Joshua Yood, age
2, was born prematurely. He needs a ventilator and 24-hour home
nursing care. Emily Nelson, now 10, had bipolar disorder, psychosis
and a fistful of other psychiatric diagnoses. Sometimes violent,
sometimes suicidal, she needed long-term institutional care.
Both children's health problems are heart-rending.
Their families' health insurance problems are more like hair-tearing.
Josh's and Emily's parents are professionals (two of them
physicians) who live in affluent suburbs. Unlike 43 million other
Americans, they have health insurance.
But their insurer, Health Net, refused to pay for Josh's nursing
care and Emily's hospitalization. They refused even though those
services were apparently covered under their contracts. So these
heart-rending, hair-tearing stories also became budget-busting--for
us, the Connecticut taxpayers--because the state ended up paying the
Infuriating. Inhumane. And in the Yoods' case, according to the
state Insurance Department, illegal.
Not to mention just plain stupid.
Stupid, that is, to anyone but insurance company bean-counters
who see their job as not actually providing health coverage, but
preventing people from using it.
Fortunately, most managed care stupidity is neither as costly nor
as dangerous as what the Yoods and the Nelsons went through. Much of
it involves not life-or-death decisions but everyday frustration and
inconvenience. Stupid stuff like fighting to get your insurer to
cover care it's clearly supposed to cover. Stupid stuff like going
for a checkup, discovering something the doctor could take care of
on the spot--and being told to come back for a second appointment
because the insurer won't cover two things in one visit. Stupid
stuff like being required to show proof of your old insurance before
the new plan will pay a claim.
The state attorney general's office has opened about 3,500 cases
based on health insurance complaints in the last four years. The
most common complaint: claims being denied for arbitrary reasons
that have nothing to do with the patient's medical needs--for
example, an arbitrary rule that an insurer will cover only one
hospitalization a year.
The second most common type of complaint is what the AG's office
calls an "unfairly restrictive interpretation" of contract language.
The third biggest category is "baseless obstruction"--when insurance
companies simply don't act on a claim. They don't deny it; they
don't pay it. Sometimes they say the claim was lost. Sometimes they
say they need more information.
Health insurers, says state Attorney General Richard Blumenthal,
are "arbitrary and unfair." They misinterpret their own rules. They
"act unilaterally and deny coverage" for reasons that "make sense
only to increase the bottom line of the companies. They put people
on hold, give them the runaround, confuse them with highly technical
or unnecessarily complex verbiage."
The attorney general, however, has no authority to regulate or
penalize insurers. That power belongs to the industry-friendly
Insurance Department. The AG can only file suit and try to
negotiate. Blumenthal is suing
Anthem, Cigna, Oxford and Physicians Health Services (now Health
Net) in federal court.
From the AG's files and from interviews with doctors' offices and
patients, here are some examples--accompanied, where possible, by
the insurers' explanations--of stupid things health insurers do.
#1 They Force Patients to Make Two Doctors' Visits When One
You go to the doctor's office--let's say the gynecologist. It
could be a routine exam, or maybe you've been having some pain. The
doctor finds a cyst. It needs to be aspirated. She's got time; she
can do it right now.
But if she does it right now, she won't get paid for it. At least
not if you're insured by Health Net. They won't cover an assessment
and a procedure in the same office visit. They want patients to
leave, then make a separate visit to have the procedure done.
So doctors like Hamden gynecologist Emily Fine--who recently
ended her Health Net contract in disgust at this and other
practices--end up doing the procedure while the patient is there and
eating the extra cost.
"You can't just practice medicine," Fine complains. "You have to
be aware of all this stuff, because your patients are going to get
For a layperson, it's hard to come up with any reason for
requiring patients to make a second appointment for something that
could be done in one visit--unless the goal is to discourage people
from having it done at all.
Health Net spokeswoman Alice Ferreira offers this explanation:
"If a member walks in and is a brand-new member and the doctor
feels they need to get a little bit of history before they do the
procedure, there is an additional office visit cost. If
the patient is a regular patient, where the doctor has current lab
info and history, we usually try not to bill for that kind of
history office visit and just strictly for the procedure that's at
Make sense to you?
But the practice was about to
change, she said in August.
"They're in the process, hopefully in the next 30 to 45 days, of
trying to make that go away. We should get a new policy where that
can be done all in the same day and should not require a member to
come back--pain or no pain, from a hassle point of view."
Eight weeks later, she didn't respond to emails and phone calls
asking whether the change had taken place.
#2 They Expect You to Anticipate Every Conceivable Obstacle They
Might Put in Your Way.
ConnectiCare customer service--may I help you? Not for a routine exam.
So she went to the eye doctor, this co-worker of mine. She'd been
having headaches. Hadn't had her eyes checked in ages. Maybe I need
glasses, she thought.
A couple of months later:
ConnectiCare customer service--may I help you?
Yeah, hi. I went for an eye exam, which was supposed to be
covered, but now I got a bill for $177. What's the deal?
You were supposed to get a referral. You guys told me I didn't need one!
That was for a routine eye exam. Your exam wasn't
routine, because the doctor submitted it with a "headache"
diagnosis. That means you needed a referral.
So she called her primary care physician and
got a referral. ConnectiCare sent her a letter saying the referral
was approved and valid starting in June.
But her eye exam was in April.
The eye doctor sent her another bill--and a collection notice.
I called ConnectiCare's public relations director, Deborah Hoyt.
I called her not to straighten out my co-worker's situation
(although she did have some good advice) but to ask why this
shouldn't fall into the category of "Stupid Things Your HMO Does."
OK, wimp that I am, I didn't put it quite that way. I told her it
was an article about people's frustrations with their health
"Things work fluidly when people know what their plan covers and
follow the procedures," says Hoyt. "Maybe instead of the title of
your article being frustrations with insurance companies, it should
be: The onus is on members to know their plans."
But my co-worker did follow procedure by calling about a
referral. ConnectiCare told her she didn't need one for a routine
"I guess she, having headaches, is not considered routine," Hoyt
How was she supposed to know that?
"I don't know. Maybe she should use the same words she's going to
use with the doctor," Hoyt suggests. "I think it all breaks down to
what language or what communication styles you're using."
Does that mean we have to anticipate every obstacle that might
arise in trying to actually use the health insurance we pay so much
"Members have to know what they're buying," Hoyt responds.
"Individuals with health plans have to ask more questions: 'I'm
considering this my routine checkup. Are you, Mr. Doctor,
considering it that way too? I don't want to end up with any
surprises on the bill.'"
Keeping costs down "is part of the reality of fixing our health
system," she says. "It's kind of a rude awakening for members."
#3 If They Can't Find a Loophole, They Manufacture One.
Marianne and Steven Yood knew right away that their baby son Josh
was going to need gobs of expensive health care. Born in January
2001, he spent his first seven months in the hospital.
"We were looking for insurance that covered [home] nursing care,"
says Marianne Yood. "But our insurance broker said, 'Look, you're
already covered. It's right here in your contract.'"
Health Net, however, insisted Josh's nursing care was not a
covered benefit. That insistence rested on a convoluted
interpretation of its members' contract.
According to Yood, the contract twice mentions home nursing care
as a covered benefit. A third reference defines skilled nursing as
services that are delivered by an RN or an LPN and "meet the
requirements of Medicare."
What are those "requirements"? Turns out a Medicare regulation
defines skilled nursing as "intermittent"--in other words, not
Health Net argued that the Medicare restriction was "implicit" in
the Yoods' contract--even though it appeared nowhere in the
document. Think of it as an invisible loophole. The company told the
Yoods it would pay for nurses only if they applied for state
assistance, in the form of Medicaid.
Desperate, they did apply. They also appealed Health Net's denial
of coverage. The company turned them down again. They went three
weeks without nurses.
Eventually the Yoods filed a complaint with the state Insurance
Department. "By now the state [was] paying" for 16 hours of nursing
care per day, Marianne Yood recounts--at a cost of about $20,000 a
month. Health Net refused to pay for the other eight, so family
members pitched in to care for Josh.
This February, Health Net offered a deal: The company would cover
eight hours a day if the Yoods waived their grievance rights, kept
quiet about their dispute with Health Net, and agreed not to
re-enroll when their insurance expires at the end of September.
The Yoods turned that down and kept fighting.
In March--after WTNH reported on the Yoods' plight and Marianne
testified at the state Capitol--the Insurance Department ordered
Health Net to pay for Joshua's nursing care. According to Yood, the
order declared Health Net's practice "illegal." On May 1, the HMO
started paying for the 24-hour care. And Health Net has changed its
contract language, specifying that it will cover 80 home nursing
visits per year.
Happy ending? Not quite. For one thing, the new contract doesn't
define a "visit." Marianne Yood says the company sent a letter
defining it as four hours. "For us a shift is eight hours," she
says. "So we're probably going to take them on on this as well."
What's more, Yood wants the company "to pay back the state every
friggin' penny that [Medicaid] paid out for my son. Instead of
paying for 12 months of nursing, they paid for four. It was
financially way in their best interest." She says the state billed
Health Net for almost $60,000 last month.
Health Net's Ferreira says the insurer stands by its
interpretation of the old contract. She couldn't be reached for
comment on whether Health Net will pay the Medicaid bill.
Early this year, Marianne Yood testified in favor of state
legislation that would have given the attorney general--and not just
the notoriously toothless Insurance Department--power to regulate
health insurers. The bill died.
"If the attorney general was overseeing this," she says, "this
crap would not happen."
#4 They Assume Your Claim is Illegit Instead of Finding Out.
Before Botox achieved star status as a quick 'n' poisonous faux facelift, the nasty little
botulism injections served an important medical purpose: relaxing
In fact, doctors still use Botox that way. But now they find it
harder to get reimbursed.
Two such complaints arrived at the attorney general's office
recently. At least one of them involved--once again--Health Net. But
the AG's office says it's a widespread problem.
The patient had paralysis of the muscles surrounding her larynx.
Botox injections were the treatment that worked. Health Net had
covered it for years but then, last summer, suddenly denied
coverage, the AG's office says.
The reason: not medically necessary.
"Botox does require prior authorization" since 2001, Health Net
spokeswoman Ferreira says. "With Botox primarily being used for
cosmetic reasons, it ensures that the patient is getting it for
medically necessary reasons." If the treatment is truly medical and
not cosmetic, Health Net will cover it, she says. But apparently
it's presumed cosmetic until proven otherwise.
Without knowing the specifics of the AG complaint, Ferreira
speculates that the doctor in question might have been outside the
Health Net network.
"An out-of-network physician cannot decide just to order certain
services," she explains. So that doctor's claim "might at the first
pass be denied. It might be called denial, but sometimes [payment
is] halted because we need more information" about what the doctor
is doing and why.
Why call it a denial, then?
"We don't call it a denial," she says. "The doctor's office might
be calling it that."
Out-of-network doctors have to jump through more bureaucratic
hoops to get Health Net reimbursement, Ferreira says. "Not that
you're not suspecting anything, but you need to be aware. We're very
cautious with the out-of-network."
Health Net has already screened and credentialed its in-network
physicians, she points out. Plus, the HMO negotiates discounted fees
with the network docs.
HMO members already have a financial incentive to stay in the
network, since visiting out-of-network doctors costs more. Does
denying or delaying out-of-network claims further discourage members
from using a benefit they're entitled to? Ferreira says she doesn't
#5 They Refuse to Take Responsibility for Their Subcontractors.
Ann Nelson was terrified. Her 7-year-old daughter, Emily, was out
of control. Drugs weren't helping, outpatient care wasn't helping,
and Emily was a danger to herself, her mom, her younger sister.
The family took her to the psych ward at Yale-New Haven Hospital.
A social worker told them that their insurer, Value Options, would
probably cover only a 48-hour stay.
Which it did. Two days later, with no further insurance
authorization, the hospital sent Emily home.
"No medications had been changed, no behavior intervention had
occurred," Ann Nelson told a legislative committee this February.
"These kids need time to receive the appropriate pharmacological
intervention. And if we are always fearing their discharge,
psychiatrists and social workers can't treat these children with any
"We are a fairly well-to-do family," testified Nelson, who lives
in Madison. "And so we sought the most expensive and hopefully the
best insurance plan for our family. The sole intention was based on
my daughter's illness."
They chose Value Options, a subcontractor or "carve-out" that
handled mental health coverage for Health Net. Subcontracting of
so-called "behavioral health" benefits is widespread.
So are problems getting the subcontractors to provide the
services that customers pay for--widespread enough that the
legislature's Public Health Committee drafted a bill to make HMOs
accountable for their subcontractors' actions. Nelson testified in
favor of the bill, which did not pass. (A Senate bill, drafted by
the industry-friendly Insurance Committee, did pass, imposing some
accountability. Nelson sees it as "a start" but not enough.)
"Emily met every single clinical criteria for admission and
inpatient stay, and I have that criteria right before you," Nelson
told the committee.
"Despite Emily meeting that criteria, which was in front of Value
Options and us, they said, 'She doesn't fit our clinical judgment.'
What is clinical judgment based on? Seeing a patient, speaking to a
patient, looking at the medical record. So Value Options blatantly
disregarded their contract to us."
Along with complaints about subcontractors, problems with mental
health coverage are rampant. Partly that's because psychiatric care
is "very ambiguous," Nelson says in an interview.
"I'm a cardiac nurse," she says. "You can define a heart attack
by an EKG." But with mental illness, "it's very easy for the
insurance company to say, 'Well, that doesn't really meet our
criteria for admission. She didn't put a knife to her throat.'"
After three acute hospitalizations totaling about three months,
Emily went into a residential treatment center and school in October
2001. She finally came home this August.
"She's great. Absolutely great," her mom says. She still needs
outpatient care, for which her parents pay $150 per visit out of
As for Emily's nearly two years of residential care, Nelson
estimates the cost at $85,000 to $90,000 per annum. The state
Department of Children and Families paid about half, she estimates,
with the Nelsons' local school district picking up the other half.
The family will look into switching insurers when they get the
chance, she says. "But this is a systemic problem, not just a Value
Health Net spokeswoman Ferreira says the Nelsons "hadn't
contacted us with any concerns. They did not exhaust their appeals
process," she says. "They elected not to. And there hasn't been any
activity since on their file."
After a Waterbury reporter called Health Net asking about Emily's
care, the company tried to reach Ann Nelson by phone and by
registered letter, Ferreira says, "because we certainly didn't want
her to be unhappy or to give up."
#6 They Assume You're Not Covered Until You Prove You Are.
A man changed jobs. He got new health insurance. He went to the
doctor for a pre-existing condition. By law, the new insurer has to
cover him--unless there was a break in his coverage between the old
job and the new job.
Insurers love those loopholes. In this instance and many others,
the attorney general's office says, they presumed the patient was not covered, and required him to
prove that he did not have a break in coverage.
"We do that daily. That's standard practice," says Lewis Panzo,
president of Associated Plan Administrators, the subject of the AG
Under federal law, employers have to provide departing employees
with certificates showing the dates during which they had health
insurance, Panzo explains.
"If somebody can't show us that they had no break in coverage, we
won't pay the benefit."
His company is not an insurer but an administrator that processes
claims for insurers.
"We're out to protect the client, to make sure they're not paying
a claim they shouldn't be paying," Panzo says. "If you don't check
the prior coverage, the carrier's going to deny payment of the
#7 They Cut Off Drugs the Doc Says You Need.
Dr. Cary Caldwell treats liver patients--lots of 'em. Many have
Hepatitis C. The drug of choice is Interferon, which costs $5,000 to
$10,000 a year.
The medication does two things, Caldwell says. It eradicates the
Hepatitis C virus, and it helps prevent or reduce scarring of the
liver, which can eventually cause cirrhosis.
About 20 percent of Hepatitis C patients get cirrhosis, Caldwell
says. About 7 percent to 10 percent end up on a waiting list for a
Because of those risks, "I'm very aggressive about treatment,"
Caldwell says. But he keeps running into roadblocks with--you
guessed it--Health Net.
"They have this arbitrary process of terminating" patients'
Interferon, he says. He usually wants to treat patients for 12
months. Health Net likes to cut the drug off after six months.
Other insurers, he says, will ask patients to explain why
Caldwell wants to continue Interferon for more than six months. But
they're usually satisfied with the answer. Health Net, by contrast,
sends patients a letter saying they're terminating coverage for the
One reason: "If the patient hasn't responded in a couple of
months, they'll terminate after six months," Caldwell charges.
"They'll say the success rate is under 10 percent. I say, you could
use that same logic for chemotherapy."
Health Net also likes to cite a study that shows that certain
types of Hepatitis C--the types that do respond better to
Interferon--can be cleared up in six months. But the company
"ignores the data about cirrhosis," Caldwell says.
"I tell them it's cheaper to pay for Interferon than to pay for a
liver transplant," which typically runs about $125,000.
Of course, demand for transplants outstrips supply. Some people
die on the waiting list. Others will undoubtedly have changed
insurance by then.
And publicly traded companies like Health Net always have at
least one eye on the latest quarterly earnings statement--an outlook
that encourages short-term cost-cutting regardless of the long-term
Ferreira says it's hard to respond to Caldwell's complaint
without referring to specific cases. "Absolutely, Health Net pays
for cases where one year is medically necessary," she says. "In
other cases, six months is called for."
And in any case, she says, "doctors are always encouraged to call
our medical directors."
#8 They Won't Pay the Doctor to Talk to You About Your Cancer.
Among the most important things a doctor can give a
patient--especially a seriously ill patient--are time, information
and advice. Frequently, Health Net won't pay for that.
"Say you had a breast mass that Dr. Horowitz did a biopsy on, and
God forbid it came back positive," explains the office manager for
New Haven surgeon Nina Horowitz. (The office manager asks not to be
"Dr. Horowitz would bring you in for at least an hour-long
consultation." The office calls it a "cancer conference," at which
the surgeon provides "all the new information about the different
treatment options--mastectomy vs. lumpectomy, reconstruction vs. not
reconstruction"--and answers questions.
Health Net won't cover the conference. The company deems it to be
part of the biopsy.
"You've gone from having a mass in your breast to having cancer.
I don't consider that the same!" the office manager exclaims. "It's
a whole different ballgame"--one that other insurers cover
So will Health Net, the company's Ferreira says. "They're
formulating new policies on that based on physician feedback, and
hopefully that will be fixed soon." She doesn't have an explanation
for why it needs fixing in the first place.
Ferreira hopes the Advocate will
follow this article with one called "The Really Smart Things HMOs
It might be pretty short.
© 2003 Advocate Newspapers
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