Subrogation is a legal right that lets an insurance company seek to recover costs from any third party who is responsible for the damages. The term subrogation literally means one party is standing in the place of another party.
In healthcare insurance, subrogation involves recouping healthcare costs that are deemed the fault of an insured party other than the claimant. The insurance carrier accepts the financial burden of the claimant from an accident or injury and seeks repayment from the at-fault party. For example, subrogation is practiced in cases involving workers’ compensation or personal injury resulting from doctor malpractice or the actions of others. The insurance company will pay the claimant as part of their policy, and then take legal action against the at-fault party to collect damages. The claimant may also have deductibles and copays reimbursed.
As healthcare costs rise steeply in the United States, health coverage companies are increasingly focused on eliminating costs for which they are not responsible. As a result, insurance companies sometimes contact customers with health conditions that may stem from the actions of other insured people. This contact is often in the form of a letter with a questionnaire designed to collect information that will help determine if the incident is an appropriate case for subrogation. The form may also request additional information required to complete the process.
Most cases involving questionable liability are investigated through insurance claims analysis. Large health coverage providers like Blue Cross Blue Shield often use third party companies to investigate subrogation. Equian, for example, is a medical expense management company which performs much of the investigation of subrogation cases for its 390 clients, with over 240 billion cases translating to $1.6 billion in annual savings for insurers.