Every day e-mails and phone calls come our way with questions about the PPACA as it applies to specific situations. The ball of confusion is compounded by years of minor and un-discussed changes over the past 10-15 years in group contracts and broad assumptions based on guesses rather than facts.
Now, everyone is supposed to be covered. Additional taxes and fees are built into the premium paid to cover all that apply but that may not be enough for lots of reasons. The additional money is being gobbled up by a bureaucracy that is so vast and unguided it may never be fully understood. Rules are proposed and published breeding further confusion and more questions about topics that have real gravity in the lives of plan participants.
Here are two recent examples.
A COBRA qualifier who was terminated in May, properly accepts and pays his premium even before his coverage as an active employee ends at the end of that month. He has claims that are paid in June and naturally assumes that his coverage has been reinstated under his COBRA rights. Our staff properly notified the broker and the client that he should be reinstated and by the middle of June we received his July payment and August before the end of July ... a model COBRA participant. So, the first week in July he is refused by the local pharmacy who indicates that his coverage has been cancelled. Then he gets a letter from the carrier and so does the pharmacy saying that his coverage is cancelled for non-payment. We have collected and forwarded 3 months of premium to the plan sponsor totaling nearly $6,000 and the carrier has not been paid? Well, the reason the carrier has not been paid is two fold. The carrier requires that the monthly invoice be paid as presented ... no changes allowed. And, the carrier has yet to load the COBRA participant in their billing system and this could easily be the case until the September or even October invoices. Wow! How can a Plan Sponsor pay premium if these two circumstances exist?
It is obvious that this system puts the full reconciliation burden on the Plan Sponsors ... thus the pay as presented model ... but pending claim payments or refusing approval of services until the billing system catches up is not a helpful model at all. This specific participant will have spent nearly $8,000 before the coverage is retro reinstated ... crazy ... and a lot of unnecessary worry, phone calls and math for COBRA participants.
And next we have the "retro rules' that seem to be written in the sand. The delays in retro enrollments just outlined certainly favors the carrier and punishes those that exercise their rights under COBRA. But the "retro rules" have other problems as well. An employee quits in February and accepts a new job in March at an employer that has a waiting period of 60 days. His wife needs an outpatient procedure that was already scheduled in early March and the carrier issues a pre-authorization which is valued at $16,000. The Plan Sponsor terms his coverage in the carrier system the first payroll after his final check in mid-March. The procedure is successful and the now former employee knows of no problems with the claim or the process he has followed. The employer told him that he would have coverage until the end of the month ... the employer was thinking February and the former employee was thinking March, since he did get a paycheck in March. Ha!
As it turns out, he refused COBRA and never looked back because the insurance company had authorized the procedure that was done in a month that he thought he had coverage and he even confirmed on the phone that his coverage was active AFTER the procedure was done ... why in the world should he not skip paying for COBRA for April and get on the new employer's plan April 1st. Enter the "retro rules". Even though the carrier authorized the procedure, the retro term back to the last day of February was imposed in early April and in June, the hospital has been reversed billed by the carrier and the former employee gets a bill from the hospital (including a nastygram saying that the payment is late) for the full $16,000. The hospital would have only been paid around $1,600 through the copay and carrier responsibility but that does not seem to matter. The hospital wants their $16,000 and they want it immediately. By this time, it is too late to accept and pay for COBRA so the young family is stuck with a $16,000 bill that should have been only $1,600. They just assumed that the dates on the COBRA letter were wrong because the carrier assured them on the phone that their coverage was active in March when it was later retro cancelled without their knowledge.
There are thousands of stories like these. I deal with plan sponsors and plan participants every day and the compounding of the gradual drip if change in carrier procedures and the 40,000 pages of new regulations related to the PPACA is making a mess of a system that has worked well since the 1950's. Sure it has a lot of holes that needed to be plugged, but soon I hope the pendulum starts coming back to a place where fairness and transparency can be the rule. The ONLY way to do that is to let the market drive the process. How long could a car dealer, grocery store or even an insurance company survive if their was not a way to do price comparison shopping? That is the position of the hospital and providers now. The insurance companies are often their exclusive payors, so there is no way to compare and get the "real price" for procedures. How can an insurance company get a procedure for $1,600 and charge an uninsured person (who happens to be the same person) $16,000? I asked this question and the answer will be in our next blog post. Let me know if you know the answer or if you can figure it out.
Now, everyone is supposed to be covered. Additional taxes and fees are built into the premium paid to cover all that apply but that may not be enough for lots of reasons. The additional money is being gobbled up by a bureaucracy that is so vast and unguided it may never be fully understood. Rules are proposed and published breeding further confusion and more questions about topics that have real gravity in the lives of plan participants.
Here are two recent examples.
A COBRA qualifier who was terminated in May, properly accepts and pays his premium even before his coverage as an active employee ends at the end of that month. He has claims that are paid in June and naturally assumes that his coverage has been reinstated under his COBRA rights. Our staff properly notified the broker and the client that he should be reinstated and by the middle of June we received his July payment and August before the end of July ... a model COBRA participant. So, the first week in July he is refused by the local pharmacy who indicates that his coverage has been cancelled. Then he gets a letter from the carrier and so does the pharmacy saying that his coverage is cancelled for non-payment. We have collected and forwarded 3 months of premium to the plan sponsor totaling nearly $6,000 and the carrier has not been paid? Well, the reason the carrier has not been paid is two fold. The carrier requires that the monthly invoice be paid as presented ... no changes allowed. And, the carrier has yet to load the COBRA participant in their billing system and this could easily be the case until the September or even October invoices. Wow! How can a Plan Sponsor pay premium if these two circumstances exist?
It is obvious that this system puts the full reconciliation burden on the Plan Sponsors ... thus the pay as presented model ... but pending claim payments or refusing approval of services until the billing system catches up is not a helpful model at all. This specific participant will have spent nearly $8,000 before the coverage is retro reinstated ... crazy ... and a lot of unnecessary worry, phone calls and math for COBRA participants.
And next we have the "retro rules' that seem to be written in the sand. The delays in retro enrollments just outlined certainly favors the carrier and punishes those that exercise their rights under COBRA. But the "retro rules" have other problems as well. An employee quits in February and accepts a new job in March at an employer that has a waiting period of 60 days. His wife needs an outpatient procedure that was already scheduled in early March and the carrier issues a pre-authorization which is valued at $16,000. The Plan Sponsor terms his coverage in the carrier system the first payroll after his final check in mid-March. The procedure is successful and the now former employee knows of no problems with the claim or the process he has followed. The employer told him that he would have coverage until the end of the month ... the employer was thinking February and the former employee was thinking March, since he did get a paycheck in March. Ha!
As it turns out, he refused COBRA and never looked back because the insurance company had authorized the procedure that was done in a month that he thought he had coverage and he even confirmed on the phone that his coverage was active AFTER the procedure was done ... why in the world should he not skip paying for COBRA for April and get on the new employer's plan April 1st. Enter the "retro rules". Even though the carrier authorized the procedure, the retro term back to the last day of February was imposed in early April and in June, the hospital has been reversed billed by the carrier and the former employee gets a bill from the hospital (including a nastygram saying that the payment is late) for the full $16,000. The hospital would have only been paid around $1,600 through the copay and carrier responsibility but that does not seem to matter. The hospital wants their $16,000 and they want it immediately. By this time, it is too late to accept and pay for COBRA so the young family is stuck with a $16,000 bill that should have been only $1,600. They just assumed that the dates on the COBRA letter were wrong because the carrier assured them on the phone that their coverage was active in March when it was later retro cancelled without their knowledge.
There are thousands of stories like these. I deal with plan sponsors and plan participants every day and the compounding of the gradual drip if change in carrier procedures and the 40,000 pages of new regulations related to the PPACA is making a mess of a system that has worked well since the 1950's. Sure it has a lot of holes that needed to be plugged, but soon I hope the pendulum starts coming back to a place where fairness and transparency can be the rule. The ONLY way to do that is to let the market drive the process. How long could a car dealer, grocery store or even an insurance company survive if their was not a way to do price comparison shopping? That is the position of the hospital and providers now. The insurance companies are often their exclusive payors, so there is no way to compare and get the "real price" for procedures. How can an insurance company get a procedure for $1,600 and charge an uninsured person (who happens to be the same person) $16,000? I asked this question and the answer will be in our next blog post. Let me know if you know the answer or if you can figure it out.
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