October 4, 2022

Third-Party Liability Claims: What They Are and Why Hospitals Can Easily Miss Them

So you’ve granted some patients Charity care but they now have a payer on file. How do you know and what can you do to get reimbursement for the services you provided? By implementing a scalable Third-Party (TPL) claims recovery solution, you can recover so much more from a revenue source you may be overlooking.

In U.S. hospitals today, missing revenue from internal processes, adjustments, write-offs, and unrecovered third claims can easily reach into millions of dollars annually. One of the major areas where the finances of hospitals and healthcare providers continue to bleed annually is “Third-Party Liability”.

Emergency Recovery Inc (ERI), in its 2019 Rev Cycle Quarterly article suggested that hospitals and other reimbursement seekers can tighten up their revenue cycle management and reduce revenue loss by focusing more on third-party liability (TPL) claims. However, the major challenge for these hospitals when it comes to optimizing TPL recovery is that TPL coverage, in itself, is quite nuanced, requiring both legal experience and the ability to successfully navigate the system.

The thing is, many hospitals and providers are beginning to appreciate the importance of doubling or probably tripling efforts on TPL coverage, but a lack of expert TPL representation poses another serious problem still. Going through legal representation costs time and legal fees, which can quickly cripple the efforts of these hospitals to get their money back.

What are Third-Party Liability Claims?

In simple terms, third-party liability claims are liability claims presented by patients allegedly involved in an accident or injured by the insured. The insured is the first party (e.g., the individual or company that owns a vehicle or product that caused injury or the property where the injury occurred), the insurer is the second party, and the claimant (injured person) is the third party. Hospitals always render healthcare to persons who qualify for third-party care.

However, these hospitals often end up not being able to recover the compensation for the care they have provided even after the claimants (patients) have been compensated by the third-party insurer. In many cases, they are just never told about it. So they lose millions of dollars annually giving free or uncompensated medical care to these patients. For these hospitals, the issue is a lack of in-house expertise on how to track claimants or patients who have received payments and the legal expertise to engage the patients or their lawyers.

Another instance where hospitals lose lots of money is when they attend to charity accounts. Charity accounts can be written off when patients qualify for financial aid and do not have any other source, such as insurance, to pay for the medical services they receive. But in some cases, patients successfully sue an insurer and receive compensation for the charity care they have already received. Ideally, the health care provider that treated the patient ought to receive payment for their services. But the patients are unlikely to inform them.

This trend validates ERI’s suggestion to hospitals to tap into TPL expertise as a potential strategy for improving their revenue cycle. But considering that hospitals cannot legally collect on Charity by calling patients, they are left with rather expensive legal procedures to engage patients who have received payments after charity care. But the most important action is to track these patients to know if they received any reimbursements or not.

How Third-Party Liability Claims Benefit Hospitals

So you’ve granted several patients Charity care but they now have a payer on file. How do you know? What can you do to get reimbursement for the services you provided? This is where a TPL claims discovery and recovery solutions come in. By implementing TPL recovery solutions, revenue cycle managers have realized that there's a lot more money going undetected in an area they were previously overlooking.

According to ERI, TPL reimbursements can help hospitals recoup as much as 100 percent of total billed charges, provided it is handled correctly. And at a time when hospital finances across the country are far from being impressive, Third-Party Liability claims can serve as an additional revenue stream that would help hospitals guard against financial ruin and possible bankruptcy. 

TPL insurance can cover virtually any type of accident, from health to motor vehicle accidents, "slip-and-fall" accidents, and workers' compensation claims. TPL claims can cover up to five percent or more of a hospital's overall accounts receivable (A/R) in a year. Optimizing Third-party liability recovery will help hospitals and their Revenue Cycle Management teams get reimbursed for services provided to accident victims who have been compensated.

How Technology Makes TPL Collections Seamless

It is one thing to understand the importance of TPL recovery, but it is yet another to be able to successfully implement a collection strategy that doesn’t cost the hospital more money. Luckily, there are new technologies that have been developed to discover a lot more Third-Party Liability Claims and ensure hospitals are getting reimbursed properly for services provided. 

TPL recovery provider, Discover Claims, for instance, has developed a unique, scalable technology that tracks all qualifying accounts and notifies hospitals whenever patients have received Charity and TPL reimbursements/settlements. This claims discovery tool uses artificial intelligence, making it super easy to find those Charity accounts that have been written off but should've been paid instead. Even without communicating with the patients, hospitals can legally reverse the charity and receive reimbursement for care provided.

With this tool, hospitals can sort through hundreds of thousands of accounts and easily tell which patients now have pending legal actions in the insurance or courthouse system within about 3 days. But beyond collecting on charity, this tool can also detect Bad Debt accounts quickly and without much hassle. If your facility is currently dealing with patients who haven't paid their part of a bill and are no longer picking up or responding to emails/texts, you might even get more frustrated going through legal firms.

This is because law firms rely on an arduous manual process that is often not accurate and takes several weeks and maybe months to complete. However, with a scalable TPL claims discovery technology that automates the entire process, it is so much easier to identify Insurers that still owe you. This eliminates the stress and expenses involved in the process and helps you improve your hospital’s revenue cycle.

About Discover Claims

Discover Claims is a tech-enabled RCM service provider focused on auditing hospitals' Charity accounts to identify those that now have insurers on file. Our solution is targeted at helping hospitals that are losing millions of dollars every year by giving free care to patients whose care has been written off but later gets paid by Third-Party Liability insurers. 

To keep this from going unchecked, Discover Claims developed an automated claim matching tool that finds those legal actions and ensures the hospital always gets its fair share of reimbursement. If you fear that some of your patients may have received free care and a settlement check, find out now and get reimbursement for your services. For any questions, contact billy.ayoola@discover-claims.com.

This content is powered by Mission and was co-authored by the Discover Claims Team.