Court Says Healthcare Providers Cannot Balance Bill AHCCCS Patients

In a decision issued January 17, 2014 in Winters v. Banner Health Network, et al., the Maricopa County Superior Court considered whether hospitals and other health care providers can continue to place a lien on a patient’s personal injury claim in order to secure payment of the customary charges incurred by the provider for in providing care, treatment, or transportation to the patient when that patient receives benefits from Arizona’s Healthcare Cost Containment System (“AHCCCS”). Under Arizona law, a health care provider may seek to collect full payment from Medicaid for said care, and then “collect any unpaid portion of its bill from other third-party payors ….” A.R.S §36-2901.01(G)(4).

The plaintiffs in the case argued federal law preempted the Arizona lien statute. As a condition of receiving Medicaid payment for services, a provider must agree that any amount paid by Medicaid will be accepted as “payment in full.” See 42 C.F.R. § 447.15. Because AHCCCS is Arizona’s state-run Medicaid program, the plaintiffs contended that the federal law on Medicaid preempted Arizona’s statute allowing “balance billing” of AHCCCS patients. Balance billing is the practice of seeking to collect the difference between what the provider customarily charges (the “billed charges”) for the care/treatment provided versus what the provider is actually paid.

The defendant hospitals in the case countered, saying the enforcement of a health care lien does not constitute balance billing because the provider is collecting from a third-party tortfeasor, rather than from the Medicaid patient. The Court noted that Arizona federal courts had already rejected that proposition in Lizer v. Eagle Air Med Corp., 308 F. Supp. 2d 1006 (D. Ariz. 2004).

Noting that the federal regulation conditioning receipt of Medicaid monies on accepting them as payment was unambiguous, the Court agreed that Arizona’s health care lien statute – A.R.S. §36-2903.01(G)(4) is preempted by federal law related to Medicaid. In so doing, the Court noted that while AHCCCS itself may go after third-party tortfeasors responsible for paying a portion of the patient’s bill, AHCCCS providers could not.

Click the link below to read the decision:

Winters v. Banner Health Network

For more information, call Erin Byrnes at the Udall Law Firm: 602.606.2111.

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