What is Med-Pay?



This is an article that I found very helpful in understanding Medical Payments coverage.  Dr. T.

Dissecting your insurance coverage: What is Med-Pay?

Neal H. Sobol, Attorney at Law


Medical Payments coverage, commonly known by it's short-hand abbreviation "med-pay" is a type of available coverage on automobile insurance policies, which all California consumers should carry.  Med-pay provides coverage for medical treatment rendered for injuries "arising out of the use of a motor vehicle". 

The concept of "arising out of the use of a motor vehicle" is broadly taken to mean coverage for injury associated with the removal of cargo from the insured's own vehicle, injury while a passenger in another's vehicle, as well as injury to an insured's passengers in the insured vehicle.  The bottom line appears to be that so long as a vehicle is involved, the policyholder has a reasonable expectation of receiving the benefit of his or her medical payments coverage.

In such an instance, med-pay benefits are paid regardless of who was at fault for this accident (emphasis by Dr. T.).  The coverage is just as applicable if the policyholder is struck by another vehicle, strikes another vehicle, or is involved in a single vehicle incident.

Subject to very few exceptions, such as covering your passengers, med-pay applies to the policyholder only.  Therefore, if you are struck by a driver who has med-pay and liability insurance, their insurer will not directly pay the doctors bills under med-pay and then settle the case under liability coverage, despite statements to the contrary.  The only known exception is where a case is being presented as passenger versus driver, and in this instance, the claimant is entitled to med-pay only because he or she was covering under the policy as a passenger of that driver.  

The extent of med-pay benefits depends on the limits of coverage of the insured purchases.  There is no pre-set amount, or statutory minimum as with liability insurance.  In fact, it is not mandatory that medical payments, of any kind, be carried on your policy.  It is a good idea to carry at least $5,000.00 in medical payments coverage, even if covered by applicable health insurance.  This will be of assistance in the event of injury at a later date, where there may be no other party which to have medical expenses paid, and where available health insurance does not completely cover the cost of your treatment.

While the limits of medical payments coverage is determined by the amount of coverage purchased by the policy holder, the amount of payment is determined by the reasonableness and necessity of the treatment rendered.  Take the following example; the claimant has med-pay available to him, in the amount of $5,000.00.  That same claimant may have $5,000.00 in incurred medical charges.  However, if the incurred medical charges were for chiropractic adjustment only, for a period of 4 visits, it's a pretty safe bet that the incurred medical charges will not be fully paid.

For years, this was all a consumer needed to know about medial payments coverage.  However, as a natural progression of the insurance industry's desire to maximize profits, the availability of benefits has decreased.  Below, we will examine the degree of benefits available to the consumer, and have listed some common coverage, in decreasing order of benefits.

Types of Medical Payments Coverage

"Non-reimbursable, Non-excess Med-pay" a coverage that many refer to as the last "true med-pay", and is the type that would have been part of a "full-coverage" package many years ago.  There is no repayment obligation by the consumer, and the applicability of coverage is independent of health insurance benefits.  It is the most expensive the medical payments coverage to cost $5-10 per $1,000.00 of coverage, over a six-month period.  This is the type of coverage that you should have, as a consumer, and advise your patients to purchase, as a healthcare provider.  

"Reimbursable Med-pay" marks the first in the deviation from the type of Med-pay that was typically provided, and is one level lower on the scale of desired coverage.  The reimbursement is described by many names, such as "Third Party Liability", "TPL", "subrogation" or "contractual reimbursement."  All of these names have been used interchangeably to detail the concept that the original payor of the bills is due to receive a refund of amounts paid, from settlement or judgment against the responsible party, due to the fact that it's policyholder was not at fault for the incident.  The way this typically works, is that the med-pay insurer pays the bills as deemed reasonable and necessary, up to the limits of coverage.  The insurer then has a claim against the settlement proceeds, or award of judgment, pertaining to the case of the policyholder.  Upon settlement or judgment, the policyholder is required to pay the funds of settlement back to the payor of the med-pay benefits.  This can cause friction between doctor and patient, and may ultimately lead to the possible destruction of the doctor-patient relationship, when it is perceived that the doctor received more money in his pocket than the patient, when the patient "was the one injured".

"Excess Med-pay" is the first in a series of coverage that many consumer groups feel represents illusory coverage.  "Excess" refers to amounts of medical care that exceed that which the policyholder's health insurance will cover.  Because of the status of the law, many carriers are refusing to consider billing above any contractual rate between the facility rendering care, and the health insurer.  So, in essence, if you have health insurance and the facility is contracted with the health insurer, there cannot be excess, so therefore, you have no med-pay, although you are paying for it.  Most excess coverage also carries a reimbursement obligation, therefore in the event the carrier does pay anything, they receive the amounts they paid as reimbursement.  Further complicating this coverage, and giving further support for the allegations that the coverage is illusory, is the fact that without health insurance, many policies are subject to a deductible.  Often times, the deductible, or "retention" is 40% of the coverage amount.  

"Modified, or Coordinated Med-pay" further represents coverage which may be classified as illusory.  The "Modification" or "Coordination" is between the health insurer and med-pay carrier, thus acting as excess med-pay.  There is one little difference separating the two, however, in that it pays a percentage of the excess amounts, after the policyholder first pays a deductible.  The same problems persist as with "excess" coverage, in that if there is health insurance the insurer may refuse to honor any amounts in excess of what was paid by the health insurer.  

Caveats to Medical Payments Coverage

Insurance companies have been to known to arbitrarily change your coverage from "Non-reimbursable" to "reimbursable," and from "Non-excess" to "Excess."  You should take time to review any notices sent to you by your insurer, which reflect "changes to your automobile policy" and immediately reject any non-requested changes.  The information provided herein is intended to be a very basic, thumbnail explanation of the workings and types of medical payments coverage.nbsp; For specific questions, and discussion pertaining to exceptions to the general applicability of medical payments coverages, please contact our office.

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