When it comes to health insurance and risk management, many terms and concepts can seem complex or intimidating. Health plan subrogation is one of them.

Subrogation is a fundamental principle that plays a critical role in ensuring fairness and efficiency in the health insurance industry. Understanding subrogation can help you navigate and manage the medical claims process with confidence.

What is Health Plan Subrogation?

At its core, health plan subrogation is the process by which a health insurance company or self-funded health plan recovers money on paid claims from a third party who is responsible for causing injuries to an insured or a plan member.

In simpler terms, if someone else is at fault for an accident that an insurer or self-funded health plan has paid claims for, then that insurer or plan has the right to take steps to recoup the money they paid.

Why does Health Plan Subrogation matter?

Subrogation serves several important purposes:

  1. Streamlined Claims Process: Subrogation allows insureds and plan members to receive prompt payment for their claims without having to pursue legal action against the at-fault party themselves just to get their injury-based medical bills paid.
  2. Fairness and Accountability: It ensures that the party responsible for causing an injury or injuries is held financially accountable, rather than letting the burden fall solely on the impacted member or their health plan.
  3. Cost Control: By recovering funds from at-fault parties, insurance companies and health plans can mitigate their losses. This, in turn, helps keep premiums and contributions more affordable for members.

How does Subrogation work?

The subrogation process typically begins after medical claims have been paid. Here’s a simplified breakdown of the steps involved:

  1. Investigation: The insurance company or health plan investigates the claim to determine who was at fault for the loss or damage.
  2. Notice and Monitoring Efforts: If there are reimbursement sources, the insurer or health plan will notify the at-fault parties, and will monitor any litigation or settlement efforts related to the accident-related claim.
  3. Negotiation and Recovery Efforts: An insurance company or health plan negotiates an acceptable settlement based on the policy limits and any other factors specific to the case.  

It’s worth noting that subrogation can occur in various types of insurance, including auto, home, health, and workers’ compensation. Motor vehicle accidents account for the majority of medical claims eligible for subrogation. The specifics of the process may vary depending on the circumstances and the policies involved.

Conclusion

Subrogation is a powerful tool that benefits both insurers and plan members by promoting fairness and financial responsibility. While it may seem like an opaque, behind-the-scenes process, its impact is far-reaching, helping to maintain the payment integrity of the health insurance system.

Working with subrogation experts can ease your plan’s burden. Intellivo has more than 25 years of experience in health plan subrogation. Our experts are available to review your plan’s or your clients’ plans’ subrogation provision to confirm it is up to date with the latest case law requirements that maximize subrogation recoveries.

Interested in more? Check out our just published eBook “Subrogation for Health Plans: 5 Things to Know.”