On March 6, 2013 the Florida Supreme Court heard oral arguments in the case of Geico General Insurance Company v. Virtual Imaging Services, Inc. This case arose from a woman insured under a Personal Injury Protection (PIP) policy with Geico who received two MRIs from Virtual Imaging Services. Virtual Imaging then billed Geico under the PIP policy to receive payment for the medical services provided to the patient. When Virtual Imaging received their payment from Geico however, the check was far less than expected.
In accordance with Florida’s PIP Statute, insurance companies are required to pay 80% of an insured’s reasonable medical expenses up to $10,000. The PIP Statute as it was revised in 2008 however seems to allow two different methods for determining what is “reasonable.” Under one option, an insurance company may pay 80% of all reasonable medical expenses, while another option under the statute allows the insurance company to pay 80% of 200% of the maximum allowable amount under Medicare Part B. The problem for medical providers is that the allowable fee payment under Medicare is far less than the amounts customarily charged by medical professionals for the same services. In this case for instance, the two MRIs for which Virtual Imaging billed Geico totaled $3,600. Under option A- the pure 80% rule- Virtual Imaging would be entitled to receive $2,880 for their services. Under option B however, Virtual Imaging would have only received 80% of the statutorily allowed limit under Medicare- or $1,989.57. Basically the Florida PIP Statute as it is written, insurance companies are allowed to choose which calculation method they want to use to pay their medical providers. As Geico and many other insurance companies throughout Florida have repeatedly shown, they are generally inclined to go with option B.
So if the law permits these “pick and choose” methods of payment, then why are we arguing about it? Well, the real issue presented in this case is that Geico never told anyone that they intended to choose the cheaper option. In fact, their own explanation of benefits states that they will pay PIP benefits to medical providers totaling “80% of medical expenses,” and defines those medical expenses as “reasonable expenses for medically necessary services.” Based on this language, it seems as though Geico’s PIP insurance policy promised to pay 80% of any bill they receive from a medical provider, so long as the total bill is reasonable and the services are medically necessary. Yet instead of following their policies, Geico chose to pay the lower amount based on the second statutory option. So the question that must be decided by the Florida Supreme Court is: If an insurance company chooses to use option B under Florida’s PIP Statute, are they required to make a specific election of that option in the insurance policy? Hopefully, the answer will be yes.
The concern with not requiring insurance companies to disclose their methods of bill calculations is that it may limit the insured’s access to quality medical care and treatment. If medical providers are not aware of how payment amounts for their services will be calculated, they may be inclined to only perform the bare minimum of treatments so they are not left holding a bill for services that that insurance companies refuse to pay for. The danger here is that hospitals and doctors performing only the bare minimum services can miss serious internal issues such as injuries to the spine and traumatic brain injuries. Additionally, if insurance companies are not required to disclose their payment calculation decisions, people insured under these policies will be left with no idea what types of coverage they actually have in case of an accident.