Are Texas Hospital Liens Limited To The Medicare Rate?

A review of the Texas Supreme Court cases of Speegle v. Harris Methodist Health System and Haygood V. De Escabedo leads to the inescapable conclusion that while a Texas hospital may elect not to bill Medicare it is nonetheless limited to the Medicare rate when filing hospital liens against Medicare patients.

Medicare regulations allow a Texas hospital to pursue third-party liability insurance rather than Medicare. Hospitals frequently inflate their charges by five, ten or even twenty times the reasonable rate and then file a hospital lien pursuant to Texas Property Code sec. 55.004(d)(1) for the inflated amount. However, Texas Civil Practices and Remedies Code sec. 146.003(a) prohibits a hospital from billing an individual for amounts which they could have received from Medicare. In Speegle v. Harris Methodist Health System the Texas Supreme Court issued a very limited decision which held that Texas Civil Practices and Remedies Code Section 146.002(c) is preempted by Federal law to the extent that it requires a hospital to bill Medicare. While there are many Texas laws which regulate a hospital’s billing conduct, Section 146.002 (c) is the only section which was held by Speegle to be Federally preempted.

Speegle discussed Texas Property Code Chapter 55 hospital liens but did not hold that any of the Chapter 55 hospital lien provisions were Federally preempted. T.P.C. 55.004(d)(1) limits a Texas hospital lien to reasonable and regular charges. The reasonable and regular charge for Medicare patients is undeniably the Medicare rate. Speegle confirmed that if a hospital elects not to bill Medicare and to pursue liability insurance that the hospital must pay the applicable procurement costs. U.S. Dept. of Health and Human Services, Centers for Medicare and Medicaid Services, Medicare Secondary Payor (MSP) Manual, Chapter 2, Section 40.2 (2009). Costs of procurement include both attorneys fees, expert fees and litigation expenses.

In Haygood V. De Escabedo the Texas Supreme Court limited hospitals’ charges for treating Medicare patients to the Medicare rate. In the words of Justice Nathan Hecht, “Federal law prohibits health care providers who agree to treat Medicare patients from charging more than Medicare has determined to be reasonable.” De Escabedo, at Page 5. While Speegle gave hospitals the option of billing third party liability insurance, De Escabedo confirmed that a hospital who elects to bill a third party liability insurance is nonetheless limited to the Medicare rate.

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