No, I did not have an unexpected, debilitating health crisis. No, this is not a masochistic hobby.
I’m trying to build a technology company, Better, that advocates on behalf of patients for care. To do this, I needed to understand in excruciating detail how the claims process works — what happens to a claim as it is reviewed by insurance companies, how to most effectively push back when a claim is denied, and the ins and outs of the coding system.
I’ve filed thousands of claims and spent an equal number of hours navigating America’s fascinatingly complex and error-prone healthcare system. Regardless of whether the Affordable Care Act (ACA) is repealed or whether the American Health Care Act (AHCA) advances, this claims system is the one that U.S. patients will have to deal with for the foreseeable future.
The healthcare industry is a $3.2 trillion-a-year industry — or 18 percent of U.S. GDP. Thirty cents of every dollar is spent on people, systems and processes that manage administrative tasks. Despite how many trained professionals we have in the U.S. who have dedicated their lives to healthcare administration, when things go wrong it’s ultimately the patient’s responsibility to solve the problem. When a doctor’s office can’t get reimbursed for a claim, or medical records need to be transferred, or care coordinated between different facilities, the administrative burden for dealing with it often falls to the patient. To avoid these costly administrative headaches altogether, more and more providers are going out-of-network and all of this burden is increasingly falling on the patient.

Here’s what we’ve learned so far:

The quality of your health insurance coverage depends on how well your employer negotiated for you.

If you have a plan from a major employer in the technology space — like Facebook, Google, or Apple — your HR department probably worked hard to negotiate preferential treatment. In a hypothetical example, you could have two Blue Shield customers, and one could be through an employer plan from a well-resourced company such as Google, while the other could have purchased their Blue Shield plan through the Covered California exchange.
In the employer plan, you’ll get routed to a special corporate concierge, which only handles calls from employees of that big, publicly-traded company. But in the bargain deal, you’ll get bucketed into a different call center — even if the policy is under the same brand name.
The difference in the level of responsiveness is amazing. The employer plan will have well-trained dedicated agents, while the bargain plan will have unhelpful call center employees, who aren’t really able to answer any questions. On Covered California or other exchange plans, individual consumers have very little negotiating power. We often see the worst support and the lowest allowable amounts for different types of care from plans purchased on the individual marketplace.

Members’ policies are written in intentionally ambiguous language.

Often, when claims are processing strangely, or common services are unexpectedly denied, I request a copy of a member’s policy to research why. This is necessary to write an effective appeal. The full terms of a policy are documents hundreds of pages in length and in some instances, are only available by mail upon request. Unfortunately, the terms of a given policy are often written in such ambiguous language that it is impossible to come to a clear conclusion on how a specific claim should be processed.
A great example is a policy we’ve been struggling with recently. I found a set of claims that processed unusually. The allowed amounts were in line with the ones we generally see, but a co-payment was being deducted from the allowed amount prior to it being applied to the deductible. This interpretation made it practically impossible for this member to receive any benefits from their plan. The challenging thing was that the policy documents read the same as any other policy. And no other policy we’ve come across removes arbitrary co-payment amounts before applying payments made by the member to their deductible. After pouring through hundreds of pages of policy documents there is nothing that states these are the terms. None of the agents I spoke to in this process were able to say where this was delineated in the policy documents, and our appeal is still pending.
Even though our legal system favors the consumer when contracts and policies are ambiguous, the effort and energy it takes to do the research and fight errors is untenable for most. People do not have the time or resources to fight to be treated fairly, and the insurance companies benefit.

The differences between what policies do and don’t cover expands when policies are under insurance companies’ control.

There are profound differences in how we see claims get processed from pre- and post-ACA policies. When there is standardization and we know what to expect, the people who win are the consumers.
When a consumer goes to purchase a health plan, they are in many ways buying a black box. Even for those with the time to fully read the plan documentation, the language is so ambiguous it is impossible to be certain how the benefits will actually be applied to future claims. Historically, we’ve seen that the more freedom insurance companies have to set standards, the less consumers are protected when they need to use their insurance.
The ten Essential Health Benefits that every plan must cover as a result of the Affordable Care Act are a godsend. Patients can know what basic coverage to expect of their policies. Before this, so many people could not access care. So many people were denied coverage for pre-existing conditions.
Even today, consumers are not aware of what their plan will and will not cover. We have many patients who come to us with a $9,000, $10,000 or $15,000 deductible that they had no idea was that high. Many people have intentionally shopped for a policy that covers out-of-network care and are blindsided when none of their claims are reimbursed.

In many cases, consumers will know that their plan covers 60 or 70 percent of care outside their network, but they don’t realize that that means 70 percent of the allowable amount. Allowed amounts are prices set by the insurer for a given type of care and are often far below the amount billed by the healthcare provider to the patient. This hidden variance between policies hurts patients.

Insurance companies run a system that is confusing by design.

Insurance companies have created systems that are cumbersome and error prone by design. About 15 or 20 percent of the time, phone calls will just drop. For no discernible reason, an automated system or tele-robot will chime in with a “Goodbye” and then hang up. Companies frequently lose documentation and files, which we have to re-send in through fax machines or mail. Then their OCR, or optical character recognition systems for reading these claims, are terrible.
The information I am given by agents is often incorrect. I’ve made a personal rule that if I don’t like an answer, I ask the question three times, sometimes of three different agents. Over half of the time, this resolves whatever issue I am having.
State-by-state differences in consumer protections matter.
California and New York offer more consumer protections than many U.S. states, but others, like Texas, offer less in the way of consumer protection.

While more and more states are passing laws to protect consumers from predatory practices such as surprise billing and balance billing, which are significant contributors to medical debt and bankruptcy, not all state residents get to reap the benefits. California has passed laws against both surprise and balance billing, but Californian patients may not be financially protected if their plan isn’t governed by the California Department of Managed Care. Health plans offered by a major employer might instead be overseen by a federal law known as ERISA, which doesn’t offer the same strength of protections.
Say you live in San Francisco and are hit by a car while crossing the street. While you are unconscious, an ambulance comes and takes you to the closest emergency room with space available. Unfortunately, the hospital is outside of your network.
Not to worry, right?
The combined protections of the ACA and California law should make sure the money you‘ve saved over the last several years will be safe. But if you’re currently working for a company with a health plan administered out of state, that San Francisco hospital can bill you for anything over the amount your insurance will pay even though you are a California resident living and working in California.
So why are we doing all of this?
I believe that much of this can be fixed through brute force and better systems. I was once a pre-med student at Stanford and did public health work in Africa. This problem is one of the reasons why I never became a doctor. Doctors rarely receive much training on billing and coding, and the complexity of the system prevents doctors from doing what is best for their patient.

At the same time, patients deserve to have someone on their side and should not be left without support in a system this complex. As a nation, we spend $1 trillion dollars on healthcare administration each year. Yet time and time again, the burden to fax the form, find the problem, coordinate between various parties, and correct the error falls on the patient. When a third of every American healthcare dollar is spent on administration, this is unconscionable. These inefficiencies are self-inflicted and increase profits for insurers or hospitals, always at the expense of the patient.

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