When your health plan won't pay

By Insure.com

HMO members know the drill. Got a sore throat? See your primary care physician (PCP). Need an allergy specialist? Ask your PCP for a referral. Having a cyst surgically removed? You make sure you get your health insurer's prior approval. You understand that if you don't follow your health plan's rules, your claims won't be covered. But sometimes you do everything right and your health insurer still doesn't play by the rules.

For example, you get your plan's permission for surgery. Months after the operation, you get a bill in the mail and discover that your X-rays were read by a radiologist who doesn't participate in your health provider's network of doctors. X-ray claim denied.

Or, your benefits handbook says your insurer fully covers diabetic test strips. But when you go to pick them up, your pharmacist charges you the full price, saying your handbook -- the only one you've ever been given -- must be out of date. Claim denied.

5 ways to prevent claims problems

When you have a group health plan through work, you're not responsible for negotiating your own health-care contract. But you can educate yourself and ask your employer plenty of questions about your group health plan. Unfortunately, the responsibility for payment of a claim falls to the consumer unless the group health contract states otherwise. Here are five steps you can take to help minimize any "claims surprises" like those outlined above.

• Never rely on what you think is true about benefits or providers that are covered under your plan -- even if they are stated in your most recent benefits handbook. Always double check whether the benefits, services or providers you need are covered under your plan before you receive treatment.

• You can do this by calling your plan's customer-service department. Remember to take notes. Get the representative's name and write it down, along with the date, time and general substance of your conversation.

• If a claim problem arises and you need to file a grievance, these notes will come in handy. Most insurers' customer-service phone calls are tape-recorded. Having the date and time of your call will make locating your call history with the representative much easier.

• Should you have a problem with a claim, call the insurer and ask for an explanation. Again, remember to take detailed notes.

• If the explanation is not consistent with your understanding of your health benefits, call or visit the person in your company responsible for benefits administration. Because of their position, they may be able to quickly resolve your problem.

• If you have a claim problem that's unresolved, file a grievance with your health plan. If you get a denial, don't give up. In many states, the complaint eventually goes before a grievance committee that's outside the plan, called external review. There's always a chance the denial may be reversed.

• You may also want to complain to the appropriate officials who regulate your health plan. If your health plan is self-funded by your employer, it is regulated by the U.S. Department of Labor.

• Otherwise, your state insurance department regulates your health plan. Your insurance department has a complaint procedure that will trigger an investigation into your problem.

• If you discover your providers or benefits have changed and you have not been notified, bring it to the attention of the person in your company responsible for benefits administration. Ask if this situation is covered under the company's contract with your health plan. If it's not, ask how a situation like this will be prevented in the future.

How employers purchase health care

The seeds of some of the most common claims problems are sown when employers purchase health care for their employees, according to Maria K. Todd, president and CEO of HealthPro Consulting Consortium, a private managed-care consulting firm in Aurora, Colo., and a national mediator for managed-care payer-provider disputes.

Todd says most employers use health insurance brokers to whom they give a list of desired benefits. The broker, in turn, identifies insurers that offer affordable plans with those benefits. Once the employer selects an insurer, the broker hands the employer a contract to review and sign.

"But the average human resources director really isn't aware he or she is being given a boilerplate contract that favors the health plan," Todd says.

Written in legalese, the contract generally focuses on which benefits are included and how much they'll cost. Although this is crucial information, what is omitted from the contract is just as important.

Issues for negotiation

There are some health-plan rules that may be negotiated, Todd says, particularly if the employer is large enough to command real bargaining power with the insurer. Yet few employers are aware of this. Some issues that may be open for negotiation include:

• Who are the providers in the network?

• What happens when the network loses a provider that threatens the network's adequacy? (If the plan loses its only orthopedic surgeon, will it compensate by paying for its members to see an out-of-network surgeon?)

• What happens when a new member can't find a network provider who's accepting new patients?

• How long are provider directories and benefit handbooks good? (For example, if the plan loses 5% or more of its providers, does it have to reprint its provider directory and notify plan members?)

If employers don't negotiate these issues with health insurers in the beginning, there are no guidelines in place for identifying who's responsible if claims problems arise. Todd says that unless the employer has negotiated the finer details of health plan operations matters up front in its contract with the insurance company, the insurer can "pretty much act with impunity" in denying claims and requests for treatment that stem from these contractual issues.

But some say that such detailed negotiations are unrealistic. Richard Coorsh, spokesperson for America's Health Insurance Plans (formerly the Health Insurance Association of America), says, "In such a competitive marketplace, insurers have to compete on many different levels, including economic," he says. "But insurers also have to retain customers and, in order to do that, they have to be as responsive as possible to their customers."

It's virtually impossible for insurers to negotiate every possible health plan operations scenario in their contracts with employers, Coorsh says, and these contracts may contain too many fine details that might very well impede the insurers from responding flexibly on a case-by-case basis. Besides, he adds, the insurers already have well-defined appeals procedures in place.

However, appeals procedures don't prevent problems from occurring in the first place. If neither your employer nor your insurer has defined who's to blame when your health plan doesn't work the way it should, ultimately, the responsibility falls on you to pay for your treatment.

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