Insurance Rescission case to go to Court – Business Intelligence Practices Used to Analyze and Deny Claims and Coverage at Bay
Posted May 18 2009 10:44pm
Rescission of Health Insurance is still legal and this will more than likely represent a land mark case to perhaps get some type of resolution to the situation everybody hates, using Business Intelligence software to scour, analyze and deny coverage and claims. Despite fines and other investigations, the process continues. This is a big part of what is wrong with healthcare today, if you are sick or forget some minor detail on your history, you are denied and the companies run and analyze the formulas or algorithms to make their determination.
I talk a lot about Business Intelligence and how it is used constructively, in this case like most, it is being used by payers to save money, nothing new here and this is a big reason why consumers all hate health insurance companies. We saw this on the big screen with several examples with the movie Sicko from Michael Moore who dug up several instances of this exact same thing and the movie did a good job of bringing the reality of this practice to the attention of all.
This is probably why the momentum for a national plan is gaining ground quickly too, as people are penalized for being sick and does nothing to help people get the medical attention they need. Several years ago I spoke about this and nobody really seriously listened when I talked about the folks with all the analytical processes using it against those who did not embrace technology from their side of the coin and use it against you. We saw the same with Wall Street too, big business with business intelligence software, same basic process, all about software.
When you read through and see how much money was saved, it’s a big number relating just to Health Net below. There seems to be plenty of money around for the companies to invest in venture capital efforts, but is it derived from saving money in not providing insurance? In a post from last week some insurers, not necessarily those with a healthcare focus are getting bail out funds from the government as they purchased banks and other restructuring to qualify. Allstate, one of the companies named for bail out money actually has a test online for older drivers to see if they can still qualify to drive.
When you read on further and see the efforts of how records were scoured up to 20 years prior looking for information, well you get the picture on what is going on here, finding any one small or large item to deny payment or coverage. They also scour your medication records too and then there’s the MIB who has a rap sheet on millions of consumers whereby the industry compares notes from one company to another. If there are errors in these files, it can be an almost impossible task to get some of these items corrected too.
This case should prove to have some potential landmark decisions when it goes to trial on how health insurance can use business intelligence software to scrutinize claims and coverage. Cases like this really tend to negate any of the positives the companies are working on as well, as this is the basis of the entire business, coverage for healthcare, the cost of which needs to be spread out over a large enough group to where consumers can feel confident they will receive the services and care they need.
It’s not only the patients, but doctors and hospitals too are affected, and right now it is estimated that 60% of the hospitals in the US are operating in the red. I post a monthly article about the hospital situation called “Desperate Hospitals” on the blog and last time I had a big influx of information pouring in from other sources as well to include. The situation again is more than just a consumer issue and problem. BD
The practice of canceling medical coverage after policyholders have become sick or injured has cost insurers millions of dollars in fines and settlements. Now, for the first time, a jury will weigh whether an insurer owes anything to a canceled policyholder. The case pits a former Cypress man against the health insurer that dropped him after a disabling car accident. Steve Hailey, a former self-employed machinist, and Blue Shield of California will be directly affected by the outcome, but the case already has influenced how insurers in California handle these rescissions.
The 4th District Court of Appeal in Santa Ana said there were questions on both sides for the jury to consider in deciding who is to blame for the Haileys' loss of coverage. Did Hailey and his wife, Cindy, dupe Blue Shield into covering them? Or did the insurer act in bad faith by blindly accepting their application, conducting a secret rescission investigation and continuing to take their premiums until Steve's medical bills got too high?
Blue Shield declined to comment. But, in previous interviews and in court, Blue Shield has contended that it was within its rights to cancel the Haileys' coverage because they misrepresented Steve's true weight and failed to list his medical history, including hypertension and headaches, on their application.
Several insurers set up departments devoted to rescission. They pulled members' medical records from as far back as 20 years and scoured them for details not disclosed on their applications for coverage. Those discrepancies were used to justify rescissions.
Rescinding thousands of policyholders a year enabled California insurers to save millions of dollars. Health Net Inc., for example, figured that it avoided $35 million in medical expenses over six years. The loss of coverage left individuals awash in medical bills and without healthcare when they needed it most, and it left many hospitals and physicians with uncollectable debt.