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|Newsletters: Is Your Insurance Company Charging You Fairly?|
Is Your Insurance Company Charging You Fairly?
Elizabeth Tucker, HPN Consumer
During the thirty-one years I have had Crohn’s disease and the almost ten years I have been on HPN, I have had the opportunity to use and interact with the insurance industry many, many times. I have always felt that it was my responsibility to make sure the bills were accurate and that the charges which were being paid were legitimate. Because of my close monitoring, I discovered a practice by the insurance company that I felt was unfair and needed to be changed. The rather amazing thing is that I was able to do something about it. But, let me start at the beginning.
When my insurance coverage under COBRA ended, I was transferred to the high risk pool in Minnesota called MCHA (Minnesota Comprehensive Health Association). The administrator of that plan was and is Blue Cross Blue Shield of Minnesota (BCBSM).
My new policy with MCHA went into effect December 1, 1992. As luck would have it, I had to have major abdominal surgery that month for several obstructions plus a hysterectomy. Because of that surgery and an infection in the incision during January, I had numerous bills and EOB’s (Explanation of Benefits) in my mail. It was July before I finally got any EOB’s for my HPN. When I looked at them I was flabbergasted! Where my monthly bills had been approximately $2,500 to $3,500 per month, they were now anywhere from $6,000 to over $10,000 per month! I hadn’t changed homecare companies nor had my prescription for my formula been changed. To say it didn’t make any sense would be an understatement.
Over the next six months I asked many questions at the homecare company and the insurance company, but never got an explanation that felt satisfactory. During that same time I was speaking to other medical professionals that I knew about the same thing. It seemed to make people uncomfortable, but eventually I pieced together enough information to make me think I hadn’t asked my questions in the right way.
In the first part of January, 1994, I called the reimbursement clerk at my homecare company and said, “I have a bill from you for October, 1993, for $9,400 and an EOB from BCBSM for the same amount. Is that the amount you were paid? Also, I would like a copy of the check.” There was a short pause and then the homecare company representative told me that was not the amount that had been paid. The real amount was under $5,000. She then told me that they had a contract with BCBSM which dictated the amount they would be paid, but that they were told to bill at list price to the consumer. BCBSM told the homecare company that this arrangement was to be kept confidential. However, the homecare company decided if a consumer asked a question of the nature of mine, that they would not lie. Several more hours were consumed by phone calls to BCBSM trying to get an explanation and more calls to my homecare company to get explanations for the mis-information I was getting from the insurance company.
While there is much more to the story, the important thing to note is how the information I discovered may impact you and other health care consumers. The confidential contracts which are negotiated by BCBSM, as well as other insurance companies and managed care organizations around the country work like this. The insurance company or managed care organization will go to a hospital, lab, doctor’s clinic, homecare company, etc. and tell them that if they want to be part of the insurance company’s network, they will be paid “X” amount of money for a given procedure. In order to have access to the insurance company’s patient pool, most homecare companies and other providers sign on.
When it comes time for billing, the homecare company generates a list price for 14 days of TPN which might look something like the following:
This list would continue for every cotton-tipped applicator, Op-Site, needle, alcohol swab, etc. that you use over the course of 14 days. The end result in this case might be a bill for $6,000 to $7,000. This would be the price on your bill and also the price that would be listed on your EOB as having been paid by your insurance company. The reality would be that under the confidential contract the homecare company is actually being paid a fraction of this amount, something closer $3,150.
How does a situation like this harm the consumer? Potentially two ways.
1. You may be charged more than your share of the coinsurance payment. For example, say your policy includes a $500 deductible and then an 80/20 major medical coinsurance payment. Under a confidential agreement where the contracted price is never disclosed, your coinsurance payment ends up being based upon the list price - a considerably higher amount.
In this example, you would have been charged $1,200, almost half of what the insurance company actually paid ($2,550) for the TPN and related supplies. For those of us with large yearly bills, the financial impact of this practice ceases once we’ve met our out-of-pocket maximum. We simply paid more out-of-pocket up front. (However, those without large yearly medical expenses or without a cap on out-of-pocket expenses are affected more dramatically.)
2. You will reach your insurance policy’s lifetime maximum much quicker. Continuing with the same example, if the charges against your policy are based on the list price rather than the contracted price, you will reach your lifetime maximum much quicker. In this case, your insurance policy would run out twice as fast.
Because my insurance company was unwilling to change this practice for all consumers that they cover, I contacted a lawyer I trust. In October, 1994, we initiated a class action suit in both state and federal court against BCBSM and MCHA for these practices.
In June, 1995, we mediated a settlement with BCBSM which ended up being 3.9 million dollars (plus the attorney’s fees). Preliminary court approval was given September 15 and final approval is expected December 1. As a result, approximately 60,000 Minnesotans will start receiving reimbursement checks this February for the overcharging of their major medical coinsurance payments.
The settlement also included an agreement that as of September 1, 1995, policy holder charges (deductible and 20 percent major medical coinsurance payment) and lifetime policy maximums will be based on the amount BCBSM actually paid (contracted amount) - not the list price. In addition, BCBSM will be required to recalculate all past charges against policy holders’ lifetime maximums, based on the discounted amounts. Priority will be given to those persons who have reached, or are close to, their policy’s lifetime maximum.
Soon we will be mediating with MCHA, hopefully as this article goes to press. Our desire is for an equitable resolution to that portion of the suit as well.
Unfortunately this unfair insurance practice is not limited to BCBSM. There have been similar class action suits started in other states, and I am confident that there are other insurance companies and managed care organizations still using this practice. As a consumer of health care, it is your responsibility to make sure that the charges to your account are fair and equitable, and that the stated reimbursement levels are accurate.
Copyright © 1995 The Oley Foundation