Health insurance is designed to cover patients when they get sick, but what happens when insurance companies stamp "reject" on a claim?
Some of those patients may end up sicker, suggests a recent survey entitled "Not What the Doctor Ordered" from the Doctor-Patient Rights Project (DPRP). Health insurers denied coverage for nearly a quarter of the Americans with chronic conditions or persistent illnesses. In a third of the cases, these patients, all of whom had insurance coverage, said their conditions worsened after being rejected.
A spokeswoman for America's Health Insurance Plans (AHIP), a trade association representing 1,300 health insurers, took issue with the study. "It's a political campaign by Big Pharma to drive up the cost of drugs," said spokeswoman Cathryn Donaldson.
The DPRP study claims the insurance appeals process doesn't work in many cases. Less than half were successful in their appeals, and 50 percent of those denied were turned down multiple times. As a result, more than a third either put off or had to forgo treatment altogether. Nearly a third of patients saw their conditions worsen, even if their insurer eventually provided coverage for treatment.
"The most vulnerable patients were likely to experience a coverage denial," according to the study.
"Patients with chronic illnesses tell us that insurance is worthless when their insurance providers withhold essential treatments prescribed by a doctor," said Stacey Worthy, executive director of the Aimed Alliance, a non-profit group that promotes health care. She is also one of DPRP's founding members. In fact, nearly two-thirds of patients felt insurance providers "are currently failing their customers," the study claimed.
Denials of coverage were widespread, but the delay in care was – in some ways – even worse, according to the DPRP. More than 40 percent of those who ended up being denied medicine or treatment had to wait more than a month just to receive a ruling from their insurer. And three in ten said the process took three months or longer.
If accurate, the DPRP figures are a devastating commentary on the health insurance industry. It also suggests patients with pre-existing conditions who believed they would be fully covered under Obamacare may not be receiving the care they might expect.
The study might raise questions about how insurance practices have changed, especially since the advent of the Affordable Care Act, which has added 20 million people to the insurers' rolls. For instance, a U.S. General Accounting Office study based on early 2010 data indicated that denials then were only 19 percent, and a study by the American Medical Association in 2013 found that figure even lower.
As denials and interminable delays rose, about four in 10 health insurance policyholders said their opinion of their insurer had declined, according to the DPRP. Only one percent said they trusted their insurer's judgment.
The DPRP study said that insurers have, in effect, usurped the role of doctors, and so can make their own determination as to whether a treatment is medically necessary. Insurers now tell a patient what and how much treatment he or she can have, with what drugs, and for how long. Insurance tactics include:
- Prior authorization before a medication or procedure is approved.
- "Step therapy" or only allowing a more expensive treatment after the less expensive one failed, a delay that could exacerbate a patient's condition.
- Listing medications in a multiple of tiers and then refusing to pay for the more expensive medication except in "dire circumstances."
- Alerting pharmacists – but not patients – that they will only pay for less expensive drugs in the same class, even if they have a different chemical structure than the ones the doctor prescribed.
The DPRP represents doctors, pharmaceutical providers and patient activist organizations, but not health insurers. Its founding members include women and Hispanic physicians, biotech company Amgen (AMGN) the U.S. Pain Foundation and groups dedicated to eradicating autoimmune and chronic diseases.
AHIP's Donaldson dismissed the study as being funded by the drug companies "whose goal is to get every drug covered."
"$1,000 a pill is just not acceptable," she said. "And we do work closely with doctors."
But the survey does update a gap from 2013, when the AMA did its last study on health insurance denials. That study was based on the electronic claims filed by health insurers and physicians, while the DPRP surveyed 1,500 people with health insurance. Asked why the AMA hadn't undertaken more recent studies, spokesman Robert Mills said, "We have other priorities," citing – in particular – the opioid crisis.
The DPRP's challenge to the health insurance industry is yet another battle in the ongoing tug of war between doctors, pharmaceutical companies and insurers over just how much insurers should be involved in the decision-making role for patient care. Doctors often argue that they should decide a course of treatment, but insurers say they have to pay the bills and they can't make money in the current health-exchange market.
As a result, many insurers have abandoned the health exchanges. Blue Cross Blue Shield left the Obamacare state exchange in three major Tennessee markets last year, citing a loss of $500 million over three years. That leaves 73 of the state's 95 counties with only one insurer – and average premiums have jumped more than 50 percent. Other major insurers such as Aetna (AET), Humana (HUM) and United Healthcare (UNH) have also in other states.