The Claims Denial Secret Your Employer Hopes You Never Learn
I recently saw a video of Jesse Welles performing his song “United Health,” a catchy-as-heck, Bob-Dylan-esque critique of United Health (big insurance) and its profit-driven commodification of patient care, arguing that individuals ultimately pay for the very system that denies them what they’re owed. As a person who lies awake at night asking, “Does anyone even care about employee health benefits?” I was shocked to hear the crowd singing back and cheering in support of the protest song. Certainly, in the past year, the public murder of an insurance company CEO has put a major spotlight on the distrust and angst the public feels toward the American health insurance industry.
Now the song is a total earworm, and as I listened to the crowd singing back the words, I thought, “Well, I’m sure almost everyone at this concert has a job, and statistically, more than half of them work at large companies.” And I thought this charming, folksy sing-along would turn into an all-out Woodstock ’99 mosh pit fire riot train-wreck if they knew that, for more than half the people in the audience, the claims they’re singing about aren’t denied by their insurance carrier. The claims are denied by their own employer.
It’s true. Sixty-three percent of covered U.S. employees are enrolled in an employer health plan called a “self-funded health plan”. That means tens of millions of Americans are in plans where the employer, not an insurance company, assumes the financial risk for medical claims. Large companies, generally considered those with more than 300 employees, almost always have self-funded plans.
So what does that mean for most of us?
• Your employer sets aside its own money to pay your medical bills as they come in.
• Your employer hires an insurance company to process claims, provide a provider network, issue ID cards, and handle the infrastructure.
• Your employer does this to avoid insurer profit margins, customize coverage, and, if the year is good, keep unused funds. And it uses an insurance company as a mask to disguise who is fighting against you when you have a claim.
You may be asking, “Wait! Hugh! Our own employers are the ones who deny insurance claims, not, for example, United Health? But my employer says ‘We are like family’” And I would say, “If your employer has a self-funded health plan… then… yes!” For tens of millions of Americans, their own employers are the ones denying their medical claims, and they do it because they have a financial incentive to do so. Every time a claim is paid, the employer’s costs go up, dollar for dollar; every time a claim is denied, the employer’s costs go down, dollar for dollar..
They deny claims because they know most of us won’t, or don’t know how to, appeal a denial. We just take the L. And what’s even lamer is that they’re too chicken-shit to put their name on the denial, so they pay an insurance carrier like United to send you the letter. Most people never realize it and just blame the insurance company.
Only about 3% of claim denials are challenged by employees, even though it’s very easy to challenge a denial, and even though your employer has a legal obligation to help you. Of those denials that are challenged, about 50% are overturned, meaning the benefit is paid. That’s why most employers keep your appeal rights quiet: if employees simply asked their employers for help with denials, employer costs would skyrocket.
As I learned all this on my adventure toward total employee benefit enlightenment, I began to scratch my head, thinking, “If my employer has a legal and ethical duty to assist me with a legitimate claim denial but they also have a financial incentive not to… isn’t that a conflict of interest?”
Is there a risk that my employer would choose profits over people? Gasp!
So in the end, for most of us, when it comes to health insurance claims denials the big bad wolf is not the insurance company but really our own employer, as compromised as can be. I have never been much of a song writer but I guess if I had to write my own Jesse Welles style song I would go a little something like this.
Sixty-three percent of us in the very same boat,
With a network card and a carrier coat.
You think it’s the insurer slammin’ the door,
But it’s your own employer ever hungry for more.
