assignment of benefit voucher

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Does the patient have to sign the bulk bill voucher?

Date of Answer: 12:06 pm  I  August 1, 2020

BB 2020/061

It is commonly believed that patients do not have to sign the bulk bill voucher. This is incorrect. The law is clear that the patient’s signature evidencing consent to bulk bill is always required.

This answer explains the law around the requirement for patients to sign the Bulk Bill voucher, commonly known as the DB4 form.

Relevant legislative provisions

Health Insurance Act 1973 , Section 20A

Health Insurance Act 1973 , Section 20B(3)

Health Insurance Act 1973 , Section 127

Health Insurance Regulations 2018, Reg 63(2)(b)

Electronic Transactions Act 1999

Other relevant materials

1. Short bulk bill explainer article published in Australian Doctor:

The Law Trumps Medicare Advice on Bulk Bill Vouchers: https://www.ausdoc.com.au/workwise/youre-likely-guilty-so-beware-law-trumps-medicare-advice-bulk-bill-vouchers

2. Peer reviewed academic journal article published in the Journal of Law and Medicine, with detailed analysis of bulk billing arrangements:

Medicare Billing Law and Practice: Complex, Incomprehensible and Beginning to Unravel. https://www.ncbi.nlm.nih.gov/pubmed/31682343

Wong v Commonwealth of Australia;  Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee No 309 [2009] HCA 3 (2 February 2009) 

Departmental interpretation

https://www.servicesaustralia.gov.au/organisations/health-professionals/services/medicare/medicare-online-health-professionals (accessed 6 June 2020)

“Assignment of benefit documents

Assignment of benefit forms no longer need to be stored at the practice if you are using Medicare Online. ..

The legislative requirements for the assignment of benefit are:

• an agreement must be made between the patient (assignor) and you for the assignment of benefit
• the agreement is evidenced through the use of the assignment of benefit form
• the patient is required to sign the form
• a copy of the agreement must be provided to the patient.”

Detailed reasoning

Section 20A(1) of the Health Insurance Act (the Act) describes the bulk billing process as follows (my underlining):

“Assignment of Medicare benefit

(1)  Where a medicare benefit is payable to an eligible person in respect of a professional service rendered to the eligible person or to another eligible person, the first‑mentioned eligible person and the person by whom, or on whose behalf, the professional service is rendered (in this subsection referred to as the practitioner) may enter into an agreement, in accordance with the approved form, under which:

(a)  the first‑mentioned eligible person assigns his or her right to the payment of the medicare benefit to the practitioner; and

(b)  the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first‑mentioned eligible person.”

There are two parties described in Section 20A. The first is the ‘eligible person’ which is the patient, and the second is the ‘practitioner’ which may be a doctor or any health provider able to claim using the medicare scheme.

Section 20A states that the patient holds the legal right to the medicare benefit, not the practitioner. A simple two step process (known as bulk billing) is set out, whereby the patient assigns their right to a medicare benefit to the practitioner, and the practitioner accepts it in full payment for the service provided.

Implicit in this arrangement is the concept of consent.

In deliberations around the operation of Section 20A, Kirby J, in the High Court case of Wong v Commonwealth of Australia said:

“Even “bulk billing” is only possible by consent of both parties to that relationship.”

The method of consent is described in Section 20B(3) of the Act. This is where the patient’s signature comes into play. The Act states that the patient has to sign the assignment of benefit form to evidence their consent to being bulk billed.

Here is section 20B(3) with the word ‘signed’ underlined.

“(3)  A claim referred to in subsection (2) shall not be paid unless the claimant satisfies the Chief Executive Medicare that:

(c)  in the case of an agreement under subsection 20A(1) that was signed by each party in the presence of the other—the assignor retained in his or her possession after the agreement was so signed a copy of the agreement;”

The content on the Department’s website (above, under the heading Departmental Interpretation) is likely the cause of widespread non-compliance with the signature requirement, because it is confusing.

However, it is important to understand that the department saying you do not have to keep the signed form, does not mean the patient does not have to sign it.

The law is clear – the patient has to sign the assignment of benefit form to evidence consent, and the fact that the department permits putting your copy of the signed form in the bin, in no way negates the provisions of the Act.

From the government perspective, continuance of the signature requirement is good policy, designed to protect the integrity of public money, in two ways:

• It is the only active involvement the patient has in a bulk billing transaction, and it therefore provides the only opportunity for the patient to review and query the services being claimed against her/his Medicare number, and
• It is a critically important safeguard against fraudulent billing (such as billing for fictitious services) because it is the only evidence of both the practitioner and patient being in the same place at the same time.

From the practitioner perspective, retaining copies of signed bulk bill vouchers is a good idea, because it evidences practitioner presence and patient consent. Entries in clinical records cannot do this to the same extent. For example, an unethical practitioner could easily make an entry in a clinical record for an existing patient, without having provided a service, and the patient would likely never know that a claim had been bulk billed under their Medicare card.

The department’s position is unfortunate, however, it is there in black and white on their website. So, if you are bulk billing electronically, the department has made clear, the decision to retain or bin signed bulk bill vouchers is a matter for you.

Section 20A and 20B are two of the key machinery provisions of the Act, underpinning the operation of the Medicare scheme. Think of them like pulmonary veins that deliver oxygenated blood to the heart. These sections deliver approved payments of taxpayer’s money to your pocket. Removing them from the scheme would obliterate patient consent and render the scheme more vulnerable to abuse.

Examples and other relevant information

Other important legal provisions relating to bulk billing that you should be aware of.

• Asking patients to sign blank bulk bill forms or forms with missing details is illegal per Section 127 of the Act .
• Not giving patients a copy of their signed bulk bill form is an offence, but penalties can be waived if you have a ‘reasonable excuse’ as to why you didn’t give it to the patient. This is also in Section 127.
• Using a Medicare Easyclaim terminal has a special legal provision, so having the patient (not you) press ‘yes or ‘OK’ on the terminal is a legally valid signature, per regulation 63(2)(b).
• If the patient is unable to sign, you can indicate ‘unable to sign’ and notate why. This has always been an available option on the prescribed form (the DB4).
• Medicare is a fee-for-service scheme meaning you must obtain the patient’s consent for each separate service. It is not permissible to obtain a blanket ongoing consent to bulk bill, such as for a course of chemotherapy.
• The Department is bound by the provisions of the Electronic Transactions Act 1999 and so SMS/email signatures are permitted, providing certain criteria are met. This will help you to understand how to manage the bulk bill signature requirement in situations where the patient is not physically in the same place as the practitioner when the service is provided, such as case conferences and telehealth. See answer BB2020/062 .

Who this applies to

Everyone when bulk billing.

When this applies

Always. This has been the law since Medibank (later Medicare) began.

Relevant AIMAC courses

Bulk Billing, Medicare’s Heart Beat

Date of Answer: 1:37 pm  I  September 21, 2020

• Bulk billing is only permissible AFTER a service has been provided and fees have been incurred in respect of a professional service. Therefore, do not ever ask a patient to sign a bulk bill voucher (even if all data elements have been completed) before a service has been provided. Patients cannot be asked to sign for a service they have not received.

Date of Answer: 5:54 pm  I  January 16, 2023

Date of Answer: 1:52 pm  I  February 23, 2023

Health Insurance Act 1973 , Section 20B(3)

Health Insurance Act 1973 , Section 127

2. Academic journal article published in the Journal of Law and Medicine, with detailed analysis of bulk billing arrangements:

Wong v Commonwealth of Australia;  Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee No 309 [2009] HCA 3 (2 February 2009) 

(1)  Where a medicare benefit is payable to an eligible person in respect of a professional service rendered to the eligible person or to another eligible person, the first‑mentioned eligible person and the person by whom, or on whose behalf, the professional service is rendered (in this subsection referred to as the practitioner) may enter into an agreement, in accordance with the approved form, under which:

(a)  the first‑mentioned eligible person assigns his or her right to the payment of the medicare benefit to the practitioner; and

(b)  the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first‑mentioned eligible person.”

“(3)  A claim referred to in subsection (2) shall not be paid unless the claimant satisfies the Chief Executive Medicare that:

(c)  in the case of an agreement under subsection 20A(1) that was signed by each party in the presence of the other—the assignor retained in his or her possession after the agreement was so signed a copy of the agreement;”

Date of Answer: 3:51 pm  I  March 1, 2023

Date of Answer: 2:27 pm  I  May 15, 2023

Date of Answer: 3:14 pm  I  June 5, 2023

Whether patients need to sign something when being bulk billed causes a great deal of confusion industry wide. The confusion is understandable given Medicare itself advises that you do not need to retain signed bulk bill vouchers. But what does that actually mean and what does the law say?

Date of Answer: 3:15 pm  I  June 5, 2023

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Thanks for bulk billing! Now here’s some forms

5 minute read

The rules for patient consent to be bulk billed are good news for the doctors who love paperwork, bad news for the other 99.99%.

Doctors who want to bulk bill patients for a telehealth appointment have a compulsory new form to fill out documenting a patient’s verbal consent, courtesy of Services Australia.

The only other alternatives are getting written consent via email, privately billing the patient or running the risk of repaying all those benefits in the event of an audit.

To be clear, collecting a patient’s written consent to bulk bill has been a longstanding – if somewhat obscure – requirement under subsection 20B paragraph 3c of the Health Insurance Act 1973.

When telehealth was introduced over the pandemic, Services Australia made a temporary exception and allowed practitioners to get verbal consent from patients and simply make a note of it in the consult notes.

That exception was flagged as ending in December last year, but was extended at the last minute so the Department of Health and Aged Care could develop what the AMA said would be a “solution that is more suitable for permanent telehealth services”.

At the time, the medical association said it hoped the department would take the opportunity to “streamline arrangements” and reduce paperwork.

This particular wish does not appear to have been granted.

Under the new arrangements, doctors can still collect verbal consent to bulk bill – but they will have to follow it up by completing an online form which then has to be sent to the patient via email or text.

There are two approved forms to choose from: bulk bill voucher electronically transmitted claims form DB4E and assignment of benefit Medicare bulk bill webclaim form DB020 , the latter of which can only be used in conjunction with HPOS Medicare bulk bill webclaim.

Services Australia instructs doctors to type “patient verbally agreed” in the patient signature field of these forms, but only after discussing this with the patient .

Alternatively, GPs can email a patient to ask for written consent to bulk bill if they’ve done a telehealth appointment.

This is also a multi-step process.

First, the doctor needs to tell the patient during the consult that they plan to bulk bill.

Then, the doctor has to send an email to the patient’s nominated email address with the details of the service – including item numbers, benefit amounts and the date/time of service – the customer statement and a privacy notice.

Including the patient’s Medicare card number or the doctor’s provider number in this email is apparently a no-no, presumably for privacy reasons.

The patient then replies to that email, explicitly writing that they agree to the assignment of the Medicare benefit directly to the health professional.

Only once that is done can the doctor complete general, specialist and diagnostic assignment of benefit voucher form DB4 and submit the claim, writing “email agreement” in the signature block.

A copy of the form also must be sent to the patient.

The Albanese gov’t tripled GP incentives for bulk billing, woohoo! Now they introduce the requirement for a signed patient consent form in order to bulk bill a telehealth consultation! ??How is that meant to work? ? ?? #BulkBilling #TELEhealth #Medicare — Dr Rob Mathews (@robmathews) October 2, 2023

The third and final way to get bulk billing consent from a patient for a telehealth appointment is to obtain a physical signature via snail mail.

The new arrangements first appeared in a DOHAC fact sheet dated September 18 and took effect immediately.

In the fact sheet, DOHAC credited the new requirements to prove verbal consent to an Australian National Audit Office report on Medicare telehealth services released in January.

That ANAO report found that verbal consent for bulk billing created a fraud risk.

To spell it out: if there’s no patient acknowledgement that the consult being billed by the doctor actually happened, Services Australia could potentially be defrauded by GPs $38 at a time.

The ANAO also found that DOHAC officials had not only failed to properly assess the legal implications of verbal consent before putting it in place, but also outright ignored concerns from staff members about the potential for fraud as early as March 2020.

The report is about as snippy as official wording allows and takes the department to task for not clarifying to doctors that the verbal consent policy might not meet the legal requirement to provide patients with a copy of what they’re getting bulk billed for.

Bulk billing? You need the patient's signature

The consent rule half of GPs don’t know about

Bulk billing consent must be recorded in tapestry

“The legal consequences of failing to observe such requirements can be severe [for practitioners],” the ANAO wrote.

“Where a provider does not provide a copy of the signed agreement in approved form to the patient, there is no legal basis for Services Australia to pay the benefit to the provider.

“Additionally, providers can be criminally liable for failing to complete the agreement form properly.”

It led to a recommendation that DOHAC develop better procedures for structured and documented risk assessments whenever there’s a change to the MBS, which the department accepted.

Failure to have a signature from the patient acknowledging their consent to being bulk billed makes an entire claim non-compliant, meaning Medicare can theoretically demand repayment.

If it considers the non-compliant claims to be fraudulent in nature, there’s every chance that Medicare will also refer that doctor to the Commonwealth Director of Public Prosecutions.

DoHAC has reportedly assured the RACGP that no retrospective compliance will be carried out on this front.

Generally, however, doctors are advised to keep a copy of all correspondence, claims and forms for at least two years for auditing purposes.

College president Dr Nicole Higgins said she would raise the issue with DoHAC and Health Minister Mark Butler on behalf of members.

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Assignment of Benefits

An agreement by a doctor, provider, or supplier to be paid directly by Medicare, to accept the payment amount Medicare approves for the service, and not to bill the beneficiary for any more than the Medicare deductible and coinsurance.

• Assignment is a term used to describe the agreement between a healthcare provider and Medicare to accept the Assignment is a term used to describe the agreement between a healthcare provider and Medicare to accept the.
• If a beneficiary is enrolled in Medicare , and they visit a provider who accepts assignment, they may be responsible for paying a copayment or coinsurance for certain services. These out-of-pocket costs are typically a small percentage of the overall cost of the service and are required to be paid at the time the service is provided.
• It is important to note that not all providers accept assignments. Some providers may choose to bill Medicare directly for the services they provide but may also bill the beneficiary for any amount not covered by Medicare. This is known as nonassigned billing, and it is important to be aware the beneficiary may be responsible for paying a larger out-of-pocket cost if they visit a provider who does not accept assignment.
• If a beneficiary is considering receiving medical care from a provider who does not accept assignment,it is recommended they discuss the costs of the services with the provider and confirm whether they will be responsible for paying any additional out-of-pocket costs.

Understanding AOB is essential for Medicare beneficiaries to ensure they are not billed for healthcare services covered by Medicare beyond their financial responsibility. AOB helps simplify the billing process for beneficiaries and ensures they are not subject to unexpected out-of-pocket expenses for covered services.

Interested in learning more about how Assignment of Benefits works and its impact on Medicare coverage? Download our comprehensive E-book for valuable insights and guidance on navigating Medicare billing and coverage effectively.

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Assignment of benefits

Assignment of benefits is a legal agreement where a patient authorizes their healthcare provider to receive direct payment from the insurance company for services rendered.

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What is Assignment of Benefits?

Assignment of benefits (AOB) is a crucial concept in the healthcare revenue cycle management (RCM) process. It refers to the legal transfer of the patient's rights to receive insurance benefits directly to the healthcare provider. In simpler terms, it allows healthcare providers to receive payment directly from the insurance company, rather than the patient being responsible for paying the provider and then seeking reimbursement from their insurance company.

Understanding Assignment of Benefits

When a patient seeks medical services, they typically have health insurance coverage that helps them pay for the cost of their healthcare. In most cases, the patient is responsible for paying a portion of the bill, known as the copayment or deductible, while the insurance company covers the remaining amount. However, in situations where the patient has assigned their benefits to the healthcare provider, the provider can directly bill the insurance company for the services rendered.

The assignment of benefits is a legal agreement between the patient and the healthcare provider. By signing this agreement, the patient authorizes the healthcare provider to receive payment directly from the insurance company on their behalf. This ensures that the provider receives timely payment for the services provided, reducing the financial burden on the patient.

Difference between Assignment of Benefits and Power of Attorney

While the assignment of benefits may seem similar to a power of attorney (POA) in some respects, they are distinct legal concepts. A power of attorney grants someone the authority to make decisions and act on behalf of another person, including financial matters. On the other hand, an assignment of benefits only transfers the right to receive insurance benefits directly to the healthcare provider.

In healthcare, a power of attorney is typically used in situations where a patient is unable to make decisions about their medical care. It allows a designated individual, known as the healthcare proxy, to make decisions on behalf of the patient. In contrast, an assignment of benefits is used to streamline the payment process between the healthcare provider and the insurance company.

Examples of Assignment of Benefits

To better understand how assignment of benefits works, let's consider a few examples:

Sarah visits her primary care physician for a routine check-up. She has health insurance coverage through her employer. Before the appointment, Sarah signs an assignment of benefits form, authorizing her physician to receive payment directly from her insurance company. After the visit, the physician submits the claim to the insurance company, and they reimburse the physician directly for the covered services.

John undergoes a surgical procedure at a hospital. He has health insurance coverage through a private insurer. Prior to the surgery, John signs an assignment of benefits form, allowing the hospital to receive payment directly from his insurance company. The hospital submits the claim to the insurance company, and they reimburse the hospital for the covered services. John is responsible for paying any copayments or deductibles directly to the hospital.

Mary visits a specialist for a specific medical condition. She has health insurance coverage through a government program. Mary signs an assignment of benefits form, granting the specialist the right to receive payment directly from the government program. The specialist submits the claim to the program, and they reimburse the specialist for the covered services. Mary is responsible for any applicable copayments or deductibles.

In each of these examples, the assignment of benefits allows the healthcare provider to receive payment directly from the insurance company, simplifying the billing and reimbursement process for both the provider and the patient.

Assignment of benefits is a fundamental concept in healthcare revenue cycle management. It enables healthcare providers to receive payment directly from the insurance company, reducing the financial burden on patients and streamlining the billing process. By understanding the assignment of benefits, patients can make informed decisions about their healthcare and ensure that their providers receive timely payment for the services rendered.

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Related terms, national correct coding initiative (ncci).

National Correct Coding Initiative (NCCI) is a Medicare program that promotes correct coding methodologies to prevent improper payment for healthcare services.

Scrubber is a software tool used in healthcare revenue cycle management (RCM) that automatically detects and corrects errors in medical claims before submission.

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Assignment of Benefits: What You Need to Know

• August 17, 2022
• Steven Schwartzapfel

Insurance can be useful, but dealing with the back-and-forth between insurance companies and contractors, medical specialists, and others can be a time-consuming and ultimately unpleasant experience. You want your medical bills to be paid without having to act as a middleman between your healthcare provider and your insurer.

However, there’s a way you can streamline this process. With an assignment of benefits, you can designate your healthcare provider or any other insurance payout recipient as the go-to party for insurance claims. While this can be convenient, there are certain risks to keep in mind as well.

Below, we’ll explore what an assignment of insurance benefits is (as well as other forms of remediation), how it works, and when you should employ it. For more information, or to learn whether you may have a claim against an insurer, contact Schwartzapfel Lawyers now at 1-516-342-2200 .

What Is an Assignment of Benefits?

An assignment of benefits (AOB) is a legal process through which an insured individual or party signs paperwork that designates another party like a contractor, company, or healthcare provider as their insurance claimant .

Suppose you’re injured in a car accident and need to file a claim with your health insurance company for medical bills and related costs. However, you also need plenty of time to recover. The thought of constantly negotiating between your insurance company, your healthcare provider, and anyone else seems draining and unwelcome.

With an assignment of benefits, you can designate your healthcare provider as your insurance claimant. Then, your healthcare provider can request insurance payouts from your healthcare insurance provider directly.

Through this system, the health insurance provider directly pays your physician or hospital rather than paying you. This means you don’t have to pay your healthcare provider. It’s a streamlined, straightforward way to make sure insurance money gets where it needs to go. It also saves you time and prevents you from having to think about insurance payments unless absolutely necessary.

What Does an Assignment of Benefits Mean?

An AOB means that you designate another party as your insurance claimant. In the above example, that’s your healthcare provider, which could be a physician, hospital, or other organization.

With the assignment of insurance coverage, that healthcare provider can then make a claim for insurance payments directly to your insurance company. The insurance company then pays your healthcare provider directly, and you’re removed as the middleman.

As a bonus, this system sometimes cuts down on your overall costs by eliminating certain service fees. Since there’s only one transaction — the transaction between your healthcare provider and your health insurer — there’s only one set of service fees to contend with. You don’t have to deal with two sets of service fees from first receiving money from your insurance provider, then sending that money to your healthcare provider.

Ultimately, the point of an assignment of benefits is to make things easier for you, your insurer, and anyone else involved in the process.

What Types of Insurance Qualify for an Assignment of Benefits?

Most types of commonly held insurance can work with an assignment of benefits. These insurance types include car insurance, healthcare insurance, homeowners insurance, property insurance, and more.

Note that not all insurance companies allow you to use an assignment of benefits. For an assignment of benefits to work, the potential insurance claimant and the insurance company in question must each sign the paperwork and agree to the arrangement. This prevents fraud (to some extent) and ensures that every party goes into the arrangement with clear expectations.

If your insurance company does not accept assignments of benefits, you’ll have to take care of insurance payments the traditional way. There are many reasons why an insurance company may not accept an assignment of benefits.

To speak with a Schwartzapfel Lawyers expert about this directly, call 1-516-342-2200 for a free consultation today. It will be our privilege to assist you with all your legal questions, needs, and recovery efforts.

Who Uses Assignments of Benefits?

Many providers, services, and contractors use assignments of benefits. It’s often in their interests to accept an assignment of benefits since they can get paid for their work more quickly and make critical decisions without having to consult the insurance policyholder first.

Imagine a circumstance in which a homeowner wants a contractor to add a new room to their property. The contractor knows that the scale of the project could increase or shrink depending on the specifics of the job, the weather, and other factors.

If the homeowner uses an assignment of benefits to give the contractor rights to make insurance claims for the project, that contractor can then:

• Bill the insurer directly for their work. This is beneficial since it ensures that the contractor’s employees get paid promptly and they can purchase the supplies they need.
• Make important decisions to ensure that the project completes on time. For example, a contract can authorize another insurance claim for extra supplies without consulting with the homeowner beforehand, saving time and potentially money in the process.

Practically any company or organization that receives payments from insurance companies may choose to take advantage of an assignment of benefits with you. Example companies and providers include:

• Ambulance services
• Drug and biological companies
• Lab diagnostic services
• Hospitals and medical centers like clinics
• Certified medical professionals such as nurse anesthetists, nurse midwives, clinical psychologists, and others
• Ambulatory surgical center services
• Permanent repair and improvement contractors like carpenters, plumbers, roofers, restoration companies, and others
• Auto repair shops and mechanic organizations

Advantages of Using an Assignment of Benefits

An assignment of benefits can be an advantageous contract to employ, especially if you believe that you’ll need to pay a contractor, healthcare provider, and/or other organization via insurance payouts regularly for the near future.

These benefits include but are not limited to:

• Save time for yourself. Again, imagine a circumstance in which you are hospitalized and have to pay your healthcare provider through your health insurance payouts. If you use an assignment of benefits, you don’t have to make the payments personally or oversee the insurance payouts. Instead, you can focus on resting and recovering.
• Possibly save yourself money in the long run. As noted above, an assignment of benefits can help you circumvent some service fees by limiting the number of transactions or money transfers required to ensure everyone is paid on time.
• Increased peace of mind. Many people don’t like having to constantly think about insurance payouts, contacting their insurance company, or negotiating between insurers and contractors/providers. With an assignment of benefits, you can let your insurance company and a contractor or provider work things out between them, though this can lead to applications later down the road.

Because of these benefits, many recovering individuals, car accident victims, homeowners, and others utilize AOB agreements from time to time.

Risks of Using an Assignment of Benefits

Worth mentioning, too, is that an assignment of benefits does carry certain risks you should be aware of before presenting this contract to your insurance company or a contractor or provider. Remember, an assignment of benefits is a legally binding contract unless it is otherwise dissolved (which is technically possible).

The risks of using an assignment of benefits include:

• You give billing control to your healthcare provider, contractor, or another party. This allows them to bill your insurance company for charges that you might not find necessary. For example, a home improvement contractor might bill a homeowner’s insurance company for an unnecessary material or improvement. The homeowner only finds out after the fact and after all the money has been paid, resulting in a higher premium for their insurance policy or more fees than they expected.
• You allow a contractor or service provider to sue your insurance company if the insurer does not want to pay for a certain service or bill. This can happen if the insurance company and contractor or service provider disagree on one or another billable item. Then, you may be dragged into litigation or arbitration you did not agree to in the first place.
• You may lose track of what your insurance company pays for various services . As such, you could be surprised if your health insurance or other insurance premiums and deductibles increase suddenly.

Given these disadvantages, it’s still wise to keep track of insurance payments even if you choose to use an assignment of benefits. For example, you might request that your insurance company keep you up to date on all billable items a contractor or service provider charges for the duration of your treatment or project.

For more on this and related topic, call Schwartzapfel Lawyers now at 1-516-342-2200 .

How To Make Sure an Assignment of Benefits Is Safe

Even though AOBs do carry potential disadvantages, there are ways to make sure that your chosen contract is safe and legally airtight. First, it’s generally a wise idea to contact knowledgeable legal representatives so they can look over your paperwork and ensure that any given assignment of benefits doesn’t contain any loopholes that could be exploited by a service provider or contractor.

The right lawyer can also make sure that an assignment of benefits is legally binding for your insurance provider. To make sure an assignment of benefits is safe, you should perform the following steps:

• Always check for reviews and references before hiring a contractor or service provider, especially if you plan to use an AOB ahead of time. For example, you should stay away if a contractor has a reputation for abusing insurance claims.
• Always get several estimates for work, repairs, or bills. Then, you can compare the estimated bills and see whether one contractor or service provider is likely to be honest about their charges.
• Get all estimates, payment schedules, and project schedules in writing so you can refer back to them later on.
• Don’t let a service provider or contractor pressure you into hiring them for any reason . If they seem overly excited about getting started, they could be trying to rush things along or get you to sign an AOB so that they can start issuing charges to your insurance company.
• Read your assignment of benefits contract fully. Make sure that there aren’t any legal loopholes that a contractor or service provider can take advantage of. An experienced lawyer can help you draft and sign a beneficial AOB contract.

Can You Sue a Party for Abusing an Assignment of Benefits?

Sometimes. If you believe your assignment of benefits is being abused by a contractor or service provider, you may be able to sue them for breaching your contract or even AOB fraud. However, successfully suing for insurance fraud of any kind is often difficult.

Also, you should remember that a contractor or service provider can sue your insurance company if the insurance carrier decides not to pay them. For example, if your insurer decides that a service provider is engaging in billing scams and no longer wishes to make payouts, this could put you in legal hot water.

If you’re not sure whether you have grounds for a lawsuit, contact Schwartzapfel Lawyers today at 1-516-342-2200 . At no charge, we’ll examine the details of your case and provide you with a consultation. Don’t wait. Call now!

Assignment of Benefits FAQs

Which states allow assignments of benefits.

Every state allows you to offer an assignment of benefits to a contractor and/or insurance company. That means, whether you live in New York, Florida, Arizona, California, or some other state, you can rest assured that AOBs are viable tools to streamline the insurance payout process.

Can You Revoke an Assignment of Benefits?

Yes. There may come a time when you need to revoke an assignment of benefits. This may be because you no longer want the provider or contractor to have control over your insurance claims, or because you want to switch providers/contractors.

To revoke an assignment of benefits agreement, you must notify the assignee (i.e., the new insurance claimant). A legally solid assignment of benefits contract should also include terms and rules for this decision. Once more, it’s usually a wise idea to have an experienced lawyer look over an assignment of benefits contract to make sure you don’t miss these by accident.

Contact Schwartzapfel Lawyers Today

An assignment of benefits is an invaluable tool when you need to streamline the insurance claims process. For example, you can designate your healthcare provider as your primary claimant with an assignment of benefits, allowing them to charge your insurance company directly for healthcare costs.

However, there are also risks associated with an assignment of benefits. If you believe a contractor or healthcare provider is charging your insurance company unfairly, you may need legal representatives. Schwartzapfel Lawyers can help.

As knowledgeable New York attorneys who are well-versed in New York insurance law, we’re ready to assist with any and all litigation needs. For a free case evaluation and consultation, contact Schwartzapfel Lawyers today at 1-516-342-2200 !

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What Is an Insurance Claim? | Experian

What is assignment of benefits, and how does it impact insurers? | Insurance Business Mag

Florida Insurance Ruling Sets Precedent for Assignment of Benefits | Law.com

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What Is Assignment Of Benefits In Medical Billing – AOB Complete Guide

The healthcare industry operates with a diverse network of payers and various reimbursement means. From government to private insurance companies, a healthcare practice is simultaneously engaged with multiple payer parties, each linked to a different patient with unique regulations and requirements. This reimbursement workflow and many other factors alone make this already hectic environment business a bit more chaotic if not dealt with properly. With the development and execution of several policies, every healthcare service strives to bring more efficiency and seamlessness to its operations, and the reimbursement system is not an exception in this regard. This is where the assignment of benefits in medical billing comes into play. 

What is Assignment of Benefits in Medical Billing?

An assignment of benefits in medical billing is a type of agreement between the healthcare provider, insurance company, and the patient through which a patient authorizes the medical service to collect healthcare policy coverage benefits on their behalf from their insurer for the service they have received from the facility. Once the patient signs this agreement, a direct payment link is made between the facility and the insurance company without communicating every time with the patient, which brings seamlessness and efficiency to the reimbursement process. 

Read More: Medical Billing vs Revenue Cycle Management – Key Differences Explained

Medical Services That Use the Assignment of Benefits

Various healthcare providers across different specialties and settings may use Assignment of Benefits (AOB) as part of their billing practices. Some examples of healthcare providers that commonly use AOB include:

• Physicians and Medical Practices
• Hospitals and Medical Centers
• Dentists and Dental Clinics
• Physical Therapy and Rehabilitation Centers
• Ambulatory Surgery Centers
• Imaging Centers

So how does this assignment of benefits in medical billing work? Let’s explore:

What is the Procedure for the Assignment of Benefits in Medical Billing ? – the Methodology

Patient visit.

In the first step, the patient receives medical service from a healthcare facility like a hospital, clinic, etc.

AOB Agreement 

Once the services are rendered, the healthcare facility presents an AOB agreement to the patient to transfer their healthcare insurance coverage benefits to the facility directly. The patient is advised to thoroughly review the form before signing for consent as they are establishing a direct form of communication and payment action by authorizing the medical service to collect monetary benefits on their behalf.

Claim Submission

In this stage, the healthcare service document and code all the service encounters with the patient into medical bills and claim, comprising all the details and treatment procedures that are associated with curing the patient. These claims are then sent to the insurance company. 

Claim Reviewing

After claim submission, the insurance company meticulously evaluates it on the criteria of its unique requirements, standard policies, and regulations. They also analyze the accuracy of the claim and assess the coverage limit against the payment listed in the claim. If the claim is found to be inaccurate or ineligible for coverage by the insurance company, it reverts back to the facility for denial management. 

In the case the claim is approved, the insurance company makes payment directly to the medical service given the AOB policy. This reimbursed amount may cover the full or half of the patient’s medical bills, based on the coverage plan.

Patient Responsibility

Once the insurer pays the billed amount to the medical service, any remaining payment responsibilities come on the shoulder of the patient, like deductibles, co-pays, or services not covered by insurance. The patient may receive an explanation of benefits (EOB) from the insurance company, outlining the details of the claim and any patient responsibility.

Read More: Why Outsourcing Ophthalmology Medical Billing is the Smart

What are the Complications in the Assignment of Benefits in Medical Billing? – the Hindrances

Assignment of benefits does not work well necessarily for all patient encounters. There are some instances where it fails to be applicable or may get denied. So what are those cases? Let’s explore:

Out-of-Network Providers

An insurance policy can deny the assignment of benefits claim if the service acquired by the patient is out of its network of carriers. In this case, the healthcare facility can’t establish any type of reimbursement connection with the insurance policy and must obtain the payments directly from the patient. The patient can then cover their expenditure from their insurance policy. 

Non-Covered Services

It is not necessary that a health insurance policy cover all types of patient medical encounters. Every policy has its own limitations and offers reimbursements for medical services according to its regulations. So if a patient seeks a medical facility that is not covered by their healthcare policy, no AOB agreement will be applicable here. In this scenario, a patient is required to pay all the charges from their own pocket. 

Preauthorization Requirements

Insurance policies require preauthorization for certain medical treatments, procedures, or medications, and if a patient fails to obtain this preauthorization, the insurance company rejects the assignment of benefits claim, leaving the patient to pay the bills out of their pocket.

Claims Rejection

Even with an AOB in place, insurance companies may reject or deny claims for various reasons, such as incomplete documentation, coding errors, or policy exclusions. In such cases, the provider and the patient may need to work together to resolve the issue and resubmit the claim.

If an AOB gets accepted, it will only cover the services eligible for insurance coverage. Patients are still responsible for any deductibles, co-pays, or non-covered services as per their insurance policy. If the patient fails to pay their portion, it can lead to complications in the billing process.

Billing Disputes

Moreover, billing disputes between healthcare providers and insurance companies are another reason for AOB complications. Occasionally, disputes may arise between the healthcare provider and the insurance company regarding reimbursement rates or claim processing. These disputes can delay or hinder the AOB process, requiring additional efforts to resolve the billing issues. Read More: What Is Down Coding In Medical Billing? – The Complete Guide

Assignment of benefits is an excellent way to increase the efficiency of the reimbursement process in the medical industry. However, for a patient, it is important to thoroughly and meticulously review all the terms and complications associated with the agreement of AOB as it transfers their monetary rights directly to the healthcare service. 

Concerning healthcare services, they must ensure a well-communicated, clear, and detailed preparation of this agreement to help patients better understand all the things related to their financial obligations and insurance benefits transfer. Further, the medical facilities should also bring more accuracy and compliance with standards to their billing and overall financial landscape to make the whole process conducive to the acceptance of AOB, effectively navigating the complex web of reimbursements.

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Consumer Insight

Sept. 13, 2023

Assignment of Benefits: Consumer Beware

You've just survived a severe storm, or a tornado and you've experienced some extensive damage to your home that requires repairs, including the roof. Your contractor is now asking for your permission to speak with your insurance company using an Assignment of Benefits. Before you sign, read the fine print. Otherwise, you may inadvertently sign over your benefits and any extra money you’re owed as part of your claim settlement.

The National Association of Insurance Commissioners (NAIC) offers information to help you better understand insurance, your risk and what to do in the event you need repairs after significant storm damage.

Be cautious about signing an Assignment of Benefits. An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company.  An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal directly with your insurance company when negotiating repairs and issuing payment directly to the repair company. However, an AOB is a legal contract, so you need to understand what rights you are signing away and you need to be sure the repair company is trustworthy.

• With an Assignment of Benefits, the third party, like a roofing company or plumber, files your claim, makes the repair decision and collects insurance payments without your involvement.
• Once you have signed an AOB, the insurer only communicates with the third party and the other party can sue your insurer and you can lose your right to mediation.
• It's possible the third party may demand a higher claim payment than the insurer offers and then sue the insurer when it denies your claim.
• You are not required to sign an AOB to have repairs completed. You can file a claim directly with your insurance company, which allows you to maintain control of the rights and benefits provided by your policy in resolving the claim.

Be on alert for fraud. Home repair fraud is common after a natural disaster. Contractors often come into disaster-struck regions looking to make quick money by taking advantage of victims.

• It is a good idea to do business with local or trusted companies. Ask friends and family for references.
•  Your insurer may also have recommendations or a list of preferred contractors.
• Always get more than one bid on work projects. Your adjuster may want to review estimates before you make repairs.

Immediately after the disaster, have an accurate account of the damage for your insurance company when you file a claim.

• Before removing any debris or belongings, document all losses.
• Take photos or video and make a list of the damages and lost items.
• Save damaged items if possible so your insurer can inspect them, some insurance companies may have this as a requirement in their policy.

Most insurance companies have a time requirement for reporting a claim, so contact your agent or company as soon as possible. Your  state insurance department  can help you find contact information for your insurance company, if you cannot find it.

• Insurance company officials can help you determine what damages are covered, start your claim and even issue a check to start the recovery process.
• When reporting losses, you will need insurance information, current contact information and a  home inventory or list of damaged and lost property . If you do not have a list, the adjuster will give you some time to make one. Ask the adjuster how much time you have to submit this inventory list. The NAIC Post Disaster Claims Guide has details on what you can do if you do not have a home inventory list.

After you report damage to your insurance company, they will send a claims adjuster to assess the damage at no cost to you . An adjuster from your insurance company will walk through and around your home to inspect damaged items and temporary repairs you may have made.

• A public adjuster is different from an adjuster from your insurance company and has no ties to the insurance company.
• They estimate the damage to your home and property, review your insurance coverage, and negotiate a settlement of the insurance claim for you.
• Many states require public adjusters to be licensed. Some states prohibit public adjusters from negotiating insurance claims for you. In those states, only a licensed attorney can represent you.
• You have to pay a public adjuster.
• The NAIC Post Disaster Claims Guide has information on the different types of adjusters.

Once the adjuster has completed an assessment, they will provide documentation of the loss to your insurer to determine your claims settlement. When it comes to getting paid, you may receive more than one check. If the damage is severe or you are displaced from your home, the first check may be an emergency advance. Other payments may be for the contents of your home, other personal property, and structural damages. Please note that if there is a mortgage on your home, the payment for structural damage may be payable to you and your mortgage lender. Lenders may put that money into an escrow account and pay for repairs as the work is completed.

More information. States have rules governing how insurance companies handle claims. If you think that your insurer is not responding in a timely manner or completing a reasonable investigation of your claim, contact your  state insurance department .

About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.

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What is an assignment of benefits.

The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.

This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .

An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.

Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.

Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.

How an AOB works

The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.

Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says "assignment of benefits" across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?

According to Dr. David Berg of Redirect Health, the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”

With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.

“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.”

Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:

You and your contractor draw up an AOB clause as part of the contract.

The contract stipulates the exact work that will be completed and all necessary details.

The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.

The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.

After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.

Example of an assignment of benefits

If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”

In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.

When would you need to use an assignment of benefits?

An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.

An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.

Assignment of benefits for health insurance

As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other.

Assignment of benefits for car owners

If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.

Assignment of benefits for homeowners

When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.

When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.

The fraud factor

No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.

In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.

State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.

The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:

File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.

Don’t pay in full upfront. Legitimate contractors do not require it.

Get three estimates before selecting a contractor.

Get a full written contract and read it carefully before signing.

Don’t be pressured into signing an AOB. You are not required to sign an AOB.

Pros and cons of an assignment of benefits

The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.

Pros of assignment of benefits

With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.

An AOB frees you from paying for services and waiting for reimbursement from your insurer.

Some people appreciate not needing to negotiate with their insurer.

You are not required to sign an AOB.

Cons of assignment of benefits

As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.

Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay.

An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south.

Any AOB you do sign is legally binding.

The takeaway

An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.

It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.

This story was originally featured on Fortune.com

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Medicare and Digital Signing of DB4 Benefit Assignment Forms

The executive summary is that GP2U now offers Australia's only Medicare approved digital signing of DB4 form process. With a couple of mouse clicks a patient can now legally assign their Medicare benefits to a remotely located specialist. The background to this ground breaking eHealth development is presented below.

What section 20A says is that a patient can assign their Medicare benefit to their treating doctor by signing the approved form, where the approved form is the form approved in writing by the minister. The approved form is called a DB4 form .

With the advent of Telehealth a problem arises. How does a Specialist obtain the signature of a patient who is not in the same physical location? The initial Medicare advice to doctors was that a patient's verbal consent over a video conference link would be accepted as satisfactory for the purposes of Section 20A and the assignment of patient Medicare benefits. Earlier this year that advice was revoked and replaced with advice that doctors could either get a physical signature using paper DB4 forms and regular mail, or use an email process.

At GP2U our core focus is on making Telehealth easy. Sending physical DB4 forms by ordinary mail, or using a complicated email process, that, like verbal assignment of benefits process that preceded it appears non compliant with the requirements of section 20A, seemed to be making Telehealth harder - so we started thinking.....

The Electronic Transactions Act (1999) sets out the requirements for a digital signature. The GP2U process for a digital signature follows the industry standard MD5/RSA algorithm as specified by the World Wide Web Consortium (W3C). W3C is the peak organisation largely responsible for Internet standards. The detailed W3C technical specification for a digital signature is found here .

" In relation to the digitally signed DB4 it appears, based on the information you have provided, that your model would meet the requirements of the Health Insurance Act 1975 (the HIA) for the assignment of Medicare benefits"

You can read the full text of the Medicare approval letter here .