Billing and Collections: You Are Being Watched

September 1, 2007

Patients are increasingly asking doctors to keep diagnoses and treatments out of their records to avoid damaging their chances of obtaining insurance coverage in the future. What should you do?


Have you ever had a patient ask you to leave a diagnosis or prescription out of his medical chart? Odds are you have. And if not, you probably will soon.

The reason: That diagnosis or prescription could ultimately prevent the patient from buying health insurance.

As you likely know, the U.S. insurance industry relies on an extensive network of patient data when making decisions about whether to insure people purchasing policies on their own. So that prescription for, say, Zoloft could prompt an insurer to reject Jane Doe’s application for coverage in years to come because of a pre-existing condition.

Now a growing number of American consumers are becoming aware of this practice, too. Many are responding by asking physicians to deliver care that’s off the chart, so to speak.

How can a conscientious doctor respond to a patient worried that a treatment he needs may come back to haunt him?

David Kibbe, a physician with an MBA, would certainly like to know. He wonders about the limits on legally permissible uses of information that a health plan might have on a patient, suspecting that “rather large loopholes” in public policy allow for either unethical or discriminatory applications of personal health information. Denying coverage on the basis of a previous mental illness - perhaps one deduced from a medication list - is of course blatantly discriminatory. But as part of payers’ risk-assessment process (“cherry picking,” in less-charitable language) and accepted pre-existing condition disqualifications, it’s perfectly legal.

The renowned patient privacy advocate Deborah Peel warned Congress that this and worse would happen if they approved a proposed amendment to HIPAA in 2002, effectively eliminating requirements for patient consent to information sharing. “Health plans will gain open access not only to the results of a few diagnostic drug and urine tests performed in hospitals and to patient communications about sexual orientation with their physicians, but to all the genetic and medical records of every citizen of this nation,” the psychiatrist testified at the time. “Access to all past and future medical records, in every place where patients receive (or received) medical care, will be permitted by over 600,000 covered entities, business associates of those entities, and all their employees.”

A little over the top, perhaps, and many groups, including insurers, certainly have good reasons for wanting to access patient records. However, setting aside concerns about biases against mental health parity, “Every week there is a story of a security breach in a medical record system,” says New Jersey psychiatrist Robert Bransfield. “Once information enters these databases, who knows where it will go?” Or how they might use it. Electronic health records, e-prescribing, and online physician-patient communication will only add new wrinkles to these scary scenarios.

What’s the deal?

Bransfield knows many stories of patients being turned down or put in higher-risk groups because of a history of psychiatric treatment. “Medication records and requests for precertification requiring a diagnosis before pharmaceutical benefit management companies cover a medication can be used, and are used, to stigmatize a patient when they apply for coverage at a later date for health, disability, or life insurance,” he explains.

To be fair, notes Bransfield, “insurance is risk sharing - it is not a subsidy. Unhealthy patients want cheap insurance with good coverage, and insurance companies want healthy members who incur minimal healthcare costs.” In this game, though, insurance companies make far better players than patients - they’re the ones holding all the information cards. “The irony is that people who address their psychiatric issues and receive proper treatment have much lower risks in many areas than the person with the same condition who does not seek treatment,” Bransfield says. “This second person is not discriminated against, when in fact they are a much higher risk.”

Interestingly, none of the major insurers Physicians Practice contacted were willing to comment on the issue. One did refer us to an industry association, America's Health Insurance Plans, but the group’s spokesperson was unreachable. The American Medical Association, American Academy of Family Physicians (AAFP), and American Psychiatric Association do not have official positions on the matter. Physicians, therefore, will have to continue to forge ahead on their own.

Subterranean network

The vast majority of patients, and many physicians, don’t realize the extent of the market for their most intimate details. Surely Kibbe, the former director of AAFP’s Center for Health Information Technology and coauthor of “The AMA’s Field Guide to HIPAA Implementation,” can be considered an expert on privacy and security. Yet even he’s never heard of some of the nebulous organizations that collect - and disseminate - patients’ personal information. The Medical Information Bureau, for instance, is a 105-year-old trade association with 600 member companies. It maintains a nationwide database on everyone who’s applied for individually underwritten life, health, or disability insurance in the preceding seven years. That amounts to 20 percent of all U.S. consumers, according to MIB’s Web site.

We’ve become accustomed to ceding our privacy every day. Did you swipe a “preferred customer” card the last time you bought a quart of milk? If so, the supermarket is building a profile on you, albeit probably not a personally identifiable one, based on your buying habits. Something so mundane can provide quite a bit of (potentially damaging) information. As Kibbe points out, should your insurer suddenly gain access to a record of purchases, that new subscription to Skydiving magazine might lead the company to infer that you’ve taken up a high-risk hobby. In such a situation, your policy might be canceled on the grounds that the initial application was falsified (assuming the company could make a case that you’d been jumping out of planes before you applied).

The databases maintained by pharmacy benefit managers (PBMs), for example, are far more extensive than the grocery lists kept by your local store. In addition to prescription information, says Bransfield, PBMs record those detailed precertification requests, which HIPAA allows physicians to answer without patient consent. When a patient applies for insurance, a general release is sufficient to allow the company to retrieve virtually unlimited information from a PBM or any other database.

Knowledge is power

Small wonder that people will go to sometimes dangerous or illegal lengths to keep their information private. Several of the physicians with whom we spoke about this issue asked not to be identified. One says that any kind of psychiatric diagnosis is a “kiss of death” for patients’ future insurance rates, coverage eligibility, even career prospects (if they need, say, a security clearance). Another doctor calls such denials “one of the dirty little secrets” of the healthcare industry. Physicians tell us that, yes, they’ve refrained from including in medical records information that patients feared might be used against them.

Kibbe isn’t surprised, saying he suspects this is a fairly common occurrence in a small number of cases. It’s well-known “that physicians and their patients are often cautious with regard to certain kinds of information that go into the medical record,” he points out. “I also know from personal experience that there are people who do not file insurance claims for mental or psychological problems - depression, grieving - because they’re afraid that the health insurance companies will be able to infer [a diagnosis] from the medications that are billed through a pharmacy or PBM [and] they’ll be flagged.”

It’s impossible to know how many patients respond to this fear by simply avoiding the doctor’s office altogether. And some self-treat by purchasing medications illegally. Ironically, the PBM practice of requiring patients to use mail-order pharmacies and fill several months’ worth of prescriptions at a time - in order to allow the PBM to enjoy “market share incentive rebates,” or bulk discounts - actually enables patients to take the latter route. Buying or trading medications from others’ 90-day surpluses is a tactic used by all manner of shady individuals, but also by people just hoping to avoid a potentially stigmatizing paper trail. Yet another irony? The drugs covered in PBM formularies at “discount rates” with a copay may be cheaper when patients instead pay cash at a discount pharmacy (and bypass the PBM database).

HIPAA allows “mental health professionals” to keep separate “psychotherapy notes,” affording some increased privacy protection for patient information that is assumed to be extremely sensitive. Notably, an insurer cannot refuse reimbursement if a patient declines to provide a specific release for information covered by the psychotherapy notes provision. Under the official definition, a psychotherapy note is maintained separately from the medical record, and isn’t involved in the documentation necessary for healthcare treatment, payment, or operations. We’ve heard of some family physicians now taking the step of parallel records as well, and Bransfield knows of a doctor who takes notes in Chinese.

Certainly, you should take time to reassure your patients that you are doing everything you can to protect their privacy, while explaining how much of this particular issue is beyond your direct control. And what does this “reassurance” mean? Different things to different physicians, but Kibbe sums up what seems to be the prevailing physician sentiment, saying, “I’m not advocating any particular course of action other than to be aware of the unfortunate situation that we have some biases in this country against mental illness and certain other conditions.”

So keep up to date on this situation; let elected officials, government agencies, and plan executives know your opinion, clearly and often; and give patients information, options, and sensitivity. “To a physician who has a patient who has been denied coverage, one of the things I’d say is that the doctor should suggest that the patient contact the insurer to request a reason for the denial,” offers Kibbe. “And if necessary seek a legal opinion in that jurisdiction to make sure that the patient’s rights have not been disregarded by the health insurance company.” To truly share risk, says Bransfield, “Maybe the best way … is to charge the same rate for everyone of the same age. But that may be unfair to the healthy person seeking insurance.”

Laurie Hyland Robertson is a senior editor with Physicians Practice. She has been in the medical publishing field for 10 years, covering both clinical and management issues. She can be reached at CHRobertson@physicianspractice.com.

This article originally appeared in the September 2007 issue of Physicians Practice.