Insurance Companies Fined for Underpayments, Imagine That

Never bring a knife to a gunfight.

Sean Connery, the Untouchables

Thirty years ago, one of our billing office employees told me an interesting story. While previously working for a large insurance company she had been instructed to throw away every third batch of bills. The insurance companies knew that many of these claims would never be followed-up, further increasing their profits.

Although many things have changed in 30 years, health insurers are still inventing new and creative ways to avoid paying providers. Companies still routinely deny, underpay or delay payments, both to practitioners and hospitals. The cited article is about a settlement against the major carriers for these offenses in California.

Many of the techniques are not new. Legitimate bills are not paid, and inquires are met with old standby tricks like rude, under-trained employees, multiple similar sounding plans, and slow payments. However the insurance companies have a very powerful new weapon, mind-numbing complexity. Smart computer scientists have built billion dollar systems to exponentially increase the requirements for claim submission. Any deviation from these arcane rules will be identified and flagged as a reason for denial. The process is further complicated by frequent and ambiguous rule changes, which are often not published, and can only be inferred from the pattern of rejections.

The resulting mismatch is equivalent of bringing a knife to a gunfight. Individual providers, larger groups and hospitals do not have the resources to successfully confront the computer and software firepower deployed by the insurance companies. When faced with an incomprehensible, unexplained, and frequently incorrect rejection, poorly trained and overworked billing office personal are forced into the cavernous abyss of the appeals process, designed to further frustrate, confuse and delay. Up to 1/3 of doctors bills are not properly paid, in large part due to the success of the insurance company tactics.

Although the California legislature acknowledged the issue(many states haven't even gone this far), the insurance companies managed to make certain the penalties would be trivial. The fines are totally inconsequential to the bottom lines of these multi-billion dollar companies.

The vital point for the health care provider to understand is that there will be no "rescue" by the legislature, the medical societies, or the goodwill of insurance companies. Anyone submitting bills on a regular basis needs to take responsibility and obtain the tools to win the battle against these corporate behemoths. I helped start Vesicle to even the odds in this battle. Yuval and his team have developed the tools that enable the provider to thrive on the complexity. Insurance companies are bullies, and will back down when confronted with a comprehensive and powerful system that calls their bluff. Vesicle is such a system.

Readers must realize that the complex systems arrayed against the practitioner cannot be defeated by moral rectitude and hard work. Being right helps, but don't forget your gun.

Reference: Duke Helfand, "California's largest health plans are fined nearly $5 million," Los Angeles Times, November 30, 2010