agreement, the patient loses this bargaining power, as the contract would not require the direct involvement of the patient in the payment process.
2. Hospitals Would Choose OON:
Hospitals would choose to stay out of the network with insurance providers to reap the benefits of getting total payments from patients. Unlike in-network physicians, offline healthcare providers do not have to maintain a standardized quality for their healthcare services rendered. In this way, patients would no longer benefit from the advantages of reducing the contracted network or of quality care for the medical services used.
Healthcare professionals can take advantage of this situation to charge consumers for unnecessary treatments, tests, and procedures to drive up medical bills.
3. Increases Case:
As patients lose the power to intervene in the payment process upon signing an AOB, they transfer certain legal rights to healthcare professionals of medical billing companies. The patient would no longer have the right to sue the doctor. The healthcare provider would have the power to sue the insurer without the knowledge of the patient. This would increase the chances of individual patients being dragged into lawsuits.
The signing of the AOB, on the one hand, increases the convenience of payment for patients; on the other hand, it causes reasons for more significant discomfort to the patient due to the lack of transparency . So. Patients must check with their insurers before signing AOB. This would ensure frictionless execution of the insurance policy plan .
All in all, patients sometimes have great difficulty understanding the meaning of the assignment of benefits and do not know whether or not to commit. They can only sign on the dotted line after clearly understanding the benefits of doing so. Outsourcing this task to BPO Healthcare can help healthcare practices explain the benefits of signing the AOB form to patients most correctly and securely.
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What Is Assignment Of Benefits In Medical Billing – AOB Complete Guide
The healthcare industry operates with a diverse network of payers and various reimbursement means. From government to private insurance companies, a healthcare practice is simultaneously engaged with multiple payer parties, each linked to a different patient with unique regulations and requirements. This reimbursement workflow and many other factors alone make this already hectic environment business a bit more chaotic if not dealt with properly. With the development and execution of several policies, every healthcare service strives to bring more efficiency and seamlessness to its operations, and the reimbursement system is not an exception in this regard. This is where the assignment of benefits in medical billing comes into play.
What is Assignment of Benefits in Medical Billing?
An assignment of benefits in medical billing is a type of agreement between the healthcare provider, insurance company, and the patient through which a patient authorizes the medical service to collect healthcare policy coverage benefits on their behalf from their insurer for the service they have received from the facility. Once the patient signs this agreement, a direct payment link is made between the facility and the insurance company without communicating every time with the patient, which brings seamlessness and efficiency to the reimbursement process.
Read More: Medical Billing vs Revenue Cycle Management – Key Differences Explained
Medical Services That Use the Assignment of Benefits
Various healthcare providers across different specialties and settings may use Assignment of Benefits (AOB) as part of their billing practices. Some examples of healthcare providers that commonly use AOB include:
- Physicians and Medical Practices
- Hospitals and Medical Centers
- Dentists and Dental Clinics
- Physical Therapy and Rehabilitation Centers
- Ambulatory Surgery Centers
- Imaging Centers
So how does this assignment of benefits in medical billing work? Let’s explore:
What is the Procedure for the Assignment of Benefits in Medical Billing ? – the Methodology
In the first step, the patient receives medical service from a healthcare facility like a hospital, clinic, etc.
Once the services are rendered, the healthcare facility presents an AOB agreement to the patient to transfer their healthcare insurance coverage benefits to the facility directly. The patient is advised to thoroughly review the form before signing for consent as they are establishing a direct form of communication and payment action by authorizing the medical service to collect monetary benefits on their behalf.
In this stage, the healthcare service document and code all the service encounters with the patient into medical bills and claim, comprising all the details and treatment procedures that are associated with curing the patient. These claims are then sent to the insurance company.
After claim submission, the insurance company meticulously evaluates it on the criteria of its unique requirements, standard policies, and regulations. They also analyze the accuracy of the claim and assess the coverage limit against the payment listed in the claim. If the claim is found to be inaccurate or ineligible for coverage by the insurance company, it reverts back to the facility for denial management.
In the case the claim is approved, the insurance company makes payment directly to the medical service given the AOB policy. This reimbursed amount may cover the full or half of the patient’s medical bills, based on the coverage plan.
Once the insurer pays the billed amount to the medical service, any remaining payment responsibilities come on the shoulder of the patient, like deductibles, co-pays, or services not covered by insurance. The patient may receive an explanation of benefits (EOB) from the insurance company, outlining the details of the claim and any patient responsibility.
Read More: Why Outsourcing Ophthalmology Medical Billing is the Smart
What are the Complications in the Assignment of Benefits in Medical Billing? – the Hindrances
Assignment of benefits does not work well necessarily for all patient encounters. There are some instances where it fails to be applicable or may get denied. So what are those cases? Let’s explore:
An insurance policy can deny the assignment of benefits claim if the service acquired by the patient is out of its network of carriers. In this case, the healthcare facility can’t establish any type of reimbursement connection with the insurance policy and must obtain the payments directly from the patient. The patient can then cover their expenditure from their insurance policy.
It is not necessary that a health insurance policy cover all types of patient medical encounters. Every policy has its own limitations and offers reimbursements for medical services according to its regulations. So if a patient seeks a medical facility that is not covered by their healthcare policy, no AOB agreement will be applicable here. In this scenario, a patient is required to pay all the charges from their own pocket.
Insurance policies require preauthorization for certain medical treatments, procedures, or medications, and if a patient fails to obtain this preauthorization, the insurance company rejects the assignment of benefits claim, leaving the patient to pay the bills out of their pocket.
Even with an AOB in place, insurance companies may reject or deny claims for various reasons, such as incomplete documentation, coding errors, or policy exclusions. In such cases, the provider and the patient may need to work together to resolve the issue and resubmit the claim.
If an AOB gets accepted, it will only cover the services eligible for insurance coverage. Patients are still responsible for any deductibles, co-pays, or non-covered services as per their insurance policy. If the patient fails to pay their portion, it can lead to complications in the billing process.
Moreover, billing disputes between healthcare providers and insurance companies are another reason for AOB complications. Occasionally, disputes may arise between the healthcare provider and the insurance company regarding reimbursement rates or claim processing. These disputes can delay or hinder the AOB process, requiring additional efforts to resolve the billing issues. Read More: What Is Down Coding In Medical Billing? – The Complete Guide
Assignment of benefits is an excellent way to increase the efficiency of the reimbursement process in the medical industry. However, for a patient, it is important to thoroughly and meticulously review all the terms and complications associated with the agreement of AOB as it transfers their monetary rights directly to the healthcare service.
Concerning healthcare services, they must ensure a well-communicated, clear, and detailed preparation of this agreement to help patients better understand all the things related to their financial obligations and insurance benefits transfer. Further, the medical facilities should also bring more accuracy and compliance with standards to their billing and overall financial landscape to make the whole process conducive to the acceptance of AOB, effectively navigating the complex web of reimbursements.
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Insurance claims, why do nj medical providers need the patient to sign an assignment of benefits, callagy law: medical provider attorneys.
Our firm represents medical providers in a variety of contexts – Workers’ Compensation, Personal Injury Protection (PIP), and Commercial Insurance (Major Medical) – and obtaining an Assignment of Benefits is crucial in litigating these matters. An Assignment of Benefits is essential for a medical provider – whether the physician, facility, or ancillary service provider – to have a right to payment from the Insurance Carrier or Third-Party Administrator (TPA).
A medical provider or the administrative staff for the medical provider may feel overwhelmed by the number of forms that patients have to fill out prior to treatment. For instance, there are HIPPA release forms, as required by the Health Insurance Portability and Accountability Act, which authorizes the use or disclosure of protected health information, and intake forms requesting medical history, insurance coverage information, and general patient information. Requiring more paperwork from the patients may be viewed as an additional burden placed on the administrative staff, as well as a burden on the patient receiving the treatment. However, these documents, in addition to obtaining a signed Assignment of Benefits, are a vital in protecting the interests of the treating medical provider and the patient.
How Does An Assignment of Benefits Affect a Medical Provider ?
By signing an Assignment of Benefits (AOB), a patient is authorizing the Insurance Carrier or Third-Party Administrator to make health insurance payments directly to the treating medical provider. Essentially, the patient is “assigning” his or her right to receive the payment for the medical benefits. While medical providers benefit tremendously from having payments made directly to them, instead of the patient, from the Insurance Carrier or Third-Party Administrator, a signed Assignment of Benefits will also medical providers appeal denials and underpayments from the Insurance Carrier or Third-Party Administrator.
For example, a patient may seek treatment from a medical provider who is not in network with their health insurance plan. These medical providers may also be referred to as a non-participating provider, a non-network provider, or an out of network provider. Essentially, this designation means that there is no contract in place between the medical provider and the Insurance Carrier or Third-Party Administrator for agreed upon, negotiated rates for services rendered. Therefore, the out of network medical provider has an expectation that payments for the treatment rendered will be made at their actual, billed charges. By having a signed Assignment of Benefits form, a medical provider may submit the Assignment of Benefits with the claim and request that payment be made directly to the medical provider, instead of having checks go to the patient. This provides a convenience for both the medical provider and the patient.
Additionally, if the out of network medical provider is paid less than the actual, billed charges, the medical provider will likely want to challenge the payment directly with the Insurance Carrier or Third-Party Administrator. By having an Assignment of Benefits signed by the Patient, the out of network medical provider may rely on the Assignment of Benefits to appeal the denial or underpayment. While having a signed Assignment of Benefits does not guarantee an out of network medical provider will have standing to file a litigation matter to recover the underpaid reimbursement from the Insurance Carrier, the Assignment of Benefits could be sufficient under the terms of certain health plans. An attorney who is experienced in healthcare law and medical revenue recovery can review the terms of the health insurance plan and provide guidance to the medical provider as to what, if any, additional documentation may be required to pursue recovery in a litigation matter.
Because the use of an Assignment of Benefits, containing the most effective language, is such an important element to a medical provider’s financial interest in collecting payment from an Insurance Carrier or Third-Party Administrator and, possibly, challenging improper payments, a medical provider may want to have an attorney experienced with medical revenue recovery review the Assignment of Benefits. For more information or to consult with an attorney, contact Callagy Law today .
In your service,
Tamara Kotsev, Esq.
Attorney, Medical Revenue Recovery
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