My esteamed (pun intended) colleague and I spoke at length yesterday about a letter he received from Golden Rule (United Healthcare’s subsidiary). I’m paraphrasing; here’s the key points.
1. Golden Rule stated that their policy is to reprice bills for non-covered services to reflect the rate they have negotiated with the provider, and to send that information to the insured and provider.
2. It is up to the provider to determine if they will accept that amount, or if they want to balance bill the patient.
3. Here’s the corker – Golden Rule stated that this policy is not disclosed to the insured in any written materials because it is contained in the contract between the provider and Golden Rule, and is confidential. Their claim is that this matter is between the insurer and the provider, as the insured is “self-insured” for that risk…
Again, neither I (an ex-insurance company executive) or anyone else I have spoken with understand this policy.
Here’s where it really gets unpleasant. UHC, and other insurance companies, sell health plans to employers where the employer is liable for the first $25,000, $100,000, or other level of risk. Beyond that, UHC is “on the hook” for the claims expense. Moreover, employees insured through these plans who receive “non-covered” services from UHC-contracted providers usually get the benefit of the negotiated reimbursement rates.
Colleague suggested, and I agree, that this inconsistency is troubling. And not likely to make individuals, or supporters of consumer-directed health care, very happy.
I’m amazed at the blithe ignorance exhibited by insurance companies. Do they think individuals will not be upset about this? Do they think this will engender warm feelings of brand loyalty? Or do they think this will somehow endear them to their providers, even if it angers their policyholders?
Who’s the customer here?
Jul
26
Wow!
I don’t think it is blithe ignorance on their part. To a certain extent, the insurance companies may WANT individuals to have bad experiences with HSAs. I am a quite removed from this, but my sense is that if HSAs grow in market share and they become tax-deferred savings vehicles for people, you may see managers of 401k-type business try to get involved by renting networks from companies such as Multiplan and buying reinsurance to cover their exposures. In other words, if growth in HSAs would open up the insurers to additional competition (or if they believe the margins they will be able to earn from a high deductible plan will be lower), they might want people to learn to distrust the service.
Does this make any sense?
Can you clear something up for me? When this thread started it sounded like the issue your “colleague” had was related to covered services that just fell under the deductible. The most recent blogs were all about “non-covered” services – things that are truly outside of benefits.
While I believe customers will not necessarily make a distinction as it is all “patient liability”, I think it is worth exploring these seperately. Every single participant in a CDH/HDH will experience the deductible while only a subset will have non-covered services.
Tom – suggest you review the series of posts to see the evolution of the subject.
I would disagree that a subset will have non-covered services – have you read an HSA benefit plan that includes everything? I haven’t, and therefore I believe most policyholders will suffer the same fate as Colleague.
Rational – your scenario is a possibility, but unlikely. United started its own bank to get into this business (Exante) and looks to be doing quite well. other banks are partnering w HSA sellers to mutually benefit.
There are two separate issues with respect to covered services that fall below the deductible. First, it seems to defy common sense that an insurer would think it is a reasonable business proposition to pay the discounted price for a covered service above the deductible (insurer writes the check) but expect the insured to pay full list if it falls below the deductible.
The second issue is the magnitude of the difference between full list and the discounted rate. In the case of prescription drugs, for example, retail pharmacies earn a gross margin that is about 15 percentage points higher on average from self-pay (cash) customers than from insured customers. A differential in that range is reasonable, in my view. If the negotiated discount is 40 or 50 or 60 percent below what may be a completely arbitrary and artificial list price, however, (which is not uncommon for hospital and lab fees) it would be especially outrageous to have to pay full list even if you have insurance just because you haven’t hit your deductible yet.
If insurers do not fix this on their own, it should be an area for which regulatory intervention would probably be appropriate.
BC, my understanding is that the deductible is entirely irrelevant to the discussion. I was confused on this point as well, but the guys at InsureBlog cleared it up for me. It would be disastrous of an HSA plan to have a policy that charged its members full boat when they were under the deductible.
But I just can’t find the outrage about this and I’m someone who gets outraged by this kind of stuff easily (don’t get me started on specialty cardiology hospitals, for example). If a contract excludes a type of service, why would you expect that service to be covered at in-network rates? For example: What if you want to see a psychiatrist, but your plan doesn’t cover behavioral health. And your plan doesn’t even contract with psychiatrists because they don’t offer any mental health benefits to anybody. Obviously the plan wouldn’t be expected to give you an in-network rate. There would be no such thing in the first place. It seems like you’re expecting the plan to be penalized just because they offer a full slate of services to other people.
Spike, I agree that if a service is not covered by the policy, the insured is not entitled to the contract rate because there is none. What I am questioning is the spread between contract rates and list price. In my prescription drug example above, I said that a 15% differential between list price and what the retail pharmacy collects (including co-pays) from insurance is reasonable. Anything beyond 20% at most is not, in my opinion.
The key issue in this context is the difference in the provider’s cost to serve. The insurer is not guaranteeing the provider any specific level of volume (revenue) to justify the discount but merely providing potential access to insured lives. If anything, a self-pay patient who pays at the time of service probably cost less to serve than one who has insurance because there is no need to submit the claim to the insurer and wait for payment.
I agree completely about the absurdity of billed charges, but that strikes me as a separate issue. I would be surprised to find a provider who would hesitate to take the UnitedHealth allowed amount in cash on the day of service from an uninsured patient. Isn’t a massive class action lawsuit regarding this issue currently being pursued?
I was at my doctor the other day and saw they were offering a program to the uninsured where you paid $20 a month to get the “privilege” of a 25% discount off of billed charges. My EOB showed that the allowed amount from my insurer was about 60% of billed charges. If I were uninsured, I’d want a piece of the class action lawsuit, that’s for sure.