When Doctors Can’t Get Health Insurance
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.
*This blog post was originally published at Movin' Meat*
You’ve said your group is about 50 employees(and/or dependents), and that in your plan’s case ERISA pre-empts your state’s statutes regarding mandatory benefits.
Those facts raise a flag for me.
Groups of your size are almost always fully insured. In that instance, your state’s laws are going to determine what must be covered by your plan.
ERISA would be controlling in the event your little group is self- funding – that is, paying your own bills and buying only stop-loss insurance against the possibility of miscalculating your costs during the contract term.