November 3, 2022

What Hospitals and Health Care Providers Must Know About Third-Party Liability Claims

Hospitals are faced with an incessant demand to care for accident and workplace injury patients. Here's what healthcare providers need to know about perfecting their third-party claims recovery process.

Hospitals are faced with an incessant demand to care for accident and workplace injury patients. In many cases, the patients do not have any insurance carrier on record and may qualify for charity care, which the government funds. 

Hospitals and other healthcare providers get most of the reimbursement for uncompensated care provided through the Medicare and Medicaid programs. These federal funds help healthcare providers that serve low-income citizens and the uninsured. 

In the case of third-party liability (TPL) claims, if the patient doesn't know who the liable party should be, the process can be a bit complicated. Because of the legal procedure, hospitals sometimes end up losing reimbursements after providing care to injured patients. Here, we’ve provided answers to vital questions relating to recovering payments on charity accounts.

What Are Charity Accounts? 

Charity care is free or discounted medically necessary health care that hospitals offer to patients who cannot afford to pay for their treatment. Not all patients qualify for charity care - and some hospitals may look at a patient’s financial record before or after treatment. 

Charity accounts are essentially records of treatments provided for patients that qualify for charity care. Usually, charity care is given when patients are not insured or unable to pay for their medical bills, especially in emergencies and the government writes off their debt. 

Although the policies governing charity care and reimbursement for uninsured and low-income patients may vary slightly from state to state, most of the government reimbursement for charity care comes from the federal government (Medicare and Medicaid).

Can For-Profit Hospitals Reject Charity Care?

No. Going by the provision of the Emergency Medical and Treatment Labor Act (EMTLA) passed by Congress in 1986, both public and private healthcare providers are prohibited from denying care to indigent or uninsured patients based on a lack of ability to pay.

But many hospitals offer charity care as benefits to their host communities. Most non-profit hospitals actually offer charity care as part of their programs to their host communities. Thanks to the Affordable Care Act (ACA), all non-profit hospitals are required to offer some form of financial assistance or charity care to their patients. 

Can Charity Care Be Reversed? 

Yes. Hospitals and healthcare providers can reverse the free medical care provided to patients when it is discovered that the patient is insured. Many third-party liability claims often arise as a result of this. Patients get free treatment from hospitals, but later receive reimbursements from the insurance company covering the at-fault party. 

In such a case, the hospital can also press a claim for reimbursement for the care they have provided to the accident victim or third party. Essentially, the charity the patient has received will be reversed.

Can Hospitals Contact Patients For TPL Claims on Charity Accounts?

While hospitals are allowed to collect reimbursements from charity accounts, they may not contact the patient in the process, as provided in the Affordable Care Act. This is because the reversal of care that had previously been written off is a legal matter. Hence, healthcare providers can only go through the insurance adjuster or the attorney representing the client.

This is the typical procedure for third-party liability claims recovery. However, it is a process that many providers find difficult to navigate. Starting from tracing accounts that qualify for collection to actually getting reimbursements from the first party’s insurer, the back-and-forth correspondence may wear out any RCM team, plus not many providers understand the process.

How Do Third-Party Liability Claims Benefit Hospitals

Third-party liability claims enable revenue cycle managers to collect on charity accounts legally, recovering millions of dollars going undetected every year. Most patients who get reimbursements for TPL claims often do not notify the hospitals, so the hospitals do not get any payments for the care provided. Not all at-fault parties claiming they are uninsured or unable to pay eventually walk away without paying.

So TPL reimbursements, if implemented expertly, can help hospitals recover as much as 100 percent of total billed charges. TPL insurance usually covers most types of accidents, including, "slip-and-fall" accidents, and workers' compensation claims. From previous cases, TPL claims cover at least five percent of a hospital's overall accounts receivable (A/R) in a year.

Thanks to scalable technology like Discover Claims’ TPL claims recovery tool, providers now have a solution that can track all qualifying accounts and notify them whenever patients who previously received Charity receive a TPL settlement, which the hospital is owed from. 

About Discover Claims

Discover Claims serves as a safety net that identifies missed legal actions and captures Third-Party Liability payments using AI-powered proprietary technology as a safety net that helps healthcare providers to identify missed legal actions and capture Third-Party Liability payments using a proprietary technology powered by AI. At Discover Claims, we are focused on auditing hospitals' charity accounts to identify those that now have insurers on file. Our solution helps hospitals that lose millions of dollars annually after giving free care to patients whose care was 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

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