“Inappropriate Burdens on Patients”

The Biden administration’s interim final surprise billing rule and the legislation that prompted it, the 2020 No Surprises Act, were mostly a response to companies sending people huge medical bills after they visit hospitals that are part of their insurance networks but treated by doctors or staff who are out of network.

The rule, from the Centers for Medicare & Medicaid Services, also cracks down on an absurdly evil health insurance practice: insurers have been retroactively denying emergency room claims and sticking people with massive ER bills, because they say the patients’ medical events were not emergencies.

UnitedHealthcare, the nation’s biggest health insurer, announced in June it was planning to more closely scrutinize emergency room visits, warning that claims “determined to be non-emergent will be subject to no coverage or limited coverage.”

Following outcry, the company quickly backtracked with a statement saying it had “decided to delay the implementation of our emergency department program until at least the end” of the COVID-19 pandemic. However, the Daily Poster reported on several cases where UnitedHealthcare denied emergency room claims as nonemergency or was accused of doing so.

The rule language bolsters those reports, making clear some insurers have in fact been systematically issuing retroactive ER denials. It says some plans have been denying claims solely based on final diagnosis codes and “might automatically deny coverage based on a list of final diagnosis codes initially, without regard to the individual’s presenting symptoms or any additional review.”

It further indicates that insurers might not consider the federal prudent layperson standard — which is designed to protect patients and allow them to seek emergency care if an average person would believe they need immediate medical attention — unless a patient appeals. Generally speaking, only a tiny fraction of Americans appeal denials, meaning that insurance companies often get away with this scam.

Kahn’s comment letter thanked the Biden administration for moving to stop these retroactive ER denials, and adds more detail about the various ways insurers are selecting claims to deny.

He wrote that “some plans may violate the Affordable Care Act’s (ACA) patient protections by making an initial coverage determination based on final diagnosis codes and then applying the prudent layperson standard only if the participant, beneficiary, or enrollee appeals or seeks further consideration of the claim. Other plans or issuers may inappropriately require ‘sudden onset’ of the emergency medical condition or impose a time limit between the onset of symptoms and the patient’s presentation at the emergency department.”

Kahn went on to describe several other abusive health insurance practices, such as “inappropriate plan denials based on general plan exclusions and otherwise, down-coding and reclassifications; extended observation care; delayed credentialing to avoid payment; and reference pricing-based plans that operate without a network.”

He further noted that the Health and Human Services Department’s inspector general previously found that private Medicare Advantage insurers “overturned 75 percent of their own denials from 2014-2016 and that independent reviewers at higher levels of review overturned additional denials ‘in favor of beneficiaries and providers.’”

“These activities,” Kahn wrote, “impose inappropriate burdens on patients receiving and providers or facilities furnishing both in-network and out-of-network services, and, in the context of emergency services, generate surprise bills, cause patients to forego seeking emergency services, and burden emergency facilities and providers with unnecessary disputes and administrative burdens.”

Hospitals Are in on the Scam

Though Kahn’s letter includes allegations of insurance malfeasance, it is hard to believe Kahn or anyone else at FAH is too mad about insurers’ unfair or abusive practices.

Kahn once led a health insurance lobbying group that became America’s Health Insurance Plans (AHIP). There, he reportedly came up with the infamous “Harry and Louise” attack ad campaign, widely credited by the media with dooming Hillary Clinton’s 1993 health care reform plan.

More recently, Kahn helped create the Partnership for America’s Health Care Future (PAHCF), a health care industry front group, in collaboration with the health insurance lobby AHIP that’s designed to prop up private health insurers.

Protecting the corporate health insurance system lies at the heart of PAHCF’s messaging. You’re supposed to believe the private health insurance system works, and that people are happy with it.

“New Poll: Vast Majority Satisfied With Current Health Care Coverage,” PAHCF wrote in 2019. “Majority Of Americans Satisfied With Their Private Coverage,” the group declared a few months later.

What is PAHCF’s concern with Medicare for All? It would eliminate the need for private insurance. What’s wrong with a public option? People might flee their private insurance coverage for plans with lower premiums or no premiums at all. What about lowering the Medicare age? That would mean fewer patients with private insurance.

Corporate insurers might put patients through hell and make hospital staff jump through insane bureaucratic hoops, but insurers pay hospitals far more for services than the government ever would. On average, hospitals bill people with private health insurance plans roughly two and a half times what Medicare will pay for the same services.

FAH’s members are investor-owned hospital chains with billions in revenue, such as HCA Healthcare, Tenet Healthcare Corporation, Universal Health Services, and LifePoint Health. It’s a lucrative gig: Kahn was paid roughly $2 million last year.

These hospital companies benefit immensely from the corporate health insurance system, which is why they are all PAHCF members.

HCA Healthcare, an incredibly expensive hospital chain, acknowledges in its regulatory filings that it could lose out on revenue “if our volume of patients with private health insurance coverage declines.”

That’s why hospital executives will do anything to make sure nothing about our health care system ever fundamentally changes. And it’s why hospitals are pouring money into campaigns to protect health insurers’ market share, and telling the public everything is fine — even though insurers have every incentive to deny claims and try to pass costs on to patients or providers.

Hospital executives and lobbyists might say they don’t like insurers’ wildly abusive tactics, but it sure beats the alternative: making less money.