8 Stupid Things Your HMO Does

Advocate Newspapers
October 16, 2003
#1     They Force Patients to Make Two Doctors' Visits When One Would Do.
#2     They Expect You to Anticipate Every Conceivable Obstacle They Might Put in Your Way.
#3     If They Can't Find a Loophole, They Manufacture One.
#4     They Assume Your Claim is Illegit Instead of Finding Out.
#5     They Refuse to Take Responsibility for Their Subcontractors.
#6     They Assume You're Not Covered Until You Prove You Are.
#7     They Cut Off Drugs the Doc Says You Need.
#8     They Won't Pay the Doctor to Talk to You About Your Cancer.
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 tab.

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 Would Do.

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 screwed."

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 hand."

Make sense to you?

Me either.

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 insurance companies.

"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 eye exam.

"I guess she, having headaches, is not considered routine," Hoyt says.

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 for?

"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 around-the-clock.

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 paralyzed muscles.

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 know.

#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 long-term benefits."

"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 pocket.

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 Options problem."

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 complaint.

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 claim."

#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 liver transplant.

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 drug.

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 consequences.

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 named.)

"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 separately.

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 Do."

It might be pretty short.

2003 Advocate Newspapers

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