Health Insurance Fine Print Shifts Burdens to Physicians

June 22, 2014
Martin Merritt

Payers can no longer exclude patients due to pre-existing conditions, so they are resorting to other tactics.

This week, the nation was transfixed by a dramatic story reported in USA Today containing footage of a house in Whitney, Texas. Officials deliberately set the home on fire after a portion of the house, which sat on a cliff, fell into the lake below.

Allegedly, the homeowners’ policy did not cover the loss, because it did not cover earth movement (the home toppled into the lake due to the collapse of the cliff upon which it sat), according to the USA Today article. Worse, the homeowners were forced to pay for the fire department to burn the remainder of their home, rather than having it topple into the lake.

Dallas radio talk shows immediately focused attention on the subject of insurance. They drew analogies to sneaky tricks insurance companies use to exclude damage caused by hurricanes. 

Many victims of Hurricane Katrina thought their homes were covered, only to find their policies contained fine print.  Insurance didn’t cover wind, or flood damage, or damage caused by one but not the other, or seemingly, hurricanes occurring on days ending in the letters “-day."  

What does all this have to do with your medical practice?  The answer is: plenty.  The reason homeowners polices exclude "acts of God," riots, war, and the like, is because of the widespread nature of the loss. Think of a financial crisis leading to a “run on the bank.”  The insurance industry simply cannot afford to insure against a war, earthquake, or hurricane. The loss would be too great, and the insurance industry would collapse. 

So, insurance companies use fine print and exclusions.
 
This is exactly what physicians and patients are experiencing when seeking reimbursement from government insurance, self-funded plans, and private insurance companies.  The fact that patients everywhere need medical care is the widespread disaster.  The fact we can’t afford it leaves physicians who deliver the care in good faith, hanging from the edge of a cliff.  

Prior to the Affordable Care Act (ACA), private insurance companies protected the system by offering less expensive plans, but they excluded from coverage anything a patient might actually need, as reflected  in a patient’s medical history.  Any excluded care was heaped into the pile labeled “uncompensated care.” The ACA took this preexisting condition exclusion away.

So how is the insurance industry responding?  They are excluding what they can, for example, a private plan may not cover a procedure, or more than a certain number of visits.  If the industry cannot exclude a loss from coverage, it will do the next best thing: resort to more “fine print.”

That’s why “experimental” procedures exclusions, prepayment audits, and recoupment audits are so popular.  It is a way of saying, “We can’t afford to cover this on what you pay us,” without actually admitting it.  And the patients and physicians end up getting burned.