Health insurers deny valid claims with impunity

July 2, 2013 

If there is one area in which the American consumer could use greater protection, it is in the purchase of medical services. This is true whether or not you have health insurance. I should know.

For 11 years following our move to the United States, I was the unfortunate member of the family who had to deal with health insurers.

Do you call your health insurer to find out if any given procedure will be covered by your policy?

I have done so many times with four different companies.

In each instance, I have had to listen to a warning that whatever I am told by the agent taking my call, I won’t find out if I am covered until such time as I have undergone the procedure and that the insurer has “processed” the claim and made a determination of benefits.

Processing a claim can take months. Once the insurer is done, the dreaded “Explanation of Benefits” is mailed out to both the insured and the provider. Opening EOBs came to feel very much like opening a letter from the IRS.

Whatever you may have been told by the agent, few services are covered initially. On the EOB, you will find references to all sorts of obscure codes that explain why the insurer is not paying for the medical services.

Since your healthcare provider receives the same information from the insurer, you will begin receiving bills from the provider for the procedure you thought was covered by insurance

If you are like me, you call the insurer again. Once you get through to an agent, you explain that you expected the services to have been covered and possibly read back the note you made from your first call.

If you are in luck, you will be told that someone in your doctor’s office miscoded the claim, and that the agent will now re-code it properly and send it back for further “processing.” If you are not so lucky, you will likely get into a conversation about the distinctions between diagnostic tests and routine tests or some other esoteric nuances that purportedly explain why it is your responsibility to pay.

The next EOB will likely reach your mailbox several weeks later and may or may not advise of payment. If the second EOB reads much like the first, you may call yet again or decide that it is time to use the right to appeal.

With one health insurer, I ended up appealing nearly every EOB over a period of a year or more. I usually won, but it can be nearly a full-time occupation if your family is large enough, and several members have required medical services.

What can be done?

Here are a few suggestions that the N.C. legislature could consider at the same time as it is considering new laws forcing hospitals to disclose prices.

First, require insurers to give a binding estimate to every client who calls to inquire about the cost of a procedure and insurance benefits. Following all such phone calls, the insured would know what the cost will be and what will be the insured’s out of pocket expense.

One of two things will happen.

Either the health insurers will simplify their policies so that the agents can actually give customer service to their customers.

Alternatively, if insurers insist on keeping current Rube Goldberg policies, they can recruit the cream of the crop among the graduates from MIT, Stanford and Duke Universities to answer their phones and explain the opaque and arcane to the callers.

Second, there should be a penalty for any insurer who denies a claim that is subsequently found to be valid.

Now, insurers know that they can deny claims with impunity. Some will always go away after the first “no.” That is pure profit to the insurer. Others will give up when they tire of making phone calls. More profit.

Currently, if the insurer ends up paying a claim it should have paid initially, it costs no more no matter how much grief it has caused the customer and provider.

It could not be done, you say? In Switzerland, an insurer who does not pay a claim within five days has to give its client a free month’s premium.

Swiss insurers, among the biggest and most sophisticated in the world, have learned to live by those rules and still make sizable profits for the health insurance business.

I would pay a pretty penny to be the fly on the wall at any meeting of health insurers if my proposals were ever contemplated by our state.

Marc Landry can be reached at

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