19 March 2010

More insurance company hijinks

We use a little company called Assurant to administer the employee health insurance plan for our business.  We have about 50 employees, not all of whom are on our insurance (some get theirs through a spouse), so we are in a particularly undesirable segment of the small-business market.  Ironically, we have had a fair amount of difficulty in getting coverage which was affordable and sustainable. A lot of insurers wouldn't even bid on us.

Funny, right?  The doctors can't get health care insurance!  Hysterical!

So we wound up with an unusual sort of self-funded plan administered by Assurant, which was working OK.  Recently, however, a couple of our doctors wound up taking family members to the ER for various reasons -- nothing serious, but common and reasonable presentations for an ER.  And Assurant denied payment for the claims.  They didn't deny it outright, actually, just imposed a $500 "penalty for non-emergent use of the Emergency Room" on top of the usual co-pays and deductibles.

I was appalled at what I thought was a blatant violation of our state's "prudent layperson" statute -- that any prudent layperson who thinks that they have a medical emergency and must have their ER visit covered by their insurance.  There's legislation to that effect in all 50 states, I believe, and it was due to notorious bad behavior by insurers in the '90s, when they tried to control costs by routinely rejecting ER claims retrospectively, claiming they were not truly emergent.  This was a political fight that ER docs had won and since then have paid very little attention to.

Turns out there's a huge loophole. 

Our insurance plan -- like 60% of the private insurance market -- is organized under the federal ERISA statute.  ERISA is horrifically complicated, but the upshot is that there is no prudent layperson clause in it, and the federal statute pre-empts state laws in these respects.  So they can legally deny payment for ER claims, so long as the contract with the employer allows it.  I happened to chat with our state's Insurance Commissioner on another topic, and they said that they did not see many complaints on this matter, since most insurance plans gave up on this tactic due to the inevitable bad PR and small cost savings from these tactics.

I followed up with Assurant -- they pointed out that this sort of review was clearly allowed in the contract we signed with them to provide coverage for our employees, and they were right.  It's a big, complex agreement, and that clause had slipped by us.  The reps explained (to excuse themselves) that it was a computer thing, and that something about the coding had triggered the rejections.  They went on with a line of BS, though, trying to claim that they were just trying to steer consumers away from the ER and towards more appropriate avenues of care.  I was pretty pissed, though, since the way they were implementing this clause was obviously beyond the pale of what was acceptable.  Our employees -- Board-certified ER docs -- had gone to the ER for common and highly appropriate conditions (think common respiratory and GI issues).  Clearly, their claims management software automatically kicks out a few claims based on some factors known only to them -- most likely the ICD-9 code -- and they hope that the insured just eats the fee.  They certainly made the appeals process complicated, until I called our reps to complain, at which point the penalties were magically dropped.

This is emblematic of the problems with the insurance industry.  This was no mistake (as some commenters charitably ascribe insurance malfeasance to "errors"), these were automated rejections which are quite routine in the insurance industry -- you deny a certain fraction of claims on whatever impenetrable pretext you like, some of those you have to backtrack on and allow, but some never get appealed by beaten-down consumers and hey-presto - Profits!  It's simple rational behavior of a business which is in the business of making money.  Nothing mysterious about it.

Needless to say, we will be addressing this at our next renewal, either through a modification in the contract or re-opening the bidding process (sigh).  The Assurant guys know this, and to the degree that they don't want to lose our business as a customer, I suspect that they will be willing to work with us.  But it shouldn't have to be this way, that the insurers can pull every trick they can think of to deny care (or payment for care already rendered) and only have to back down when the employer goes to bat.  Some of this will change under the HCR bill, but not too terribly much, sorry to say.


  1. This is not a surprise.

    While in treatment for metastatic breast cancer, my mom was on a business trip to Phoenix, where her consulting oncologists practice at Mayo. The short version is, she woke up with an eyelid that would not open, and was convinced it was just "allergies". Oh, the powers of denial. The internist's nurse convinced her to go to the ED, fearing, as I did, that she was having a major neurological complication (new onset facial paralysis in a 60+ yo woman with a hx of metastatic ca, htn and recent air travel).

    She (grudgingly) went to the ED and was evaluated and had various imaging studies, along with neurology and oncology consults. They found a bone met in her left orbit that was irritating some other structures, and was discharged to outpatient oncology for radiation, which she completed while she was in Phoenix (such service!).

    So, a reasonable person with a serious symptom (can't open eye!) was convinced by medical professionals to proceed to the ED, where she was found to have a very real problem, and was subsequently treated for that problem at the same institution (which is on-contract with Ass****). They covered every penny of the contracted amount, except for that mysterious $500 penalty. Because it was coded as breast cancer, and Ass***** "customer service" told me that it wasn't an appropriate use of the ED.

    Calling them pond scum would be demeaning to biofilms.

  2. Shadow, honey...

    All plans you guys could hope to pay for will have you in the same boat. Time to wallow in the fate of the masses.

    Be sure to call insurance customer service prior to hopping in the car, to get yet another special authorization to go anywhere. ER care, to insurance companies, means imminently life threatening only. All else can wait for a regular primary care office visit or possibly urgent care. Each and every time you make a non-urgent/urgent visit appointment you must check once again if your provider is in network.(keep a list with billing license numbers of all providers). You will find that often the insurance website/customer service will still not confirm network status. If you need surgery, be very sure you know your anesthesia network providers, because you know they don't always play the same game as the facility... oops there's your anesthesia claim.

    Hint, you will always have to check your claims as often they will apply your insurance incorrectly.

    Finally, nobody cares to seriously "negotiate" to keep your insurance business.


  3. Out of network3/19/2010 8:07 PM

    -SCRN's comment reminds me of an experience I had with out-of-network anesthesiology (out-of-sight,out-of-mind, out-of network).

    In 2000, I had a lap chole with umbilical hernia repair under general anesthesia. I made sure the surgeon and hospital were in-network and the surgeon got approval for the surgery from Blue Cross, my ins. co., but I never even thought about the anesthesiologist. Turns out he was out-of-network, which I discovered when I received his bill.

  4. bastards. since this health care 'crisis' started, i have just ignored it because Dear Leader didn't go after the insurance companies. i get asked about it a lot, since i work in health care, and all i've ever said is wake me up when Dear Leader or Congress goes after the insurance companies. if the govmint can take over the financial industry, why can't they take over and run health care?

  5. insurance companies don't like to take on small companies that work in the health care field. just by virtue of working in health care, utilization of health care resources is higher, which of course, makes it a losing proposition for them.

  6. ...Co-op?

    Dunno how rare/feasible/practical/applicable/legal this is for you.

    My husband's company is small - they've doubled this past year to a whopping 40-50 employees, IIRC.

    Rather than fight tooth and nail for the privilege to even have some of the same problems you've described, they joined a health insurance co-op: a group of other small businesses who got together to get the necessary numbers for a large group policy.

    Which, by the way, is totally awesome. You know, as far as health insurance goes.

    This is in NC, btw.


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