This should come as no surprise to anyone who has had to use their health insurance recently. New York Attorney General Andrew Cuomo (pictured above) says health insurance companies have been cheating around 70% of their customers. He is filing suit against five companies and has demanded information from at least sixteen more.
Cuomo says a major "rip-off" is how the companies handle "out-of-network" expenses. If a doctor doesn't happen to be on the companies special list of doctors, then the customer must pay out-of-network costs (or go to a doctor of their choosing). If the customer sees an out-of-network doctor (or hospital, etc.), then the company says they will pay 80% and the customer must pay the other 20%.
On the surface that may not sound so outrageous, but the company is not talking about paying 80% of actual costs. No, they say they will pay 80% of "reasonable and customary" costs based on local market rates. Then they "lowball" the local market rates.
Here's how it works. Say a doctor charges $200 for an office visit (and most other doctors in the area charge the same). Fairness would dictate the company pay 80% or $160, and the customer would pay $40. But instead, the company consults a "rigged" table of "reasonable and customary" rates that says the local market rate for a visit is $77. They then pay 80% of the $77, or $62. This leaves the customer to pay the rest (about $138).
This means the company is actually paying about 30% and the customer is paying approximately 70%. This is worse than cheating -- it's outright fraud. They sell the customer a policy that says they'll pay a certain percentage, and then they use a defective table to actually pay far less that what the policy said.
Sadly, the wonderful healthcare plans of the Democratic candidates do nothing to solve this problem. In fact, these plans leave our healthcare in the hands of the insurance companies -- the same companies that are cheating their customers. The plans would just force everyone to buy a policy from the cheaters, and create a giant payday for the insurance companies at the expense of the ordinary citizens.
When are we going to wake up and realize that our system will remain broken as long as the insurance companies are left in charge of that healthcare. We must remove "for-profit" companies from the system, and go to a government-sponsored single-payer system that puts doctors back in charge of healthcare.
Do you really like insurance executives deciding what treatment you will get and how much they'll pay for it? Shouldn't your doctor be making that decision?
The "lowball" rate is what they usually pay in-network physicians. I was hit with this situation back when I had Blue Cross/Blue Shield and was hauled to the E.R. in an ambulance. The hospital I was hauled to happened to be an in-network hospital, so that wasn't an issue, they charged me the Blue Cross C&R. But the radiologist charged me the C&R + 70%. After some going-around on the phone and via mail that went on for a couple of months, I sent the radiologist a check for the BC/BS C&R along with the Blue Cross letter sent to me stating what the C&R was, and basically put a note in there that because I was in a BC/BS plan and it was a BC/BS in-network hospital, that was all I owed. (I had something like a $1,000 deductible on this plan, and the cost of the ER visit was less than that, so I paid the whole cost anyhow -- just the BC/BS C&R, not the "market rate"). They were happy to get that (it was what they would have gotten from BC/BS but they would have needed a lot more hassle then) and I never heard from them again.
ReplyDeleteSo anyhow -- usually you can talk the doctor or hospital into giving you the C&R if you have health insurance, even if they don't themselves accept that particular health insurance. Which just goes to show you that the uninsured are getting ripped off big-time by paying what a doctor's "book" rate is rather than what a doctor actually gets for in-network patients, because the "book" rate is always jacked way up as a negotiating point with the insurance companies.
That said, if the out-of-network C&R is less than what the insurance company actually pays its plan participating doctors for the same service, then it *is* a rip-off. But the fact that insurance companies don't pay anywhere near "book" rate to their participating doctors... well, that's just how it works. So which of these is Cuomo prosecuting? We'll see, I guess.
-- Badtux the Health Care Penguin