Health Insurance Claim Denied? See What Insurers Said Behind the Scenes
propublica.org
propublica.org
My son broke his arm skiing a few months ago and we went to the clinic that is at the ski resort. They x-rayed him, set the bone a little (thankfully it didn't need much), put on a splint, and put his arm in a sling. Straightforward simple stuff.
The clinic is not on our insurance so we filed a claim with them after the fact ourselves using the detailed receipt the clinic provided. It was out of network so they didn't pay for most of it (for some reason they did pay the $12 or whatever for the sling), but they applied the cost to our out-of-network deductible. Except not the cost the clinic charged, the cost they thought the clinic should have charged, which was of course about $150 less. What?? I'd love more insight into how all that makes sense in someone's mind.
Many folks harp about how government insurance doesn't pay enough, and there is some validity to that argument, but without cost controls or other guardrails, the patient is always caught between the payer (private insurance) and the provider. Both are attempting to maximize their profits, the former through "cost plus" accounting, the latter at point of sale/purchase/care.
This might or not be helpful, depending on circumstances: https://www.cms.gov/nosurprises/consumers/new-protections-fo...
Tangentially, this is why global/nomad/world traveller health insurance typically excludes the US specifically from coverage and visitors to the US in many cases will fly home for urgent medical emergencies vs receiving care in country; the economics are simply unpalatable.
[1] https://www.quora.com/Why-would-a-doctor-go-out-of-network-p...
[2] https://www.consumerfinance.gov/rules-policy/medical-debt/
(intimately familiar with the inside mechanics of private insurance from patient advocacy work)
Out of network is the reason. Simple as that.
>>we went to the clinic that is at the ski resort
The ski resort's clinic likely doesn't participate in any network similar to a cruise ship.
edit: facts get downvoted again. sigh.
That is not nuance, that is an knee jerk unsubstantiated misleading claim. You have 0 details into what chassis the plan is carried on, what the plan design is, who the carrier is etc.
>>"this is why global/nomad/world traveller health insurance typically excludes the US specifically from coverage and visitors to the US in many cases will fly home for urgent medical emergencies vs receiving care in country; the economics are simply unpalatable."
Again misleading, there are expatriate plans specifically for visitors to the USA, and frankly, it's great coverage.
I was getting a weekly shot. Payed 40 dollar co-pay. Couple hundred billed to insurance. Asked about cash price. $15 dollars.
MRI. I can pay 1500 dollar to vendor and balance to insurance. Or 700 cash.
Insurance is causing prices to be drastically higher than they need to be.
Gets very opaque fast.
Edit: lots of (I assume) correct points below about hospital/procedure charges, but it’s only in 2026 that Medicare will start negotiating drug prices, and just for 10 medications in the first year:
> For the first time, Medicare will be able to negotiate prices directly with drug companies, ensuring lower prices on some of the costliest prescription drugs
https://www.hhs.gov/about/news/2023/03/15/hhs-releases-initi...
So yes you can "pay what medicare pays" be prepared to have some pissed off doctors and balance billing.
> So yes you can "pay what medicare pays" be prepared to have some pissed off doctors and balance billing.
You're not wrong but your description is conflating two different things.
What you're describing - "pay what Medicare pays" is more or less how private insurance typically works for in-network providers. The provider gets paid X% of the Medicare Allowable Rate (where X > 100), and that comes either from the patient or the insurer (depending on any applicable deductible, copay, OOP max, etc.)
Reference-based pricing applies that to all providers, including out-of-network providers. However, except for care received in the emergency room, the provider is allowed to bill the patient for the difference between what the insurer allows and what the provider charges. Some plans will actually allow in-network providers to bill patients for the balance. In that case, everyone wins except the patient: the insurer/employer has a fixed cap on their costs per service, and the hospital/provider doesn't have to settle for a lower rate.
RBP is a multiple of standard Medicare rates, say 140%, often is substantially less than a negotiated rate from a Carrier, hence balance billing and not so happy provider. Basically a take it or leave it option for the provider, many of which simply take it and move on. Not claiming right or wrong, just stating facts.
RBP uses the Medicare "network".
Negotiated rates are also themselves set as multiples of the Medicare Allowable Rate. Both are set as multiples of Medicare rates; that's not something unique to reference-based pricing.
Care to provide proof of that statement?
"...instead of negotiating prices with providers."
From the American Hospital Association:
https://www.aha.org/fact-sheets/2021-06-08-fact-sheet-refere...
You've got it backwards. Medicare does negotiate, in some cases reimbursing less than COGS. Hospitals and providers make up for it by charging private insurers more (that's why private insurance contracts always state that they reimburse X% of the Medicare Allowable Rate, where X > 100).
> For the first time in history, Medicare will have the ability to negotiate lower prescription drug prices because of the Inflation Reduction Act
https://www.hhs.gov/about/news/2023/03/15/hhs-releases-initi...
We're not talking about prescription drugs - the entire thread so far has been about inpatient and outpatient care.
Medicare does not negotiate prices for prescription drugs at the moment, but that's because pharmaceutical coverage for Medicare is provided by private insurers, and those private insurers are responsible for negotiating the rates.
Insurer tries to get away with: the provider is not in network, but not strictly out of network (because they know that would be covered by the law), so they call them "participating", a 50% coinsurance applies and patient owes 121K.
(Resolved in patient's favor after state government got involved and media coverage about it).
For example, if you are traveling Out of Area (OOA) and skiing in Colorado, and you have a medical emergency, emergency room care is considered In-Network. Any financial responsibility you have under your health plan (coinsurance, copay) should be calculated as part of In-Network.
* If you have an HMO or EPO plan, it is black and white language. If you have a PPO plan, legally it is a bit squishy because of the already provided for out of network (OON) access. BUT - generally - any emergency is considered in network no matter what product you have and where you are.
Source: I work in health insurance at Evry Health (https://evryhealth.com)
Getting emergency care: In an emergency, you should get care from the closest hospital that can help you. That hospital will treat you regardless of whether you have insurance. Your insurance company can't charge you more for getting emergency room services at an out-of-network hospital.
https://www.healthcare.gov/using-marketplace-coverage/gettin...
Not quite. Balance billing for care received in the emergency department is illegal if the ER accepts Medicare payments.
In other words
- care received outside the emergency department (once admitted as a patient) can be balance billed
- care received in an urgent care clinic can be balance billed
- standalone ERs (which are increasingly common, as they're more profitable for the owners) can balance bill patients
Every payer has the concept of "UCR Rates" or "Usual, Customary, and Reasonable Rates" for every procedure code, for every ZIP code. For example, the median cost of an X-ray should be a certain dollar amount in Topeka, Kansas and a different (higher) dollar amount in Manhattan, NY.
When a provider is out-of-network, they'll bill as much as they possibly can to see what the insurance company will pay — the insurance company will only pay up to the "UCR Rate" for the treatments (or in your case, apply that to the deductible before the payments start to kick in). Whatever the difference is between the UCR rate and the requested amount is almost always ignored, since the doctors' motivation for the high requested rate was to try and maximize payment from the insurance company. In your case, since you paid out of pocket, you're unfortunately on the hook for that difference. In other situations the provider might also invoice the patient for that difference, but it's relatively rare.
In contrast, when a provider is in-network, they have contracted rates for all of the procedures (also typically varies by ZIP code). These are called the "fee schedule" rates, and every payer (including Medicare/Medicaid) has their fee schedule rates defined and agreed upon with the physicians/providers.
In either case, the goal is to try to keep prices down, and in many cases to prevent so called "upcoding" by providers. You'd be surprised how prevalent upcoding is among providers. I've been on the phone with a provider that included in a claim an $80 line item for "oral hygiene instructions", which is a fancy way of saying "instructing the patient to floss more". I've seen another claim that asked for $300 for sign language because the patient was deaf. I've seen yet another claim that asked for $200 for a swaddle for an infant patient. In all 3 of those cases, I personally informed the clinical administrator on the other end "this is not covered", and their response was something to the tune of "oh yeah that's okay, we just put that on there to see who covers it, you can go ahead and ignore that line item".
All of this is characteristic of the fee-for-service model, which is increasingly being seen as quite flawed, regardless of whether it's done by the public sector or the private sector.
According to your insurance company, that clinic charged you an excessive amount for its services.
For coverage (whether reimbursement, or deductible reduction), the insurance company will only count the "reasonable" amount.
This isn't an issue for in-network, since in-network providers are required by their contract to write-off anything exceeding the contracted rate.
You can try to get the clinic to write off the remainder; they may be willing to if they think it will hard to collect it from you.
P.S. DME (durable medical equipment, e.g. a sling) is often covered+adjudicated separately from provider services.
>>"so much money and back room dealing involved as the healthcare industry."
I'd like to see proof of this.
On an objective note, stage 4 cancer and 70% chance of failure...sounds like it was mostly a death sentence from the start.
Emphasis mine.
Can... someone explain how that makes any sense at all?
Sorry about the cancer!! please go die somewhere that I cant see it thanks.
But my experience is with a large insurer and a school with a hundred or so employees, not something on Microsoft’s scale.
This is illegal since 2011 due to the Affordable Care Act.
The only factors allowed to price insurance is age, location, and tobacco use.
https://www.healthcare.gov/how-plans-set-your-premiums
Even the age factor is bounded by the highest risk age having to be only 3x the lowest risk age (i.e. a subsidy from young to old). The lack of ability to price based on pre existing health conditions is a subsidy from healthy to sick.
And for political reasons, we can afford to discriminate against tobacco use, but not sugar or alcohol or sat fats or lack of exercise.
It applies to all non-Medicare, non-Medicaid, non-grandfathered[0] plans for people under the age of 65.
Ironically, once you turn 65, all bets are off: insurers can factor your age into your premiums, and people often get a massive rate hike then (usually prompting them to switch to Medicare).
[0] A small percentage of employer-provided pre-ACA plans are grandfathered in, but they're few in number and decreasing over time. If you have a grandfathered plan, you probably know it, because it's required to be disclosed visibly in the plan documents when you enroll.
Not necessarily.
Self funded plans are underwritten. Fully Insured over 50 fte plans are underwritten. A carrier will underwrite based upon Medical History. Individual Short Term Medical plans are also underwritten.
>>It applies to all non-Medicare, non-Medicaid, non-grandfathered[0] plans for people under the age of 65.
Incorrect, see above.
>>Ironically, once you turn 65, all bets are off: insurers can factor your age into your premiums, and people often get a massive rate hike then (usually prompting them to switch to Medicare).
Again, not necessarily, Nearly all Americans over 65 have Medicare, as part A is required. The States regulate these plans so each state may be different in some way. Medicare supplements are often underwritten, but can be guarantee issue, again depends on the State.
>>A small percentage of employer-provided pre-ACA plans are grandfathered
Correct, these are getting priced out. They are underwritten. If you are on a GF/GM plan, then switching to LFP or similar is likely a smart move.
Can you give a source to this statement or is this an ad hominem?
>>but I don't think that's the case for most?
Great question, generally the larger the company the better the case for self funding. Keep in mind there are different types of self funding, such as graded funding and level funding. Most employees on employer based health insurance are likely to be on a self funded chassis however that is changing. Not all states provide that data, without that, it's hard to pinpoint an exact number of how many is on what chassis.
[EDIT] I mean I guess what I'm getting at is that if they decide to make the adjustment in treatment, it's going to be because it makes them more money, even if they can't afford to make all of those adjustments they might, or it'd push payouts too low and they'd have to give some money back—finding the option to do so doesn't increase profit immediately, but if they choose to make the change, it's surely because it'll make them more money.
This means that it is, counterintuitivly, in there interest to spend more on claims, as it makes the 20% profit they are allowed to take bigger. At least until they start to lose clients.
I can provide proof for my statement, can you do the same?
You are always welcome, even encouraged, to provide proof. I am getting my information from:
https://www.healthcare.gov/health-care-law-protections/rate-...
>Does this apply to my plan?
>It depends.
>For Rate Review: These requirements don’t apply to grandfathered plans. Check your plan’s materials or ask your employer or your benefits administrator to find out if your health plan is grandfathered.
>For the 80/20 Rule: These rights apply to all individual, small group, and large group health plans, whether your plan is grandfathered or not.
I assume grandfathered plans are not ACA compliant, and hence do not have all the provisions that make health insurance worth having (such as out of pocket maximums and zero cost preventative care and appeals processes and other things that set a floor on the quality of healthcare covered by the insurance).
Third Party Administrator.
>>I assume grandfathered plans are not ACA compliant,
Correct.
>>hence do not have all the provisions that make health insurance worth having
Not necessarily. Some have broader benefits that maybe you would want.
https://www.healthcare.gov/health-care-law-protections/rate-...
Some states are 85/15. Did you know that? However, the plans you are referring to are Marketplace plans. I am not referring to Marketplace plans, nor community rated employer plans. I'm referring to self funded employer based commercial plans. These same type of plans are commonly offered not only in the US, but UK, Canada and Germany.
Edit: I get downvoted for providing proof.
No, but it's a small number. Approximately 13% of people with employer-provided plans have grandfathered plans[0]. That number is also steadily decreasing over time.
That's specifically looking at people who get their insurance through their own employer, so the denominator doesn't include, for example, people on Medicare or Medicaid.
The 80% claims rule doesn't apply to every individual plan, but it's widespread enough that it drives the overall structure of how insurance companies operate these days. They're not optimizing their organizational workflow for plans which comprise a tiny - and shrinking - fraction of their revenue.
[0] https://www.kff.org/report-section/ehbs-2019-section-13-gran...
The quote indicates that the employer group was self-insured, and Cigna was the plan administrator. This means that Cigna is not insuring the health plan. Cigna is probably paid a per member per month (PMPM) fee for third party administration (TPA). The actual medical claims and associated costs are directly paid by the self-insured entity (the employer group).
Self-insurance can make actuarial sense for companies with >2,000 employees.
Mind you MS is a progressive disease,. causing permanent brain and neurological damage. There is no "recovering". Once the damage has been done, it's permanent, treatment only hopes to stop or slow progression, so experiment with another drug isn't something you can do, then later decide it's not working and go with something else. Permanent damage has been done, while your wasting time with treatments that have no expectations of working.
The semi-good news is the insurance company did approve the drug 6 months later after she ended up in the ER and had a 4-day stay, and she believes she hasn't experienced progression since starting the drug. I cannot fathom however why we as US citizens allow this cruel practice of private industry insurance to continue.
>>insisting that she should be put on a different medication that has never so much as been studied, much less approved for treating MS.
I find this hard to believe and would be very interested in seeing details.
Ironically, Cigna has a very good speciality Rx program for MS.
>>I cannot fathom however why we as US citizens allow this cruel practice of private industry insurance to continue.
Did she find a Country where she was comfortable getting the denied treatment? What do you recommend besides "Government paying for everything"? What makes you think that "Medicare for all or whatever" will get the declined drug approved? Do you realize Canadians commonly get denied for things too? God forbid you have Rectal Cancer in Germany, generally not covered by the Government plan.
Pepto bismal is cheap, but we don't try treating a lung cancer with it just because of that. Again the drug they wanted her taking had NEVER been so much as studied for treating MS, and she had already exhausted a number of cheaper treatments including diet, PT and a number of other drugs, and a couple clinical trials. It's not like they jumped to the most expensive option. As for a second opinion, she is working with the only neurologist in the area who specializes in MS. Even if she wasn't I'm not sure why you think a second neurologist saying the same thing would change anything.
> Did she find a Country where she was comfortable getting the denied treatment?
No, no one researched hypotheticals. It's not like she can travel to another country and get treated under their healthcare plan. These generally only cover citizens and even if not she will need treatment for the rest of her life. This isn't a one time surgery where it might be cheaper to go to another country, then come home.
> What do you recommend besides "Government paying for everything"?
Well I do recommend single payer, because I'm of the radical mind that even the poor and unemployed deserve health care, but if that's off the table how about some actual oversight? We have an insurance company overriding a doctor who specializes in this disease insisting on a treatment that has NEVER been studied for this disease. This should not be legal. And yet the only recourse is to ask the same insurance company who already made this bad decision if they'd pretty please reconsider, or to find out if you can afford to pay lawyers for longer than they can. Maybe we should have an independent board one can appeal to. Make the consequences for incorrectly denying treatment dire. Like take away their license to operate if it happens to frequently dire. For many people delays can have serious consequences including death, if we are going to let these companies make such important decisions they should be held to a very high standard.
> Do you realize Canadians commonly get denied for things too?
Sure. Government can be fucked. Call me an optimist however, but I have a lot more confidence in my ability to drive meaningful change in my government than within Blue Cross.
> God forbid you have Rectal Cancer in Germany, generally not covered by the Government plan.
Does it not? Booking health (the Link you provided) appears to be a site for finding the best specialists around the world. The fact that it has a price list just implies to me that it has a cost for non German citizens. The article below the list even talks about getting "your cancer treatment in Germany for lower cost" which implies to me it's aimed at non-german residents. You may be correct, but I was not able to find any sources corroborating your claim with a quick search. Even if so, again as broken as government can be, I have a lot more say there than a private insurance company.
What? I'm sorry that is not a reasonable statement. I have no idea what point you are trying to make.
>>Again the drug they wanted her taking had NEVER been so much as studied for treating MS
Again, without specifics I find that extremely difficult to believe.
>> because I'm of the radical mind that even the poor and unemployed deserve health care
I believe you are confusing administrators and payors. Even wealthy families get subsidized health insurance on the Marketplace. Medicaid is nearly free and medicare is for over 65 individuals. Do you know who administers Medicaid and Medicare?
>>This should not be legal.
It isn't which is why I'm having a difficult time believing your story.
>>Blue Cross
Which Blue Cross? What is the plan design? Was it employer based? What is the PBM?
>>appears to be a site for finding the best specialists around the world.
And yet that has nothing to do with the fact that healthcare is not free in Germany, and not single payer either, contrary to what 'radicals' like to claim.
>>I have a lot more say there than a private insurance company.
Specifically, how so?
> What? I'm sorry that is not a reasonable statement. I have no idea what point you are trying to make.
You stated that the insurance insisting on a non-related drug was step therapy, which is where one explores cheaper and less invasive treatments before exploring more expensive/invasive options. The point was step therapy does not include exploring treatment that there is no reasonable expectation will help.
> Again, without specifics I find that extremely difficult to believe.
I'm sorry. I'm not going to make my sister send me the drug names for a random internet discussion, and given the names of these things I unsurprisingly don't remember them. If you think I'm lying so be it, frankly I don't see how knowing the specific drugs involved would make that less likely.
FWIW it was a Parkinson's drug they wanted her to take, which might seem like it makes sense given the similarities between the diseases symptoms, but only if one doesn't understand the difference in cause and progression.
>> This should not be legal.
> It isn't which is why I'm having a difficult time believing your story.
The fact that you have a hard time believing that an insurance company might illegally deny a drug feels pretty shocking to me. The lawyer essentially agreed, it's probably not legal, but advised that fighting it would be extremely expensive and the best case outcome would be that she gets the drug, but it's more likely she runs out of money long before then. There are essentially no consequences when insurance companies do this, so of course they do. The worst case for them is they have to pay for the treatment eventually and most of the time it saves money.
> And yet that has nothing to do with the fact that healthcare is not free in Germany, and not single payer either, contrary to what 'radicals' like to claim.
I made no claim about Germany. I have no idea why you brought it up. I thought you were pointing out flaws in single payer systems, but now you tell me it isn't single payer?
>> I have a lot more say there than a private insurance company.
> Specifically, how so?
Voting, writing my senator/congressman, etc. Our government is broken in a lot of ways but are you really asserting we have zero influence? Because that's what I have with private companies.
No, I find it hard to believe, as you alluded to, Blue Cross were trying to get her on the equivalent of pepto for cancer. A Parkinson's drug likely has a correlation and is hardly pepto which is over the counter. Sounds like you acknowledge that even...
>>Voting, writing my senator/congressman, etc. Our government is broken in a lot of ways but are you really asserting we have zero influence? Because that's what I have with private companies.
You want to get an insurance company to respond quickly? Each State has an insurance commission with a phone line, email etc. I wish you the best of luck with Congress.
It takes at least three pieces of info to positively ID the correct policy for a large (national) insurance company. It's a HIPAA violation if they send you the wrong files.
If you have a common name, have a relative with a similar name, etc, it's especially important to make sure to include things like policy numbers and claim numbers.
I wish this sort of article were not necessary. This is not how it should work, though I don't know how to fix this mess.
- What's up with this $2000 bill?
- You went to an out-of-network clinic.
- I didn't know it was out-of-network; my doctor recommended it to me.
- [...pause...] How about $200?
And that was it. My $2000 bill became $200 for a completely unknown reason. I didn't ask for a price reduction; I didn't even know that was possible.
The whole situation was, and still is, bizarre to me. What is the pricing based on, if it can be dropped so drastically without explanation?
Maybe for you being a victim, that's your problem. Don't lump me into your issues. I prefer to create my own destiny. I am not a victim. I can handle myself. I have the ability to ask for help when needed.
As a matter of fact I'd say most of my circle of friends colleagues and acquaintances would agree with not being a victim. Probably be offended by your statement actually.
You do not owe the insurance company $2,000, and the insurance company does not send you bills. So what is their incentive to pay the healthcare provider the $1,800, or otherwise engage with them to reduce how much the healthcare provider charged you who has no contract with them (since they are out of network)?
Alternatively I could also get insured with a company that covers all hospitals but those have higher premiums (around €50 per month extra).
I do too. I'm in the USA. Most US carriers provide an app. My app also shows Prescriptions, how much of my deductible is left, provider search, my ID card, EOBs claims and treatment cost estimates.
>>Alternatively I could also get insured with a company that covers all hospitals but those have higher premiums
Whoah we in America thought all insurance and healthcare is free in eurolands! (i'm being sarcastic, some of us realize the truth, some on the left dont.)