Who Says Health Insurers Don’t Practice Medicine?

Posted on December 2, 2008
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When fighting a health insurer over a denial of benefits, it’s very tempting to complain that they’re practicing medicine by attempting to overrule doctors. Sadly, such behavior is interpreted by the folks in power as simple “management of benefits” or “determination of coverage”. However, as it’s described in this Sun-Sentinel article, doesn’t it seem like health insurers are coming pretty darned close to practicing medicine (and therefore should be exposed to medical malpractice claims)?:

A half-dozen insurers recently sent letters to tens of thousands of South Florida patients taking brand names, saying coverage will halt or co-payments will increase Jan. 1. The companies suggest people ask their doctors about changing to cheaper drugs to save up to 80 percent.

But some doctors and pharmacists say switching drugs to save money — in some cases several times a year — could expose patients to health complications and drugs that don’t work well for them.

“It’s not a matter of getting you, the patient, the best medication. It’s a matter of [insurers'] not having to pay as much for it,” said Miami neurologist Bruce S. Rubin, who heads a Florida group opposing such substitutions. “I choose one drug that I think will be best, and I don’t want [an insurer] second-guessing me.”

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Someone Else Learns About ERISA the Hard Way

Posted on July 8, 2008
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Seen on the AP wire:

But Spherion Corp., the temporary staffing company where Amschwand worked, told Amschwand-Bellinger she would not receive any of the $426,000 in benefits she believed she was due. When she went to court, Spherion succeeded in getting her lawsuit thrown out. The Supreme Court on June 27 refused to review the case.

Amschwand-Bellinger received a refund of the few thousand dollars in insurance premiums she and her husband dutifully had paid. The total, she said, would not cover the costs of his funeral.

The story has played out often under the federal Employee Retirement Income Security Act. Designed to protect employee benefits, the law has been used by employers as a shield against suits.

Federal appeals courts, interpreting Supreme Court decisions dating to 1993, consistently have said companies that offer health, life and retirement benefits under ERISA cannot be sued for large amounts of money, or damages. Instead, they can be sued only for typically smaller sums such as Amschwand’s insurance premiums.

Several federal judges have bemoaned the unfairness even as they have felt constrained to rule in favor of employers.

"The facts … scream out for a remedy beyond the simple return of premiums," Judge Fortunato Benavides of the New Orleans-based 5th U.S. Circuit Court of Appeals said in the Amschwand case. "Regrettably, under existing law it is not available."

I started this blog as a result of a gripe I have with the health plan I have at work.  My employer’s been great through my family’s difficulties, but the runaround we’ve received from Aetna, acting as a TPA, has sucked.

They can get away with it, thanks to their ability to hide behind ERISA – they have no reason to behave.

The story quoted above provides a different example the problem with ERISA – an employer is able to hide behind the protections in the law; there is no incentive to treat employees fairly.

It’s a shame that folks don’t learn about the problems with ERISA usually until it’s too late.  It’s such a nasty side of the employee benefits world which never has the purifying light of public sunshine directed its way.

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ERISA Reform Discussion Missing the Point

Posted on June 4, 2008
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When you talk to a politician about ERISA reform, they’re most likely to think about the movement to defang federal preemption and permit states to impose mandatory benefits requirements.   Consider, for example, this op-ed at Risk & Insurance:

A short-lived law in Maryland, for example, would have required employers with 10,000 or more employees to spend at least 8 percent of payroll for their health plans. Firms spending less would have had to make up the difference by paying into a state fund. Vigorously opposed by employers in the retail industry, the law was struck down by a federal appeals court last year. The court ruled the state law was preempted by ERISA.[...]

As courts block some state initiatives that violate ERISA, some policymakers have responded by launching campaigns to water down ERISA preemption language. Rep. Robert Andrews, D-N.J., chair of the Health, Education, Labor and Pensions subcommittee of the House Education and Labor Committee, was quoted in hearings and interviews classifying ERISA as a “barrier” to state reforms.

Some legislators are studying an exception (or waivers) to ERISA preemption for individual states. Others would totally eliminate ERISA protection for self-insured plans.

I’m encouraged that some politicians are taking another look at ERISA…but I wish that the powers-that-be would take a look at some of the other problems with ERISA — the lack of incentive for plan administrators to act in good faith, for example.

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Child With Cancer Successfully Wins Challenge Against Experimental Exclusion

Posted on May 30, 2008
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A decent portion of my and my wife’s ongoing war with Aetna has to do with their attempts to deny my wife’s claim on the grounds that her treatment is “experimental and investigatory” and doesn’t show sufficient promise to meet the exception to that clause.

So, this article at Business Insurance warms my heart just a little.  It’s nice to see any insurer’s over-use of that exclusion overturned.

A health insurer wrongfully denied coverage for a specialized chemotherapy treatment for a child with cancer, according to the Wisconsin Supreme Court. [...]

The Supreme Court ruled the insurer’s termination of benefits decision was made despite an external review agency’s finding that the requested treatment met the standard of care and was medically necessary and its recommendation that the treatment be approved. The insurer also did not provide a sufficient and adequate explanation for the termination of benefits.

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Aetna CEO Makes $18 Million While My Wife’s Claim Remains Unpaid

Posted on April 22, 2008
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It occurs to me that I really need to make key friends. For example, if I had Ronald Williams as a friend, maybe getting my wife’s claim resolved wouldn’t be such a bother. After all, it probably looks like chump change to him:

— Ronald Williams, chief executive of Aetna Inc., received compensation last year valued by the insurance company at nearly $18.2 million, according to a proxy statement filed Monday.[...]

He also received other compensation of $104,162, including perks such as $77,098 for personal use of company aircraft and $10,314 to use company vehicles.

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Conspiracy Theory du Jour

Posted on April 15, 2008
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I noticed that this week’s episode of Frontline on PBS is supposed to look at health care systems around the world, presumably as a contribution to the ongoing universal health care buzz in the country.

I also noticed that this week, Connecticut Public Television is opting to air a rerun of an older episode, discussing the hazards of online bullying among children.

CPTV is, if I’m not mistaken, underwritten in part by certain Hartford-based insurers.

Hmmmmm….it could be coincidence, I suppose.

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Not Paying Claims Doesn’t Necessarily Mean Not Knowing What They Are

Posted on April 14, 2008
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Charlie Baker with Pilgrim Health Care has an interesting blog post responding to a health care op-ed that appeared in the New York Times on the subject of controlling health care costs.

Charlie writes:

Krugman states that, “They (health insurance companies) also deny as many claims as possible, forcing doctors and hospitals to spend large sums fighting to get paid.” For me, this statement of “fact” is right up there with the one about how 40% of health insurance premiums funds health plan administrative expenses and profits. Unfortunately, Krugman isn’t the only one who believes it. Many people would like to believe it, too. Too bad it isn’t supported by the evidence. In fact, I’d say just the opposite. I believe that health insurance plans that don’t pay claims accurately and on a timely basis fare worse financially than the ones that do, and Harvard Pilgrim is Exhibit A to support my argument.[...]

You see, plans build their prices for the next twelve months based on the claims they paid in the last twelve months. Since medical expenses make up 85-90% of total expenses, it’s critical to get this number right. If a plan is doing a bad job of paying claims properly, it underestimates what its prices need to look like going forward to cover its future costs. When it underprices its products, it loses money – not just now, but for the next year as well.

In short, a health plan that does a bad job of paying claims inevitably does a bad job of pricing its products, because the plan doesn’t know what its true costs are. This leads, inevitably, to financial losses. The landscape is littered with plans that hit the skids financially because they did a bad job paying claims – not the other way around.

There is a significant logical flaw in that statement.

Charlie assumes that if a claim is denied, then an insurer assumes that it’s done and no payment will ever be required. See no evil, speak no evil, hear no evil. And, while I can see some poorly-run insurance companies naïvely taking that stance, that isn’t necessarily the case.

I do work in the insurance industry. And, I know, first hand, that just because an insurer may decline to pay a claim, it doesn’t mean that records aren’t being kept, reserves aren’t being set aside for future payment, and that the claim isn’t being monitored for development. As long as the insurer is being realistic in how its claims will eventually develop out, denying claims as a means to try to reduce payouts is going to work.

Also, I can’t tell how much the original NYT op-ed was based on true health insurance, and how much of it was based on the system that I and many other Americans are covered under—employer self-insured programs with claims handled by a third-party administrator. (Aetna, in my case).

With employer-provided, self-funded programs, the TPA’s customer is the employer. The TPA bears little, if any, of the actual underwriting risk. They’re paid a fee for their administrative services, and the relationship will continue as long as the employer they’re serving is kept happy, and costs are contained as much as possible.

Thus, there is frequently no incentive for the TPA to not attempt to deny or limit payment whenever it think it might succeed…especially since federal law protects TPA’s from jury trials and punitive damages should the be sued for such shenanigans.

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Aetna Expands Definition of “Experimental” For Chiropractic Treatment

Posted on April 10, 2008
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This post at ChiroEco.com caught my eye:

A new Aetna Mid-Atlantic policy distributed by American Specialty Health Networks treats interferential current therapy (IFC) and the use of manual spinal adjusting instruments as experimental and investigational, and are therefore not covered, according to the American Chiropractic Association (ACA).

According to the ACA, attempts to contact Aetna in regard to these policy changes, which became effective March 1, have not been successful and no response has been received. The ACA states it would continue to work with Aetna to develop policies, but will also explore other options if its collaborative effort is not productive.

The reason that it caught my eye—well, my little war against Aetna got started because they had previously been paying for procedures such as the one my wife underwent last year…but which they started to decline as “experimental” at about the time of my wife’s surgery.

What do you expect from a company which observed in their most recent denial letter, “your claim was reviewed by a board-certified pediatrician”. (Since when have board-certified pediatricians been best qualified to review claims from middle-aged women suffering from chronic pain conditions?)

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Aetna Starting to Send Patients to Mexican Hospitals to Save Money

Posted on March 28, 2008
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Seen at Bloomberg:

Health insurers such as Health Net, Aetna Inc. and Blue Cross Blue Shield of South Carolina are offering cost savings to policy holders who take their ailing backs, hips and knees to foreign countries for non- emergency medical treatment. Mexico has emerged as a favored place for American medical tourists because of its proximity and U.S. insurer incentives.

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One Issue With Aetna’s “Advantage” With SmartSource

Posted on March 17, 2008
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You’ve likely heard a thing or two in the press about Aetna’s launch of SmartSource, Aetna’s response to Google’s and others’ attempts to create online patient-managed repositories of individual health records.

Silicon Alley Insider suggests that Aetna might have an advantage in this arena for one reason in particular:

But we think there’s some overlooked upside for Aetna here. According to this AP story, neither Microsoft nor Google is covered by the HIPAA, the federal law that protects the privacy of consumers’ medical records. The law creates standards of use for medical information and applies it to health plans, health care clearinghouses, and health care providers, among others.

That, of course, assumes that Aetna would actually heed HIPAA. My own claims nightmare might suggest that pesky legislation and regulation might only be heeded when there is a financial incentive to do so.

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