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| Home : Consumers : Health insurance : Resolving health care insurance disputes |
Resolving health care insurance disputes
Faced with strong public demand for assistance in dealing with health maintenance organizations (HMOs) and other health care insurers, state insurance departments routinely go to considerable lengths when intervening on behalf of consumers who plead for help in dealing with health care claim denials, disputed claims, slow payments by health insurers, and premium-related matters. A review of recent cases turned up these typical examples of state insurance departments working to safeguard the interests of health insurance consumers:
Indiana. A woman purchased a health insurance policy that contained a pre-existing condition limitation. When the consumer made a claim in 1996 for surgery to deal with reflux esophagitis, she was denied coverage on the basis that she had had surgery that successfully corrected the same condition in 1990. In her complaint to the Indiana Department of Insurance, the consumer included letters from two treating physicians, both of whom said the condition was not pre-existing. One physician compared it to breaking the same leg twice over the course of several years. After the Department intervened, the insurer reconsidered its position and the consumer's claims of over $36,000 were paid in full.
Maryland. In 1996, a Bethesda woman hiking in the Shenandoah Mountains suffered skull, arm and pelvis fractures in falling from a 40-foot-high cliff. She had to be evacuated from the site by helicopter and treated in a nearby Virginia hospital. When her Maryland-based HMO refused to pay because it had not granted "pre-authorization," efforts were made to force collection of $10,000 in outstanding medical bills. The woman sought help from the Maryland Insurance Administration. When the HMO offered to cover roughly half the unpaid amount, the Administration made it clear that the HMO was in the wrong by fining it $1,000 and requiring that it pay all the medical costs.
North Dakota. In March 1998, a woman called the North Dakota Insurance Department on behalf of her daughter, who had been in a serious automobile accident in which her brother was killed. The sister was being treated for debilitating stress by a therapist licensed in South Dakota. When the insurance company denied the claim on the basis that the therapist did not meet North Dakota licensing requirements, the North Dakota Insurance Department intervened. The company eventually agreed to pay the claim on the basis that the therapist was licensed and in good standing in the neighboring state.
Washington state. A large health insurer canceled its contract with the only hospital in a small western Washington city, notifying consumers that they would have to drive 50 miles to the nearest big city and use hospitals there for inpatient and outpatient treatments. When a consumer complained to the Washington Insurance Commission's toll-free hotline, a state compliance officer went into action and notified the insurer that such a move violated the state's continuity-of-care requirements. The insurer relented and the consumer was notified that his surgery would take place as scheduled in the original hospital. The Washington Insurance Commission's Health Policy Division then reviewed the contract cancellation in light of the state's network-adequacy regulations. A week later, the insurer notified subscribers that it had changed its mind and the hospital was restored to its network for all those insured.
Montana. A consumer speaking no English used an interpreter to communicate with the Consumer Services Section of the Montana State Auditor's office when his claim for treatment of was denied by a group health carrier that maintained the State Auditor had no jurisdiction over it. The insurer maintained that it was headquartered in Illinois and, as such, beyond the reach of Montana health insurance authorities. The Auditor's office investigated the case, concluded that it had jurisdiction under Montana group insurance laws, and directly facilitated the recovery of $67,454 on behalf of the non-English-speaking state resident.
The cases highlighted above reflect the variety of techniques that state insurance departments have developed in order to provide direct, one-on-one assistance with individuals with a health insurance dispute. All states have a designated contact for health insurance related complaints.
Click here to access other states' insurance departments.
A growing number of states are setting up sophisticated consumer complaint handling systems, including dedicated investigators, toll-free 800 numbers, and special "plain English" publications for consumers. A typical example is the Washington Insurance Commission, which calculates that it has put back $4.4 million into the pockets of health care consumers, including roughly $600,000 in refunds, lowered premiums, and identification of more appropriate coverage through its 350-person Statewide Health Insurance Benefits Advisor volunteer network located in communities across the state.
State insurance departments receive hundreds of calls, letters and other expressions of gratitude each year from health insurance consumers who they have assisted to resolve disputes with HMOs. A Beaver Dam, Kentucky man who no longer had to face the prospect of being dunned for unpaid hospital bills wrote the following in April 1998 to the Kentucky Department of Insurance: "I want to express my gratitude to you and your office for your assistance in this matter. I truly feel that it was your involvement that brought this matter to a favorable conclusion for me. To know there is assistance and recourse out there for people like me who have problems we cannot resolve ourselves with insurance companies is reassuring. Thank you."
In the same month, a woman who had been aided by the intervention of the Ohio Insurance Department wrote the following: "I want to thank you for the wonderful job you did with my problem. For 13 months I was trying to get an answer using phone calls and letters. You folks got my answer in about 10 days."
The scope of state insurance regulation
State insurance regulation of health insurance covers an estimated 77 million Americans, roughly three out of five (62 percent) of those with private coverage. The health insurance regulatory structure in the U.S. is as follows:
- State regulation. Some employer or employee groups purchase health insurance coverage from an insurance company. Others may purchase group health coverage from a health maintenance organization. Both are called fully insured health benefit plans. Insurers of such plans are regulated by state insurance commissions.
- Federal regulation. Some employer or employee groups, however, provide what are called self-funded health benefit plans. This means your employer or employee group may set aside funds and employee premiums each month to pay health coverage claims submitted to the plan. If the plan is self-funded and offered by a private sector employer or bona fide union, the designated regulatory authority is the U.S. Department of Labor's Pension and Welfare Benefits Administration. States are not permitted to regulate most valid self-funded plans authorized by Congress under terms of the Employee Retirement Income Security Act (ERISA). In most cases, this means: (1) state insurance departments have no authority to investigate complaints that involve valid single-employer or union-sponsored self-funded ERISA plans; (2) certain other group health plans provided by governments, churches, some school districts and out-of-state Blue Cross organizations also are exempt from most state regulations; and (3) state laws requiring specific benefits in health care plans seldom apply to valid self-funded ERISA plans.
Understanding types of health insurance
Each year, fewer and fewer Americans are covered under traditional fee-for-service health insurance plans, in which insured individuals go to a doctor of their choosing and then submit health insurance claims. Today, more and more Americans are covered by one of the following arrangements:
- Health maintenance organization (HMO). An HMO provides health services through a network of doctors, hospitals, laboratories, etc. The health care providers may either be HMO employees or have some other contract arrangement with the HMO. HMO plans pay providers a monthly set amount (a capitation fee) regardless of the amount of services performed. When you enroll in an HMO, you choose one of the doctors as your primary care physician (PCP) to manage all of your health care. Whenever you need health care, you first consult your primary care physician. Your PCP may refer you to an HMO-approved specialist.
- Preferred provider organization (PPO). A PPO is a group of doctors, hospitals, and other health care providers (preferred providers) who have agreed to provide services to members of a health plan for discounted fees. Some employers combine the PPO with a traditional major medical plan so you can use providers who are not on the PPO's preferred list. But to encourage you to use a provider who is on the PPO list, you will usually have lower out-of-pocket expenses than if you use a provider who is not on the list.
- Point of Service Plans. These plans are essentially HMOs that allow members to use services provided outside of the network without prior approval from a network doctor. Point of service plans offer lower deductibles and no coinsurance for visits to doctors inside the network. Visits outside the network normally require the payment of deductibles and coinsurance the same as a standard insurance policy.
Checking out a health insurance provider
Before you buy health coverage, find out about the company selling the plan. Here are factors to consider:
- Customer service. Find out how the company services its policyholders. Does the company have a toll-free customer service number?
- Complaint history. Has the company had an unusually high number of consumer complaints?
- Licensing status. Call your state insurance department to find out if the insurance company is licensed to do business in your state.
- Cost. Premiums for health insurance will vary greatly because there are no standard plans. When you look at bids from several companies, you will also need to look carefully at the benefits offered. Also, keep in mind that the actual cost for your health coverage will be determined after you submit information about your health.
- Financial stability. Financial stability helps ensure that a company can pay its claims. Your state insurance department establishes requirements that each company must follow and continually monitors the financial stability of insurance companies operating in the state. Independent organizations also rate the financial stability of insurance companies. Keep in mind that these ratings are opinions only and do not guarantee that a company is financially sound. Your public library may also have published ratings from these sources.
Questions to ask when shopping for health insurance
About coverage
- What does the plan pay for?
- What does the plan not pay for/exclude?
- What are the limits on pre-existing medical conditions?Will the plan pay for preventive care, immunizations, well-baby care, substance abuse, organ transplants, vision care, dental care, infertility treatment, durable medical equipment or chiropractic care?
- Will the plan pay for prescriptions?
- Does the plan have mental health benefits?
- Will the plan pay for long term physical therapy?
About premiums
- Do rates increase as you age?
- How often can rates be changed?
- How much do you have to pay when you receive health care services (copayments and deductibles)?
- Are there any limits on how much you must pay for health care services you receive (out-of-pocket maximums)?
- Are there any limits on the number of times you may receive a service (lifetime maximums or annual benefit caps)?
About customer service
- Has the company had an unusually high number of consumer complaints?
- What happens when you call the company's consumer complaint number?
- How long does it take to reach a real person?
How to make a health insurance claim/dispute denials
Things to do before you file a claim:
- Review your policy or employee booklet carefully to be sure the service in question is covered.
Follow any managed care rules, including pre-certification requirements and use of network providers. - Give claim forms to the provider, with your policy number and other identifying information.
How to submit claim properly:
- Find out if your provider submits the claim for you or if you need to do it. If you need to do it, review the information to be sure it is complete and correct.
- File it as soon as you get the bill from the provider.
- Send it to the right address.
- Keep a copy for your reference.
- Allow reasonable time for company to process your claim. The company needs to inform you if it needs any additional information to complete the claim. Sometimes, it will request additional information directly from the providers or return the claim form to you to get more information. After the company has all the information it needs, it has a certain number of working days to process your claim. The company must send you an explanation of benefits that explains its decision.
If your claim is paid:
- If you assigned benefits to the provider, the benefit check will be sent directly to the provider.
- You will pay any deductibles and co-insurance.
- If you did not assign the benefits, the check will come to you and you will need to pay your providers for the entire amount.
If your claim is denied:
- The reason for denial should be stated on your explanation of benefits. If you disagree with the basis stated for denial, check your policy or employee booklet for the company's appeal procedures.
- The company should be able to answer procedural questions about appeals over the phone.
- Your appeal should be in writing and may require information from your doctor.
Filing a consumer complaint:
If you've tried unsuccessfully to resolve a claim problem with your company or agent, contact your state insurance commission. Very often, companies will resolve disputes after the agency intervenes on a consumer's behalf. If it becomes necessary to file a written complaint with the state insurance department, be sure to include the following information to speed processing of your inquiry:
- Include your name, address, and daytime phone number.
- State your case briefly, giving full explanation of the problem and what type of insurance is involved.
- Include the name of your insurance company, policy number, and the name of the agent or adjuster involved.
- Supply any documentation you have to support your case including phone notes.
- State what has been done to resolve your problem including whom you have talked to and what you were told.
- For future reference, keep a copy of your letter to the state insurance department.
- If a decision is made that you have a legitimate complaint, your state insurance department will investigate your complaint and keep you advised of what has happened.
- If a company insists your complaint or claim is not valid, the state insurance company cannot require the company to make payment unless a state insurance law has been violated. In some cases, legal action is the only way to resolve health insurance disputes. You may want to consult a lawyer if your complaint cannot be resolved and it involves a significant amount of money.
What if you aren't protected by your state?
If the health plan is self-funded and offered by a private sector employer or bona fide union, take unresolved complaints to the U.S. Department of Labor (DOL) Pension and Welfare Benefits Administration. The DOL does not interpret provisions of any particular health benefit plan or require employers to pay claims, but may investigate your complaint. In certain disputes, the DOL suggests personal legal advice may be your only option.
If the plan is self-funded but offered through a government or church employer, follow the appeals procedures outlined in your benefit booklet and other plan documents. In most cases ultimate responsibility for resolving disputes rests with the governing body of the employer sponsoring the plan, such as a school board.
If you have a disability, you may have certain protections available under the Americans with Disabilities Act (ADA) if your self-funded coverage is dropped or limited. You can reach the ADA Technical Assistance Center at 1.800.949.4232 or the U.S. Department of Justice at 1.800.514.0301 (voice) or 1.800.514.0383 (TDD).
About the North Dakota Insurance Department
The primary mission of the North Dakota Insurance Department is to help and protect consumers. Many times, the problems relating to health insurance come down to a miscommunication, misunderstanding of filing procedures, or confusion over the definition of terms. At these times, a simple call from an insurance department employee can quickly resolve a dispute. Even in situations in which the department has no powers of intervention, the staff is often able to point the consumer in the right direction and headed on the road to resolution.
The North Dakota Insurance Department is here to ensure that companies, agents, and consumers all adhere to the laws and regulations of the State of North Dakota. If everyone plays fair in the marketplace, consumers will have the security from financial devastation of accident or illness that health insurance provides.
If you have questions about this information, or want to file a complaint, contact:
North Dakota Insurance Department
insurance@nd.gov
State Capitol, fifth floor
600 E. Boulevard Ave.
Bismarck, ND 58505-0320
701.328.2440
701.328.4880 fax
800.247.0560 toll free
800.366.6888 (TTY)
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