PRIVATE HEALTH INSURANCE: Complex rules, hidden features and other insurance contracts terms that ca

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PRIVATE HEALTH INSURANCE Complex rules, hidden
features and other insurance contracts terms that
can leave consumers with high out-of-pocket
liabilityFamilies USAJanuary 2008

• Mila Kofman
• Karen Pollitz
• Health Policy Institute
• Georgetown University
• 202-687-0880

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BACKGROUND

• KFF study on maternity coverage under
  consumer-driven health plans (CDHP) June 2007
  www.kff.org/womenshealth/upload/7636.pdf
• Methodology
• Review and analyze full insurance contracts
  (traditional and CDHP)
• Individual, small group, and large group markets
• CA, MD, NC, and national

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Surprises

• Coverage rules and other features
• Insurance contracts
• Ambiguities
• Not written in English
• Summaries misleading (and contradictions with
  policy language)
• MISC cant get copies of full insurance
  contracts (proprietary)

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Health Insurance Coverage Features

• Cost sharing
• Deductible
• Coinsurance and co-pays
• OOP maximum
• Provider network
• Benefit limits/exclusions

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Rules of coverage
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Rules annual deductibles

• Family coverage family or embedded individual
  ded.
• When does family deductible begin (at birth? 30
  days later, etc.)
• 1 deductible or separate out and in-network,
  prescriptions
• What qualifies toward deductible
• In-network? out-of-network (if 1 deductible)?
  In-network toward out-of-network deductible?
• Co-payments? Coinsurance? Penalties (failure to
  preauthorize)
• Benefits without a deductible (preventive
  in-network only preventive out-of-network
  post-deductible none)

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Rules out-of-pocket annual maximum protection
(yes/no)

• Different limits in and out-of-network?
• Limits only on in-network or only on
  out-of-network?
• Out-of-network allowable charges count only
  toward out-of-network or also toward in-network?
• In-network count toward in-network only or also
  toward out-of-network?
• Annual deductibles count yes/no?
• Co-payments? Co-insurance? Penalties (failure to
  preauthorize)?

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Other features

• Lifetime policy limits claims under another
  policy with same carrier count toward lifetime
  limit
• Balance billing (if not explicit in insurance
  contract, is it in provider contracts?)
• No weekend hospital admissions (except for
  emergencies pregnancy-labor?)
• Wont pay unless receive proper paperwork from
  provider within 60 days
• Wont pay unless patient has paid his/her
  co-insurance

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Network provider reimbursement

• In determining whether or how much of a covered
  charge is
• allowable, we will consider the following
  factors
• the most appropriate procedures and medical
  service codes according to the Physicians
  Current Procedural Terminology or the Health Care
  Financing Administration (HCFA) standards that
  were current during the time the services or
  supplies were provided
• the actual charges
• specialty training, work value factors, practice
  costs, regional geographic factors and/or
  inflation factors (including but not limited to
  any state or national resources based relative
  value system)
• the negotiated rate with the physician, facility
  or supplier
• the amount charged for the same or comparable
  services or supplies in the same region or in
  similar geographic regions. or
• consideration of new procedures, services or
  supplies in comparison to commonly used
  procedures, services or supplies.

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Challenges to Transparency

• Fine print (not written in ENGLISH)
• Vague or confusing terminology
• Typo in deductible (1000 or 2000)
• What costs count toward deductible, OOP?
• What authorization rules/penalties?
• High degree of variation in policies
• THIS AGREEMENT SHOULD BE READ AND RE-READ IN
  ITS ENTIRETY

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Summary

• Financial consequences of complexity
• Hidden costs
• Lack of transparency (magnified under CDHPs)

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FUTURE PRIVATE HEALTH INSURANCE REFORMS

• Federal and state reforms build on private
  health insurance coverage
• Transparency and consumer/patient decision making
  

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What can be done?

• Establish better standards for health insurance
  contracts
• Standardize language in insurance contracts
• 12th grade reading level
• Standardize features (a menu of choices not an
  infinite number of options)
• Prohibit unfair terms
• conflicting terms
• unknown (non-contract rate) reimbursement even
  for network provider etc.
• conditional reimbursement (contingent on provider
  submission insureds co-insurance liability)

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• Standing in the middle of the road is very
  dangerous you get knocked down by the traffic
  from both sides.
• Margaret Thatcher
• Alone we can do so little together we can do so
  much.
• Helen Keller