Insurance Regulatory Law’s Van Mayhall has put together a particularly awesome Cavalcade of Risk. Get out your pencils and head over there to read the great collection of articles and complete the crossword puzzle that goes along with them. And for those of us who are always stumped by the crossword puzzles in the NY Times, this one is a bit easier to complete.
Hands down, my favorite article in this Cavalcade comes from Dr. Jaan Sidorov, writing about health insurance carriers, fine print and preauthorizations. I agree with every point he makes. And to answer his last question, I’d definitely rather have a preauthorization – and know before I get treatment that my health insurance carrier is ok with it – than have a retroactive audit after the procedure is done.
The basic point Jaan makes is that – yes, health insurance carriers use a lot of legal-eze and tend to go over claims with a fine-toothed comb. But much of the legal jargon they use on their paperwork is required by state regulations. A great example of this is the “business group of one” questions that are required by Colorado law to appear on all individual health insurance applications (to determine if an applicant qualifies as a business group of one and would thus be eligible for a guaranteed-issue business group of one policy) They are confusing and the double negatives in the questions tend to throw people off. Jay fields questions from applicants who are stumped by those four questions every single day. And yet the obscure wording is mandated by the state, not by the health insurance carriers.
With regards to health insurance carriers going over claims carefully, again Jaan makes the point that they don’t have much choice. Doctors and patients are often willing to lie or bend the truth in order to get something covered by health insurance when it shouldn’t technically be covered based on the terms of the contract.
High deductibles and ever-increasing premiums make people feel like they’re not “getting their money’s worth” from their coverage (although it helps to remember that you really don’t want to ever get your money’s worth from a health insurance policy. If you do, you’re probably having a very bad day). And that might make people more inclined to fudge things a bit in order to get something covered. But in the long run, that just results in higher premiums.
Starting in 2014, health insurance will be guaranteed issue and all of us will be required to have coverage. But until then, individual health insurance is priced based on medical underwriting and (in most cases) slightly less comprehensive benefits than group policies. That’s why it’s less expensive to have an individual policy than a group policy or a guaranteed issue policy like CoverColorado. If health insurance carriers (both individual and group) don’t go over their claims closely and utilize preauthorizations, they run the risk of being defrauded – which will only drive premiums higher than they already are. If they don’t use the specific legal-eze required by state regulations, they will run afoul of the Division of Insurance. And if individual health insurance carriers don’t utilize medical underwriting, their premiums would be significantly higher (especially now, before the individual mandate starts in 2014. The requirement that everyone have health insurance should help to offset the higher premiums that will go along with providing guaranteed issue coverage).
There are plenty of examples of health insurance carriers using unfair or deceptive practices. We’re lucky in Colorado to have a strong Division of Insurance that works hard to protect consumers. Regulations that protect patients and insureds from unfair business practices are largely beneficial (and tend to weed out the shady insurance carriers). But Jaan’s article highlights the fact that health insurance carriers also have to protect themselves. If they don’t, they will end up with premiums that are far higher than the rest of their competition – and that isn’t sustainable.