What to do about an insurance reimbursable that is too low?

My wife had medical procedures at a hospital and paid about $4,000. She submitted claims to the insurance company. The insurance company reimburses procedures but the allowable amounts are only a third of what we paid. The hospital says that since we paid upfront, they will not reimburse the difference, despite their contract with the insurance company. The insurance company says that they can only reimburse up to their contract with the hospital, and it is not their problem that the hospital overcharged us. My question is who is at fault here, if anyone, and how can we get our money back?

Asked on November 8, 2013 under Insurance Law, Massachusetts


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

The insurer is only obligated to pay what its contract provides it will pay. The hospital may have charged you more than another institution would have or more than it could have provided the procedures for, but unless it lied or misrepresented the costs prior to you agreeing to have them done, it did nothing legally wrong. (Morally wrong is another story; but that is not the issue here.) That is because people are held to be bound to the prices they agree to pay, even if by objective standards they are "overpaying." From what you write, it may be that neither institution did anything legally wrong or which would support a claim by you. That said, you may be able to negotiate a lower price or settlement with the hospital, particularly if you indicate to them that you cannot pay this amount and would have to default on any debt or even declare bankruptcy.

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