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Who’s on First?

Richard Connor

IS IT JUST ME OR HAS dealing with health insurance companies become more confusing and frustrating? Trying to figure out who to speak to feels like that classic Abbott and Costello comedy routine, “Who’s on first?

My wife retired last July. For the previous four years, we’d used her employer-provided medical benefits and now we needed to shop for coverage. Under my old employer’s pension plan, pension-eligible employees like me—who retired prior to beginning Medicare—were eligible to sign up for one of the company’s medical plans. You paid full price, less a subsidy that depended on your years of service.

I had more than 30 years of service, so I was eligible for the maximum subsidy of $735 a month. After the subsidy, a high-deductible health plan for my wife and me cost about $900 a month. This seemed like our best option for medical insurance when we enrolled in August 2021 and renewed for 2022.

I started my pension in August 2017. In the four years since, the company I had retired from merged with a larger company, went public in an initial public offering, and then merged with another, even larger company. This final merger brought the company back into private ownership, so its stock was delisted. Needless to say, human resources (HR) and benefits providers have changed many times.

I was a senior manager for the last 20 years of my career. I always made it a point to build strong relationships with HR. It was important to know who the experts were, in case you needed support. This was especially true for employee benefits.

Over the years, more and more of the benefit functions were outsourced. Benefit plans changed frequently, especially as my old company changed hands. As far as I can ascertain, my current health insurance requires five different companies to manage the process. Figuring out who to call if you have a question is getting harder all the time. Here’s my simplistic view of the five companies involved and the roles they play:

Company No. 1 is the one I worked for and retired from. It owns the pension plan and contracts with the other four companies to provide the entire menu of health insurance services to employees and retirees.

Company No. 2 is a full-service benefits administrator. It administers the benefit plans for company No. 1. This includes health plans, retirement plans and a menu of other offerings. Company No. 2 created and manages the web portal that employees use to sign up for benefits. This website is also used for annual enrollment, as well as any changes due to life events. Company No. 2 also handles the billing and payment of premiums.

Company No. 3 is a third-party administrator that processes claims. I looked the company up—it administers benefit plans for more than 100 companies. I think it interprets the insurance company’s plans and makes determinations of what’s covered. Company No. 3 keeps track of claims, deductibles and out-of-pocket totals. I also believe it sends out the explanation-of-benefits statements.

Company No. 4 is supposed to make health care personal. It’s the company you actually speak to when you call company No. 2 or 3. It administers wellness plans and can provide limited information about your health coverage.

Company No. 5 is the actual insurer, one of the Blue Cross Blue Shield companies. It doesn’t appear to interact with the insured—me—in any way. I remember speaking directly with Blue Cross 15 years ago, advocating for my mother when she was ill and the company was denying her rehabilitation care. It was a challenge, but I kept working my way up the ladder until I spoke with a supervisor who agreed with me and got the services approved. I have no idea how, or if, I could do that now.

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Last year, my doctor recommended an outpatient diagnostic procedure for me. I scheduled it for late December. The doctor prescribed two procedures at once. He presumed the results of the first would justify the second procedure based on his examination and discussions with me. Before I had the procedure done, however, the outpatient facility contacted me to say the procedure had not been approved. That came from company No. 4, which communicates with you about your insurance coverage.

The outpatient facility worked with my doctor to get a new prescription for the first procedure only. Company No. 4 approved the new request. Its response said that the procedure was medically necessary and appropriate. But it specifically stated that this approval did not imply that the procedure was covered by my insurance. That one really confused me.

Later, I received notice that it would be covered. Since we have a high-deductible plan, and my rescheduled procedure would now be early in the new year, I suspected we would pay most and perhaps all of the cost. I called the outpatient facility’s business office to get an estimate. The employee there was able to give me the amount the facility would charge the insurance company, but not what the negotiated price would be under my insurance plan.

The business office recommended that I contact my insurance company to find out what the negotiated cost would be. I called the number on my insurance card and got someone from company No. 4. The representative had trouble understanding my question. He could tell me what our family deductible was, and how much we had used to date. He recommended I call company No. 3, the one that processes claims.

I called company No. 3, using the number on its website. A representative of company No. 4 answered. She thought only company No. 5 could know the answer to my question and recommended that I call company No. 2, the benefits administrator. I’m sure you’ve guessed by now that company No. 2 had no idea of what I might be billed.

That’s when I gave up. It will be what it will be, and we will pay the bill.

Richard Connor is a semi-retired aerospace engineer with a keen interest in finance. He enjoys a wide variety of other interests, including chasing grandkids, space, sports, travel, winemaking and reading. Follow Rick on Twitter @RConnor609 and check out his earlier articles.

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Thomas Auchter
Thomas Auchter
8 months ago

My father had a good company insurance plan which operated very similarly to the way Richard describes (though not a high deductible plan). My father was convinced it was a great deal and the monthly premiums were a little lower than what Medicare plus a good Medicare Supplement insurer would have charged, so he never seriously considered dropping his employer coverage.

Reimbursements for his medical treatment were always excellent, although his 2 or 3 copays for service and drugs each month more than made up the difference for his share of the cheaper monthly premiums. But my mother had several issues typically requiring 6 to 8 monthly appointments that always required co-pays and frequently required my father’s interaction with one or more of the providers to get coverage for service and for drugs. One of her favorite providers was “out of network” so my parents had to pay more for her visits to that one. And her coverage was often denied or limited, so my parents’ annual out of pocket cost was always very significant.

His employer changed primary insurers at one point, and that led to a great deal of aggravation as the two insurers argued over which one was responsible for some of my mother’s pre-existing conditions. Neither company was willing to pay for her usual appointments in January and February that year, and my mother had to pay out of pocket to continue her treatment, though by March or April that all got sorted without extra cost to my parents and several thousand dollars was eventually reimbursed to them.

When my father died, my mother was not eligible to continue in his plan and she was terribly upset that she was forced to go on to Medicare. She was very worried that her coverage would deteriorate significantly and she would be forced to change physicians.

We chose the plan F supplement insurance for her. Every physician happily accepted Medicare, including the one who had been “out of network” for my father’s insurance. The mountain of paperwork arriving in the mail almost every day grew significantly as Medicare seems to need at least twice as much paper to explain the same thing as an insurance company does, and then the supplemental insurer would duplicate that paperwork showing that it had topped off the payments for each service, but at the same time there were no more co-pays and very few bills that were not covered in full with no need to beg for coverage. Her annual costs aside from the standard Medicare and Supplement monthly premiums were negligible.

As a result of this experience, I strongly recommend to my friends that anyone covered by retiree medical insurance plans should look more carefully at Medicare rather than dismiss the Medicare option without a close comparison.

Catherine
Catherine
8 months ago

That’s when I gave up. It will be what it will be, and we will pay the bill.”
Too soon, maybe! Would it help if you pretended it was a video game and you were working your way through the levels?

I am hoping some boomer retirees will start a cottage industry of contact mappers and phone callers. I’d pay someone $$ to get a claim settled from time to time.. In January I probably was on hold 50 hours over two weeks dealing with a single out-of-state case of flu, and am still waiting to see if a simple series of doctor’s visits and a couple of prescriptions have been paid…

Andrew Forsythe
Andrew Forsythe
8 months ago

Richard, thanks for this and I’m sympathetic. I had many a battle with insurance companies over the years and they were all time consuming and frustrating. And yes, often the hardest part was getting the right person to talk to.

What I most remember about one episode with Blue Cross BS was that I was finally able to get a response by posting my complaint on their Facebook page. Apparently they didn’t like bad publicity.

Hold out till you and your wife get on Medicare—in comparison it’s a breeze.

John Daniels
John Daniels
8 months ago

Thank you for the reminder of how well traditional Medicare plus a good supplement works. Part D is somewhat mysterious but is working well for us so far.

R Quinn
R Quinn
8 months ago
Reply to  John Daniels

Part D works fine as long as you don’t get into the most expensive drugs. I had to take seven different prescriptions this year and all were $15 or under, two were $0 but I know several retirees paying over $600 a month for one script.

J Cp
J Cp
8 months ago

I had a similar experience with an elbow rehab. I tried to discover how much the hospital network physical therapy sessions would cost me if: I was charged my insurance company’s contractual rate and if I paid cash.

Because I had insurance the hospital said: 1. They could not discuss a discounted cash rate but could tell me the standard rate was $600 per session. 2. They could not tell me what my “insurance price” would be because I had not yet been billed.

So I tried BC. They said they would be glad to tell me my “insurance price” they just needed “the code” from the hospital.

I gave up and went to Athletico where I was given the cash price upfront,
$100, and then had to sign a waiver saying I would not try to seek reimbursement from any insurance.

Now I dodge questions about having medical insurance in order to negotiate steeply discounted cash prices. Prescription drug coverage seems like a protection racket. Most of the time my “insurance price” is multiples of the Good Rx price.

mytimetotravel
mytimetotravel
8 months ago

You have my sympathy, but this is just one more example of the failures of the American (non-) system of medical care. It is the result of putting insurance company profits ahead of the health of the population. Other countries have sensible systems, some based on government run coverage, some based on strictly regulated insurance. It is beyond ridiculous that America cannot do the same. I grew up in England, with the government run National Health Service and remain flabbergasted by the situation here. (And don’t mention wait times – in my area, even with two university medical centers, you can wait four months to see a rheumatologist and a year for a hematologist.) While you wait to go on Medicare you might find this site interesting: https://armandalegshow.com/ (BTW – have you checked to see what coverage would cost on the ACA marketplace?)

Last edited 8 months ago by mytimetotravel
R Quinn
R Quinn
8 months ago
Reply to  mytimetotravel

Actually that is not correct.

Most employees, including Richard I suspect, are in self-funded plans and there is no profit motive for the insurance company functioning as a claims administrator.

In England and other countries there are reviews for medical necessity, cost/benefit analysis, etc. as well. Those sensible systems all must find ways to manage costs.There is no system that allows any and all health care at any cost no questions asked.

This experience is the result of misguided efforts by the employer to save money. That’s what HDHP, pre-certification, medical necessity, outsourcing, etc. are all about.

mytimetotravel
mytimetotravel
8 months ago
Reply to  R Quinn

If you think there are no reviews for medical necessity, and refusal of treatment, in the US system you have simply not been paying attention. It is in the interest of the insurance company to refuse treatment, and in the US it is done on an expensive, case-by-case basis. The cost of administration in the fragmented US system raises prices for everyone (and the insurance companies are not in the business of administration for their health.)

R Quinn
R Quinn
8 months ago
Reply to  mytimetotravel

Who said that? Did you not read what I said about self-funded plans?

Employers require their administrators to manage costs in various ways. It is not in the interest of insurers to falsely deny payment of valid claims. That’s a good way too get sued or lose a license. And no insurance company can refuse treatment – just to pay for it.

keep in mind that paid claims wind up in the premiums all pay. FYI the profit margins for health insurers are about the same as regulated utility.

This is not to say there are not screw ups, not invalid denials based erroneous information.

The idea that there is a general strategy to increase profit by denying valid claims is false.

Steve Spinella
Steve Spinella
8 months ago
Reply to  R Quinn

I would like to respectfully disagree. Here is how I think it works. 1) Each “contractor” bids on the contracts, so they are motivated to make low bids and meet them. 2) While no one wants to avoid valid claims, there are two motivations–get sick people to choose other insurers so “our” plan looks better, and lower total volume of claims. On average, denying preauthorization, often multiple times, and obscurring costs help lower totalization costs per insured person. When I realized what was going on, I switched back to traditional medicare before it was too late. What a relief! And I used to sell these plans….

mytimetotravel
mytimetotravel
8 months ago
Reply to  R Quinn

This discussion has been about denial of coverage, before treatment. I am not sure how you define “valid claim”, but if there has been no pre-approval, there is no guarantee that a claim will be paid, that is why medical facilities seek pre-approval. I encountered that myself a couple of months ago over an ultrasound. Richard’s saga began with a refusal to cover a particular procedure.

William Perry
William Perry
8 months ago

I predict we will be reading this article on MarketWatch soon. Thanks for sharing Richard.

R Quinn
R Quinn
8 months ago

Richard, as a person who ran benefits in a large employer for decades, I can tell you who to blame – your former employer. Consultants have sold it a bill of goods for supposedly managing health care costs.

Chances are Blue Cross doesn’t talk to you because there is no insurance involved.

After I left, my employer did much the same. Everything is outsourced, the company could care less about former employees. I’ve been trying to get an answer to a simple question. I sent e-mail to the benefits department, didn’t answer said they would have their administrator call. Bottom line trying to get an answer started on 3/21 and I’m still waiting.

In 2021 we lost our retiree medical, were given an HRA allocation and told to contact a certain broker for our Medicare supplemental coverage and Part D.

The Rx change was financially devastating for many retirees on high cost meds.

Look forward to Medicare. It’s much, much easier. Now you unfortunately know one of the risks of early retirement. It could have been worse though. Your employer could have dropped all your coverage.

Last edited 8 months ago by R Quinn

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