Published on 07/19/2009

By Jerome Whitehead

Publisher's note: Mr. Whitehead is a health care worker and a contributing editor for GBMNews. This is the first installment of a comprehensive and informative series on America's heatlth care system.

Rochelle entered the office building quietly, greeting her co-workers with a wane smile, hung up her coat and seated herself behind her desk. She had just enough time to sign herself into her personal computer, launch the necessary applications that would enable her to perform her job responsibilities, and then log herself into the company's phone system. She took a deep breath, placed her headset on, and waited until 8:00 when the cues would open and she would take her first call.

She didn't have long to wait. The moment that the second hand ticked past twelve, her phone began to ring. It was a sound that she had become accustomed to over the years…it was a sound that she had grown to despise.

"Thank you for calling Customer Service. My name is Rochelle and my goal is to provide you with superior customer service. May I have your tax id or member identification number please?"

She listens to the member who seems to be a little irritated that she was calling for the same issue that she has been calling about for several months now. It seems like there's a claim that has been outstanding that hasn't been paid and now she is being referred to a collection agency. The member goes on to say that she's angry and frustrated that she has had to call about this issue several times and that her employer is taking her portion of her premium out of her check every pay period. She also states that she doesn't understand why an insurance company as large as the one that Rochelle works for can't seem to get it rights the first time.

Rochelle listens patiently and then apologizes for the mistakes, something that she has also grown tired of doing over the years. She asks if she can place the member on hold while she researches the issue of her claim. The member agrees begrudgingly, and while Rochelle looks over the system she can't help but feel that this is the very first call of the day…the first call of many that will be reflective of this same kind of scenario. She'll wonder why her company didn't pay out the claim correctly the first time. Why did it take more than one telephone call to resolve the individual's issue? Why does the subscriber have to be threatened with the possibility of being referred to a collection agency before her insurance company will take the time to correct such a miniscule issue as the proper and timely payment of a claim? Even more importantly, is this subscriber an isolated incident or are there many people that go through this same type of issue?

On any given weekday, across the country, hundreds upon thousands of members place calls to their insurance carriers to determine what the current status is of any outstanding claim that may be on file from healthcare providers that have submitted the claim for consideration of payment.

Most of those claims have been paid correctly and the issue resolved to the members satisfaction. However, a disproportionate amount result in repeat calls with the member becoming frustrated, feeling as if the insurance company is working against them rather than for them. From a customer service standpoint, the person taking the call also feels frustrated because they are addressing difficult issues, some of which are beyond their control. However, the buck doesn't stop there. In fact, that is just the tip of the iceberg. If you delve deeper into this issue, you will see that a member's experience, positive or negative, is more than just the level of service that they receive from the moment that they pick up the telephone. In order to address some of the areas of concern for most Americans, you would have to backtrack and take a look at our health care system to see how we got to this point in the first place.

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By Jerome Whitehead

"Thank you for calling Customer Service. My name is Rochelle and my goal is to provide you with superior customer service. May I have your tax id or member identification number please?"

Most of those claims have been paid correctly and the issue resolved to the members satisfaction. However, a disproportionate amount result in repeat calls with the member becoming frustrated, feeling as if the insurance company is working against them rather than for them. From a customer service standpoint, the person taking the call also feels frustrated because they are addressing difficult issues, some of which are beyond their control. However, the buck doesn't stop there. In fact, that is just the tip of the iceberg. If you delve deeper into this issue, you will see that a member's experience, positive or negative, is more than just the level of service that they receive from the moment that they pick up the telephone. In order to address some of the areas of concern for most Americans, you would have to backtrack and take a look at our healthcare system to see how we got to this point in the first place.

Most Americans would agree that the cost of healthcare has skyrocketed over the years. Affordability of premiums (if you are paying out of pocket for a health insurance policy for yourself and your family), or cost sharing, where you are paying for part of the cost of your insurance package while your employer picks the type of product you have, seems to be one of the primary financial points of concern for most subscribers.

Oftentimes, the products would range from a managed care type of product (i.e., HMO - Health Maintenance Organization), to a PPO type of product (Preferred Provider Organization). The HMO product allows the member to take advantage of preventative treatment while incurring a low out of pocket cost, most times coming in the form of a designated dollar amount for services rendered, commonly known as a copayment. The offset of this type of product is that the member is restricted to a network of doctors that agree to take this type of policy. And more and more, we are seeing that providers are electing not to participate with this product because the reimbursement rate is significantly lower than what they bill.

The PPO product provides the member access to providers that participate with the managed care aspect of their policy as well as providers that do not participate with their plan. The offset for this type of product is that even though the member can elect to go outside of the managed care network, upon doing this, the member will incur a higher out of pocket expense, normally coming in the form of a deductible and coinsurance. The deductible is a preset dollar amount ranging anyway from one hundred dollars to twenty five hundred, depending upon the specifics of your policy. Your coinsurance is the percentage that you pay after that deductible has been met, meaning that if your out of network benefits are 70/30, then your insurance would pay seventy percent of the allowed amount and you would pay thirty - HOWEVER, if the provider is truly out of network and your insurance company is paying them at the contracted rate, the provider of the service can legally bill you above and beyond what the insurance company paid versus what they billed. Simply put, if you went to a provider and they billed your insurance company one thousand dollars, but the contracted rate for those services is five hundred, your insurance company will pay seventy percent of five hundred and the provider could legally bill you the difference between what they bill and what your insurance company paid, even if you are only supposed to pay thirty percent of the allowed amount.

There used to be a time when the only form of insurance that existed was the Traditional Policy. What that means is that there were no networks in existence and therefore, every claim submitted to the insurance company would be subject to deductible and coinsurance. The providers would be paid fee for service. But once again, with the ever rising cost of healthcare, insurance companies had to figure out a way to make healthcare affordable to the millions of Americans that struggled with healthcare costs across the country.

Now enter the HMO product and people suddenly found it easier to go to a provider for checkups and doctor visits to deter costly health related ailments before they resulted in a hospital stay; but as more and more HMO type products became available, providers soon found themselves in a position that they would have to become contracted with more than one type of product, and once again, the compensation rate was very low in comparison to what they bill. PPO products became a viable solution since it provided the member with the options of selecting the health care professionals of their choice, and the providers could afford to be more selective in the types of products that they agreed to participate in.

Even with the implementation of the PPO product, health care costs still continued to rise and people simply found it difficult to maintain adequate healthcare coverage for themselves and their families. To address this problem, various plan options were "tweaked" to help offset the cost to members and employers. Employers began changing the parameters of plans to implement higher deductible amounts as well as when those deductibles would be applicable. The exchange was that the cost of the policy would be lower for both the employer as well as the employee contribution for the premium. At the time, it seemed like a great idea. The average healthy person knew that they had a high deductible that would only have to be met if they went to an out of network provider or incurred some major out of pocket expense like a hospital inpatient stay.

The problem came when the average healthy person had to be hospitalized for any reason, even if that reason was for a same day surgical procedure like a colonoscopy. Remember, under most policies that have a high deductible, hospital services regardless of whether they are in-network or out of network would be subject to the deductible. All of the sudden, the average healthy person now has to pay a high bill that is processing correctly in accordance with their benefit. It was simply a benefit that they didn't anticipate ever having to use. Most people don't elect to take a policy thinking that the very worst is going to happen. In fact, a simple over night stay in a hospital can easily apply towards your deductible, forcing you as a subscriber to have to meet your deductible, which wouldn't be so bad if your deductible is on the low end of the spectrum. But what if it's high?

Pre-existing conditions. Many people don't understand the concept of a pre-existing condition clause that is included in their policy. A pre-existing condition is a health condition or illness that you have had before your first date of coverage on the new plan. Some insurance plan will have you wait for a pre-determined amount of time before you can receive treatment for the condition. The time period could range anywhere from three months to a year. The only problem with that concept is who would want to wait three months to a year to be treated for a condition that already exists?

Enter the Health Insurance Portability and Accountability Act (HIPAA) that was passed on July 1, 1997. With the implementation of HIPAA, there are now rules in place that limit the maximum length of time a pre-existing exclusion can be applied to a group plan, and there are ways that you can either reduce or in some cases eliminate wait time altogether. One of the things that you could do to offset the wait time for a policy that has a pre-existing clause on it is to obtain a Certificate of Credible Coverage letter (COCC) from your prior insurance carrier. If you had coverage by another carrier (i.e. from another employer) and didn't experience a lapse in coverage of more than 63 days, then your new health insurance carrier cannot impose a pre-existing condition clause at all. In fact, once you produce this letter, the pre-existing condition clause would have to be waived from the policy.

With this said, why did the cost of health care increase in the first place? What is the reasoning behind soaring costs for employers and members? There are actually several, and in the next installment of this article, I will share them with you.