How to avoid overpaying for defense costs

Is evaluating a claimant’s medical records and billings a part of your claims handling process? If so, you understand how costly it can be to obtain such records — particularly when those materials are voluminous.

Insurers can easily spend several thousand dollars on medical record retrieval costs for a single claimant.  However, a federal law, called the Health Information Technology for Economic and Clinical Health Act (“HITECH”), provides a simple and straightforward way for insurers to stop overpaying for medical records.

Expenses for obtaining medical records

Whether you handle bodily injuries on personal or commercial lines, workers’ compensation, special investigations and fraud, or underinsured/uninsured motorist claims, you analyze claimants’ medical records on a daily basis.

Traditionally, you obtain these records with a release executed by the claimant, followed by payment of the healthcare providers’ statutory “per page” fees for paper copies of those records. State law governs the amount of money healthcare providers may charge for copying medical records. Depending on the state, the costs to obtain printed copies of such records can be substantial.

In Washington, providers may charge $26 for search and handling, $1.17 per page for the first 30 pages, and $0.88 per page for all additional pages. In Oregon, it is $30 for the first 10 pages, $0.50 for pages 11-50, and $0.25 per page for each additional page. Under Maryland’s regulations, providers can charge $22.88 for retrieval and preparation, and $0.76 per page for all pages. While in Indiana, there is a $20.00 labor fee, $0.50 per page for pages 11-50, and $0.25 per page for pages 51 and higher. In Texas, hospitals may charge $45.79 for the first 10 pages, then $1.54 per page for pages 11-60, $0.76 per page for pages 61-400, and $0.41 per page for any remaining pages.

Using a sample claimant with 1,000 pages of records, it would cost a company $914.70 in Washington, $287.50 in Oregon, $782.88 in Maryland, $277.50 in Indiana, and $627.19 in Texas, to obtain copies of medical records. These costs only increase as the volume of the claimant’s records increase.  However, there is an economical and more efficient way to obtain these necessary records to in include in an evaluation.

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How the HITECH Act limits medical record retrieval expenses

Surprisingly, many carriers and law firms are unaware federal law allows each patient to obtain an electronic copy of his or her medical records for the cost of supplies and labor. In 2009, Congress enacted the HITECH Act, 42 U.S.C. § 17935(e)(1), which provides in relevant part that every person has the “right to obtain from [their health care providers] a copy of [their medical records] in an electronic format[.]”

HITECH allows health care providers to charge a fee for only the costs of:

(1) Labor for copying the records requested, whether in paper or electronic form;

(2) Supplies for creating the paper copy or electronic media (e.g., CD or USB flash drive) if the individual requests that the electronic copy be provided on portable media;

(3) Postage, when the individual requests that the copy be mailed; and

(4) Preparation of an explanation or summary of the records, if agreed to by the patient.

In the last quarter of 2017 and the first quarter of 2018, my firm sought a total of 68,534 pages of medical records and incurred $10,726.47 in related fees using HITECH requests. The same amount of records, without HITECH requests and using Washington’s statutory per page fee, would have cost $75,005.11 in defense costs. Our firm saved $64,278.64 in defense costs in two quarters by using HITECH requests.

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Requirements for HITECH requests

HITECH’s fee restrictions and cost savings come with several caveats. First, HITECH’s application is limited to healthcare providers who maintain paperless records, such as hospitals, larger facilities and medical practice groups. Smaller and independent providers who only maintain paper or handwritten copies of records are exempt from complying with HITECH. Therefore, it is less likely you will be able to reduce the retrieval fees associated with most chiropractic and massage records under HITECH.

The other key trigger for the application of HITECH’s fee limitations is that the records cannot be sought through subpoenas or release authorizations. You cannot obtain the records unilaterally or for your sole benefit and receive any cost savings. In February 2016, the U.S. Department of Health & Human Services (“HHS”) made this point clear, explaining that:

“[T]hird parties often will directly request [medical records from a health care provider] and submit a written HIPAA authorization from the individual . . . for that disclosure.  Where the third party is initiating a request for [medical records] on its own behalf, with the individual’s HIPAA authorization . . . the access fee limitations do not apply.” [See Individuals’ Rights under HIPAA to Access Their Health Information 45 CFR § 164.524, U.S. Dept. of Health & Human Services (Feb. 25, 2016).] Instead, you will need the claimant’s help in obtaining the desired records.

Under HITECH, the claimant, or a personal representative of the claimant (and not simply the claimant’s attorney), must make a direct request for his or her medical records. In applying HHS’s guidance, at least one court has agreed that claimants’ counsel do not qualify as “personal representatives” for purposes of HITECH.

In Bocage, v. Acton Corp., the U.S. District Court for Southern Alabama dismissed a lawsuit in which plaintiffs’ counsel requested access to the medical records under HITECH for application of its fee restrictions, holding that “a legal representative who requests an individual’s protected health information (and is not a personal representative of the individual) is not entitled to the fee limitations imposed under” the HITECH.

Rather, HITECH requires that three requirements must be met for a claimant to transmit his or her records directly to another person, including: (1) the request must be in writing; (2) the request must be signed by the individual or personal representative; and (3) the request must clearly identify the designated person and where to send the claimant’s records.

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No benefits for suppliers of paper records

Not everyone is enamored with the cost savings claimants (and, by extension, the claims defense industry) receive from HITECH requests. Among those are hospitals and medical facilities, as well as records retrieval vendors and service providers.

HITECH does not cover the costs associated with producing paper copies of medical records. Typically, and in order to maximize profit, healthcare providers assume that claimants want paper copies and charge their state’s statutory per page fee for such records. Even with HITECH requests calling for production of electronic copies on portable media, some health care providers still attempt to produce paper copies and bill their standard fees. Diligence is required to get some healthcare providers to strictly comply with HITECH’s requirements.

For records retrieval vendors, HITECH requests run contrary to their business models and profit margins. While some vendors specialize in obtaining and scanning paper copies of medical records, and others focus only on scanning and categorizing such records, there are not a lot of services they can offer when retrieving electronic copies of medical records. This is because under HITECH, healthcare providers are obligated to transmit electronic copies of records to the third party that the claimant clearly designates to receive them.

For decades, the standard way to obtain medical records has been through use of release authorizations, followed by payment of per page fees. The use of HITECH requests is one way for companies to effectively reduce their defense spend. Companies may also save more by avoiding the unnecessary logistical costs of scanning and storing volumes of paper medical records. As technology evolves, companies may find even more cost-effective ways to lower their records costs in the future.

Jeremy H. Rogers (jeremy@mixsanders.com) is an attorney at Mix Sanders Thompson, PLLC, a litigation defense firm in Seattle, Wash. He defends insureds in general liability matters in federal and state court, offers coverage advice, and assists in special investigations.