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Sep. 6Many advocates of health care reform are convinced health insurance companies deny claims to boost profits. How much evidence there is to support that argument in New Mexico is a matter of interpretation.
Consider the data in a first-ever report compiled by state regulators:
It shows consumers filed more than 1,000 internal appeals in 2008 in New Mexico after health insurance companies concluded that the treatment wasn't covered by their policies or wasn't medically necessary.
Compared with the millions of claims submitted to the four major private insurers in New Mexico Presbyterian, Lovelace, Blue Cross and Blue Shield, and United HealthCare that's a minuscule percentage.
Also, in roughly half of those appeals, the companies reversed the denials after an internal review.
The state Insurance Division where consumers can appeal an insurance company's final denial held just seven hearings involving appeals of disputed medical care last year. Five of those were decided in the consumers' favor; two in favor of the health plan.
The division doesn't keep information on total denials, but Insurance Superintendent Morris "Mo" Chavez said he has seen no systemic problems in New Mexico.
"Our concern was the denials that aren't valid," Chavez said. "Am I saying that an invalid denial has not ever occurred? Absolutely not. But I'm not seeing an abuse of it."
Public Regulation Commissioner Jason Marks of Albuquerque, one of five elected officials who oversee the Insurance Division, concedes that the numbers aren't huge but says there's "enough there that I'm concerned about it."
"If it was your aunt who's going to die because she's not getting the drug she needs, one's a pretty big number," he said.
Insurance companies dispute the notion that denials are profit-driven.
"At least for Presbyterian Health Plan, we're paying the claims that members are eligible to receive. There's no motivation to deny needed services or appropriate services," spokesman Todd Sandman said.
Marks said some people think that even one improper denial indicates abuse by insurers.
"You also can argue that when you create a health care system where the health insurer profits or benefits by denying care, by reducing the amount of their medical payments ... you set up that incentive and that's natural," he said.
Marks, who has a backg rou nd i n hea lt h ca re, acknowledged that some denials aren't necessarily bad.
But Marks said he's aware that some of those 1,010 reported appeals last year involved people facing life-threatening problems or changes in their quality of life.
For example, he said, eight cases are currently being considered by the Insurance Division involving denials of the cancer-fighting drug Rituxan, which can cost up to $30,000 for a course of care.
Marks said he can't talk about the specifics of those cases, but he inquired about the issue after the Journal published a column about a woman who was denied the drug by her insurance company. She has been diagnosed with an autoimmune disease, and there is little established medical evidence that Rituxan is an effective treatment for it.
"I think they (insurance companies) are saying no on the tough cases ... in at least some cases where they should have been saying yes, if they were objectively applying the medical criteria."
Denial top complaint
Nationally, the top consumer complaint about health insurance is the denial of claims, according to data compiled for the Journal by the National Association of Insurance Commissioners for 2006-08.
Delays were the secondmost cited complaint. Having to pay more for a treatment or visit than expected came in third, according to the report, which was culled from complaints reported to state insurance divisions.
A total of 3,467 internal appeals were reported by New Mexico insurers in 2008, with more than 2,400 involving administrative issues, such as claim reimbursement or payment. The rest pertained to medical necessity or coverage, the state report showed.
There are no state numbers to show how many New Mexicans with private health insurance were denied coverage or benefits to begin with.
Lovelace Health Plan and Presbyterian Health Plan told the Journal that 9 percent to 10 percent of their claims were denied in 2008. Most of those involved administrative or billing issues.
Blue Cross and Blue Shield and United HealthCare didn't give the Journal specific numbers on denials in New Mexico.
New Mexico has at least four types of health insurance companies: one owned by shareholders; another privately owned; a nonprofit mutual company; and Presbyterian, a for-profit company owned by a nonprofit.
Presbyterian, for example, reported a 2008 profit of $35 million, which includes its Medicare and Medicaid programs. Any profit goes back to the parent nonprofit to "reinvest in health care for New Mexico," Sandman said.
UnitedHealth Group, a megacompany owned by shareholders, reported more than $6 billion in profits from its operations around the country.
Advocates of health care reform cite high administrative expenses of some health insurers, but Presbyterian's were about 7 percent of premiums. UnitedHealth Group reported operating expenses of 16 percent in 2008.
Data on appeals
The state Insurance Division began collecting information on appeals of denials only last year.
But state officials say even that data didn't give an accurate picture of how all New Mexicans with private health insurance were faring.
Until 2007, not everyone covered by commercial health insurance in New Mexico was eligible under state law to file a formal appeal with his or her plan, said Kimberly Scott, chief of the Insurance Division's managed health care bureau.
Scott said PPOs, or preferred provider organizations, weren't covered by the state regulation that sets out a grievance process for denials.
The regulation applied only to health maintenance organizations, or HMOs, she said. With PPOs, consumers can rely on a network of providers or choose to go out of network.
Including PPOs was important, Scott said, because PPO insurance "is probably going to be a bigger book of business than the HMOs, because HMOs have basically phased out over the years."
Six months after taking office, Chavez's Insurance Division passed a rule effective March 2007 that required PPOs to have an internal appeals process. Under the new rule, about 1,300 more internal appeals were reported in 2008 than in 2007.
"Our goal was to make sure there were protections in PPO plans that the previous superintendent had pretty much exempted insurers from having to follow," Scott said.
Chavez took over after former Insurance Superintendent Eric Serna left office in 2006.
Serna was dogged by allegations of conflict of interest for accepting donations to his nonprofit organization from companies his agency regulated. Serna denied any conflict.
His deputy, Joe Ruiz, was convicted of soliciting charitable contributions from insurance companies and was sentenced to prison.
HMOs have been required to report appeals information annually, but that state regulation apparently wasn't enforced by the previous insurance superintendent, state officials said.
"This has been required for a number of years, but this was not happening," Chavez said.
Why not?
"Nobody really had an answer," Chavez said.
Lujan's role
The state began collecting appeals data after then-state Public Regulation Commission Chairman Ben Ray Lujan of Santa Fe inquired about denial rates.
Lujan, now a congressman, told the Journal recently that he began to focus on denials after a chance meeting with a northern New Mexico couple he hadn't seen in years.
The woman had learned she had a problem with infertility, which wasn't covered under her health insurance policy.
"They (her doctors) said, 'We've been treating you for the last couple of years for endometriosis, and infertility is one of the problems associated with endometriosis.' Therefore, he said, the insurance company wanted to bill her for the past treatment she received for endometriosis.
"They (the couple) told me they were starting to get letters from the collection agency and worried they would have to sell their house (to pay the bill)," Lujan said. "So we gave it to the Consumer Complaints Division (of the PRC), they looked at it, and, lo and behold, the insurance company was wrong, and so that decision was overturned."
That case led Lujan to wonder "how many other people out there have their claims denied and don't know they can come to the PRC for help ... because they're scared to rock the boat. They don't want them (insurance companies) canceling them."
Chavez said he, too, wonders whether consumers are aware of their rights after a denial.
Typically, insurance companies advise policyholders by putting a notice in the insured's policy handbook. Some insurance companies inform consumers at the time of a denial.
"Usually, what happens is it just comes back to the consumer and they see it's a denial, and unfortunately, a lot of people just take it as it is," Chavez said. "They don't know there's an internal process."
Complaint process
Two types of consumer complaints helping fuel the national health care debate involve denial of coverage for pre-existing conditions and revoking insurance after a claim is filed, based on alleged misstatements on an insured's application for coverage.
In New Mexico, those complaints can be brought to the attention of the Insurance Division, Chavez said, but are outside the scope of the grievance process and generally aren't included in the insurance company appeal data.
Scott said her agency fields fewer than 10 "inquiries" a year from people whose policies were rescinded. Insurance Division officials said they had no numbers on New Mexicans denied coverage based on pre-existing conditions.
To be eligible for a state review, the insured usually has to first exhaust remedies through the insurance company's internal process.
Denials upheld by the Insurance Division can be appealed to state District Court.
One of New Mexico's most high-profile denial cases is set for trial in November.
Zelphoe Maloney is a lupus patient who appealed her insurance company's denial of a bone marrow transplant. The Insurance Division, under Serna, agreed with the insurer that it was an experimental treatment for her condition.
Las Cruces attorney William Webber, who represents Maloney, said he's not surprised most people get their claims approved.
"Health insurance is like a stream designed to get the salmon out and let minnows swim free," Webber said. "The salmon are the patients who cost them (the companies) money, patients with cancer, lupus, heart disease. The minnows are healthy people with minor issues."
Report findings
The new report on New Mexico health care grievances for 2008 shows:
About one-third of all 3,467 reported consumer appeals involved a procedure or treatment deemed medically unnecessary or not covered by the insurance policy.
Most involved administrative or billing problems, and, of those, 57 percent were resolved internally in the insureds' favor by their insurance companies.
Appeals of denials represented 1 percent or less of each company's privately insured membership.
Overall, the state Insurance Division fielded 432 consumer complaints about health insurance double the number reported in 2007.
Consumers with complaints or inquiries can contact the state Insurance Division at (888) 4ASK-PRC (1-888-427-5772) or go to www.nmprc.state.nm.us.
To see more of the Albuquerque Journal, or to subscribe to the newspaper, go to http://www.abqjournal.com.
Copyright (c) 2009, Albuquerque Journal, N.M.
Distributed by McClatchy-Tribune Information Services.
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