In my recent column “What in the World Has Happened to the MBA?” I observed that many large corporations had reduced their in-house human resources support of employees. This has had real-life consequences. There is no area where these negative impacts are more apparent than in the area of company-sponsored health insurance. Corporations for the most part now take the position that their employees can get just-as-good-or-better support by working directly with representatives of the insurance companies, and have eliminated in-house system expertise and advocacy. To me, this is akin to having the “fox guard the chicken house,” but that’s just my opinion.
I’m going to relate a personal story that explains how I came to have this point-of-view. Based on discussions with others I don’t believe that what I lay out represents an outlier experience in the least.
Early in my career my wife and I experienced the same healthcare issues faced by every growing family. Some situations were routine and could be dealt with over time, while others were more acute, requiring quick action on both our and the part of our company-sponsored health plan, i.e., non-routine services required pre-approvals to be covered. At the factory where I worked we had a colleague in HR—Laurie—who knew the ins-and-outs of our health plan’s coverage. She also had the contacts such that she could push the right buttons to ensure that employees got the coverage they were entitled to. Laurie also was willing to spend whatever face time was needed with employees to ensure they understood their coverage options. In other words, we had an inside resource who was good at helping employees navigate through the healthcare system which—even at that time—was turning into a bit of a labyrinth. There is no doubt that having Laurie available locally as an in-house healthcare resource and advocate helped a lot of people improve the quality of and even extend their lives.
Several years after joining my employer I had already enjoyed some noticeable successes and apparently the word was getting out on the-street. How do I know? I started getting out-of-the-blue recruiting calls from other corporations who, I might add, were offering higher wages and more authority. I turned them all down partially because of how my current employer supported employees through its HR function. Regarding advancement, I felt that eventually my time would come internally if I stayed the course.
Now fast forward 30 years, i.e., after most corporations had outsourced their HR healthcare support and advocacy of employees to the contracted insurance providers. Although after 30 years I had retired from my initial employer and started up my own executive consulting business, as a retiree I still had healthcare coverage through that former employer. As a consultant I was always on the road. Once while on a long-term assignment 2,300 miles from home, I had what was assumed to be a stroke. I was taken to a hospital emergency room and asked to provide evidence of health insurance coverage. At this time my mind was pretty shaky and I couldn’t do much more than hand the intake clerk my company medical coverage card. On this they found the phone number of the company health insurance provider and called them to verify I had coverage. The clerk was told that while I did have insurance with them the facility I had been taken to was out-of-network, which meant any services they provided wouldn’t be covered. They went on to say that if my case was handled by an in-network hospital all services would be covered. Unfortunately, I was over 2,000 miles away from the nearest hospital in my network!
I was stunned but not really in a positon to speak for myself. Luckily, the attending neurologist got on the phone and told the health insurance company that my life was in potential jeopardy (the first time I had heard this, by the way!) and that the hospital needed to do MRIs of my brain to better understand what was causing my symptoms (the call had been put on speaker phone so I was able to hear the whole conversation).
What the insurance company representative then said threw me for a loop. She suggested that if I got on a plane I could be back within network that same day and this would solve the out-of-network issue. Hmmm? The neurologist replied in an icy tone that unless the tests were done she could not permit me to fly, which meant I would have to be driven back instead. She went on to ask whether the insurance company would take responsibility for my health during what would be over a week of driving (she would limit me to 300 miles a day) without there being any diagnostic work performed. She reminded them that without the tests I might have a condition that would prevent me from surviving this trip. The insurance company representative relented and gave a verbal OK for the tests, which did indeed indicate that I would not be able to fly but would likely survive a return home by car. My wife flew in and we started what turned out to be a most uncomfortable journey.
What happened next? The insurance company declined coverage of the services I had received at the out-of-network hospital. Again, I had no internal healthcare HR resource to turn to. In addition I found that my employer healthcare policy had a clause which stated people covered (company employees or retirees) could neither sue the health insurance provider nor seek outside mediation of disputes. In other words, to protest the non-coverage my only recourse would be to request the insurance company look over the case again. I thought this would only be a formality because after all my emergency room doctor had been given a verbal OK from a health insurance company agent that the tests would be covered. I was wrong. The insurance company rejected my protest.
At that point I had only one other avenue available to me which was to re-protest the decision, again, directly to the health insurance company, i.e., the entity that had just denied a first appeal. I put together a much more detailed protest including a written and notarized statement from the attending neurologist confirming the phone conversation where she had received verbal approval to do the tests.
As you probably know, all of the calls you make to health insurance companies are recorded, for quality assurance purposes, or so they say. I got access to a transcript of the recorded call—this was not easy to accomplish by the way, requiring legal help—and was able to include it in the protest.
I was stunned when shortly after I submitted my re-protest it was rejected. The insurance company admitted that while I had been given verbal approval by their representative for the out-of-network tests (what else could they say, given the back-up I had provided?) they wouldn’t cover the costs because that agent shouldn’t have given that approval! Huh? I had run out of options, as least as far as the insurance company was concerned, again because my employer had agreed as part of their policy with this company that the insurance company would have all power in determining whether a protest was valid or not.
In procurement, one of the first things you learn as a buyer is called the Law of Agency. The following definition is from a legal dictionary:
The law of agency allows one person (or company) to employ another to do her or his work, sell her or his goods, and acquire property on her or his behalf as if the employer were present and acting in person. The principal may authorize the agent to perform a variety of tasks or may restrict the agent to specific functions, but regardless of the amount, or scope, of authority given to the agent, the agent represents the principal and is subject to the principal's control. More important, the principal is liable for the consequences of acts that the agent has been directed to perform.
It was the job of the insurance company representative we had talked to—and she was empowered by her employer to do so—to ascertain whether coverage would be either granted or denied. She granted it. Based on this it was beyond me how the insurance company could get by with their explanation that “the representative shouldn’t have given the oral approval to the neurologist.” But I thought I was out of options. Luckily, almost by chance, I learned that after I had retired an employee ombudsman position had been added at corporate and, although theoretically I had run out of appeal options, I thought I should at least contact this person and tell them my story. I did, and at her request sent the documentation of both my protest and re-protest. The ombudsman got back to me the next day and said she was appalled at how I had been treated and within 72 hours the company’s health insurance company had paid my (long overdue) medical bills.
So all’s well that ends well, right? Not exactly. Over my career I have learned to take meticulous contemporaneous notes detailing conversations and meetings on important matters—that’s not just something done by our former FBI director. I had done so here and it provided me with a good foundation upon which to base my appeals. Outside of that, though, you need to understand that significant effort had been expended in trying to get the insurance company to pay-up.
For instance, my wife had made over 80 phone calls to the insurance company. In total, she had spent over 60 hours on the phone. (Note: My situation was that I was still having trouble that kept me from orally advocating for myself.) By the way, my wife is a nurse practitioner and has had experience in working with insurance companies on the patient’s behalf. She said that over her entire career she had never run into anything like this.
I had put together two dozen e-mails with the insurance company outlining my case. Two of these (the protest and re-protest) were over 10 pages long and contained attachments. I had about 80 hours invested in doing this.
Early on in this we were advised by a lawyer not to pay the bill ourselves. If we did that would indicate that we accepted the insurance company’s non-coverage decision. As a result, since this whole matter took six months to resolve, we started getting approached by collection agencies on behalf of the hospital, which affected our credit rating.
Needless to say, in the old days Laurie (or someone like her) wouldn’t have let this happen such that my wife and I would have to experience this whole nasty rigmarole. Ask yourself whether you would have made the same effort we did or would you have given up. Then ask yourself whether anyone should have to go through what we did to get what they were entitled to.
I believe that in the United States we have the best healthcare services available to us, if only they can be accessed. Unfortunately, many have to fight for proper access to the health insurance coverage they have paid for. Remember that lawyer I consulted with? In that consultation he actually told me that a widespread tactic of health insurance companies is to prolong the confirmation of coverage to the point that the person protesting their decisions gives up. When at the end of the case I reviewed with him my wife’s and my efforts he said that they were extraordinary and that most people would have folded much earlier. The cost of those tests was well into the five-figure category so it just wasn’t something I could let go.
Corporations set insurance companies up for this stonewalling tactic by agreeing that covered employees can neither sue nor request neutral third-party arbitration, i.e., the insurance company has no oversight (checks and balances) on its decisions. I’m pretty sure insurance companies offer discounts to corporations that agree to such terms. Is this in the employee’s interest? Do employers even consider this when selecting an employee health insurance provider? I wonder whether I would have turned down all of those outside job offers if I had experienced a situation like this early in my career.
The end result was that the attack I had experienced was the first indication that I indeed had a life-threatening medical issue. I had an opening in my skull between the brain and my sinus cavity (I should have suspected this since my wife has accused me many times over the years of having a hole-in-my-head). Anyway, when it was finally determined what was wrong I was scheduled for emergency surgery, so six days after the diagnosis I was being operated on. I remember precisely what the doctor who diagnosed the problem told me. He said that without surgery, “You probably have days. You might have a week or two. But you certainly don’t have a month.”
Again—believe it or not—once again we had issues confirming coverage with that same health insurance company. Immediately upon receiving this diagnosis my wife contacted the insurance company to gain pre-approval for the surgery. She explained that I needed immediate surgery to increase the odds of my survival and was told that it would require a minimum of two weeks for the company to evaluate the case and either approve or deny coverage. My wife was also told they could not guarantee that any related services I received without that pre-approval would be covered. Again, the neurologist got involved telling them that I might not have two weeks, but this had no effect. My wife—bless her soul—harangued the insurance company over the next six days and as I was being wheeled into surgery got approval for the operation.
Needless to say, when the skull/brain is operated on it is expensive. If I hadn’t received the coverage I was due it would have greatly affected my retirement nest egg, thus impacting me and my wife’s quality-of-life. As it was, it added significant stress at a time when both my wife and I were already under a lot of it. So, in my mind, regardless of whether we have ObamaCare, TrumpCare, or SomethingElseCare, there is a lot that needs to be fixed in how health insurance companies operate. And I don’t see anyone—much less corporate employers—working on it.
I didn’t relate this story so that everyone could feel sympathy for me. I did it to demonstrate how corporate cultures have changed over the last generation or so. Companies may give a good spiel about how they support their employees but cost reductions have long ago gone past the fat and support services have now been made anorexic at the expense of employees.
My next article will discuss in detail the risks due to supply chain length.