Volume 1 Issue 2  ●  September-November 2009

Dear Floridian:

Welcome to the second issue of The Advocate's Advice newsletter. The Office of the Insurance Consumer Advocate continues to publish informational articles and advisories on the website. However, given the positive response to the first volume of this newsletter, it is clear that The Advocate's Advice is a great way for us to communicate directly with the insurance consumers of this state.

Do you need help understanding how to navigate the managed care process? Have you ever seen a newspaper ad for a “Free Lunch Seminar” and wondered about its legitimacy? In this edition, you will learn more about these topics, as well as other consumer oriented initiatives that are being pursued by the Office of the Insurance Advocate.

An additional topic included in the newsletter deals with potential assessments to your insurance premiums in the event of a hurricane. Do you know how much you could be assessed? Are you a Citizens policyholder? Do you also pay premiums for business related insurance? This newsletter will explain how to get an estimate of your assessments in the event of a hurricane.

Lastly, I have included a copy of the letter that was sent to Governor Crist urging him to veto SB 1122.

If you wish to receive future newsletter issues, I encourage you to subscribe (it's free!) by clicking on the button on the left. Just put the word "subscribe" in the subject line. You will be able to unsubscribe at any time in the future, if you wish, by clicking on the "unsubscribe" button on the left.

Sincerely,

Sean Signature

Sean M. Shaw, Esq.
Insurance Consumer Advocate

Understanding the Managed Care Grievance Process

By ICA staff

health careIf you are insured through a managed care plan such as a health maintenance organization (HMO), an exclusive provider organization (EPO), a prepaid health clinic (PHC) or a prepaid health plan (PHP), you have special rights. These rights come into play when claims or medical services are denied by your managed care plan.

Your managed care plan is required by law to notify you of your appeal rights and procedures when service or care is denied. First, you can file an appeal with the plan itself. There is usually a two level appeal process. Once you have completed the plan’s internal appeal process, if you are still not satisfied, you may request an informal hearing with the Subscriber Assistance Panel (SAP). The SAP is a panel of various state agency representatives who will review your case and provide a recommendation to either the Agency for Health Care Administration (AHCA), or the Office of Insurance Regulation (OIR) regarding what action, if any, the plan must take to comply with its duties to you.

The SAP is designed to provide consumers of managed care plans with an additional grievance process if there has not been a satisfactory resolution through the plan’s internal process.

Arising from legislation first enacted in 1985 and contained in Section 408.7056, Florida Statutes, the SAP is comprised of the Insurance Consumer Advocate, or designee; two members employed by AHCA; two employed by the Department of Financial Services (DFS); a physician appointed by the Governor; and a consumer representative appointed by the Governor. If it is determined to be necessary, physicians with relevant expertise to the case may also be included. The SAP schedules hearings, generally on a weekly basis, to hear cases that have met the criteria for hearing and have not been settled.

Please note that the SAP process is not available to people insured under traditional health insurance policies or federal programs such as Medicare. Nor is it available for disputes in which a lawsuit has been filed.

Subscribers of managed care plans have 365 days from notification of a plan’s final determination to deny services to file an appeal with the SAP. The process begins when a subscriber submits a complete Request for Review and Release Form along with pertinent information to AHCA. The managed care plan then submits its grievance file, medical records and the subscriber’s managed care contract. AHCA reviews the documentation and, if appropriate, prepares the case for hearing.

If a grievance is scheduled for a SAP hearing, it will be conducted via teleconference. Subscribers may have another participant (attorney, physician, family member, etc.) to help in the presentation. A court reporter attends all hearings. Transcripts are available, at a cost, from the court reporter. The SAP reviews all the documentation provided by both the subscriber and the managed care plan prior to the hearing and may ask questions of the participants. The subscriber will have 15 minutes to present their case, followed by 15 minutes for the managed care plan. The presentations may or may not be followed by questions from the SAP. Finally, there is a 5 minute rebuttal period, beginning with the managed care plan and ending with the subscriber. The SAP hearings are usually closed to the public due to the sensitive medical information being discussed.

It is important for subscribers to be familiar with their contract and understand that most contracts allow the managed care plan to deny coverage for a particular medical service or treatment if the plan determines that the service or treatment is not medically necessary. If a contract specifically excludes a service, medical necessity generally does not have a bearing in the case.

Here are some tips to improve your chances at a SAP hearing:

The SAP also has procedures in place to address emergency situations. If you believe you are in an emergency situation, you must mention the need for an expedited hearing to the staff when contacting them. The SAP staff then determines whether the situation qualifies for an expedited hearing.

Within 15 working days following the hearing, the SAP will issue its recommendation to the subscriber and AHCA or OIR. Within 10 days after receipt of the SAP’s written recommendation, the parties may furnish to AHCA or OIR evidence of opposition to the recommendation or findings of fact. All parties will be notified in writing of the final determination by AHCA or OIR within 30 days of the SAP’s written recommendation.

The Subscriber Assistance Panel must complete the process within 165 days however, the process usually takes much less time. If the managed care plan disagrees with the SAP’s decision, it has the right to an administrative hearing under Section 120.574, Florida Statutes. A subscriber who disagrees may choose to go through the judicial process.

For more information on the Subscriber Assistance Panel call 1-888-419-3456, or visit their website: http://www.ahca.myflorida.com/MCHQ/Consumer/SPSAP/index.shtml.

"Free Lunch" Seminars - There's No Such Thing as a Free Lunch!

By Sean Shaw

free lunchIf you are 50 years of age or older, you belong to a very special group that has amassed considerable wealth. It is estimated that this group has accumulated almost $8.5 trillion, with another $7 trillion to be added to the coffers through inheritance over the next 40 years. That’s a lot of moola!

However, it certainly doesn’t mean that everyone in this age group is rich. And with the economy in recession, many people unemployed and the stock market and housing values way down, many people in this group are concerned about having enough money to support themselves in retirement. A successful retirement often depends on more than just Social Security benefits and pension benefits. It also depends on your savings and how you invest your savings.

Obviously, you didn’t get to where you are today without doing something right along the way. It is likely that you participate at some level in the sharing of that $ 8.5 trillion and would welcome the opportunity to increase your share. As you know too well, there are those who are ready and willing to lend a helping hand. However, you must be careful that the hand is really “helping.” Investing during the current economic crisis is trickier than ever. There are plenty of scams out there in addition to investment products that are simply not right for your financial situation.

In order to address financial issues specifically pertinent to seniors, Florida’s Chief Financial Officer, Alex Sink, created the Safeguard Our Seniors Task Force. I, as a member of this task force and as the Insurance Consumer Advocate, am taking a close look at these issues. One of the first issues the task force looked at was the inappropriate sale of variable annuities to seniors. We found numerous instances in which retirees and widows in their 80’s or even 90’s were talked into putting their life savings into variable annuities that contained severe penalties for withdrawing money any time within the next 10 or even 12 years. This is not a suitable investment for persons of this age. The purchasers, of course, were either not made aware of the penalties or didn’t understand what they were buying. These findings led us to a related issue: the marketing of annuities, life insurance and other investment products through so called “free lunch” seminars. These are seminars which are advertised as providing education on retirement planning and financial matters.

The word that immediately grabs our attention is “free.” Advertisements are aimed directly at your age group offering “free seminars,” “free lunches,” and “free prizes” to attend the seminars that claim to educate you about financial matters. Some of the advertisements focus attention on you by saying “This workshop is designed for people between the ages of 55 and 84.” While the “seminar” and lunch may indeed be free, by signing up for these seminars you “pay” by providing personal information, such as your name, address and phone number, to the “sponsors” of the event. This leaves you open to receiving future phone calls from aggressive salespersons even if you tell them you are not interested in their products or services.

Who wouldn’t be interested in receiving free financial advice at a seminar in a nice local restaurant, with free food, to listen to “experts” explain how you can receive a “guaranteed income” or eliminate taxes on your retirement income? Sounds good doesn’t it? However, everything that glitters is not gold. For this reason the state is taking a closer look at the organizations that sponsor these seminars.

If you attend one of these seminars you will probably be solicited to invest in a financial product, such as an annuity or life insurance policy, while you are being “educated” about retirement. The person or company that puts on the seminar is doing it to get you to invest your money in the investment products they sell, and for which they are paid a commission. The so-called senior investment experts pitching these products often use scare tactics or high-pressure hype.

Of course, not all seminars are designed to cheat participants. However, most are sales presentations, despite claims of being “educational workshops” where “nothing will be sold,” according to a 2007 investigation by the federal Securities and Exchange Commission (SEC). Among the 110 firms scrutinized, half made exaggerated or misleading claims, and one in four pitched investments—such as annuities or high-commission investments—that were unsuitable to the audience, usually retirees or others over age 60. About 13 percent of the investments pitched appeared to be outright fraud, the SEC reported.

The North American Securities Administrators Association (NASAA), an organization whose membership includes all state agencies that regulate securities dealers, warns that “State securities regulators are seeing a variety of violations associated with many of these seminars, ranging from outright lies and the conversion of investor funds to more sophisticated forms of abuse. Often, in a follow-up sales pitch, the salesman recommends liquidating securities positions and using the proceeds to purchase indexed or variable annuity products that the specialist offers. These products are often grossly unsuitable for senior citizens. Securities professionals must know their customers’ financial situation and refrain from recommending investments that they have reason to believe are unsuitable. It pays to remember to make sure your investments match up with your age, your need for access to your money and your tolerance for risk.”

The American Association of Retired Persons (AARP) has also warned its members to be wary of these seminars. They emphasize four ways to protect yourself:

  1. Don’t invest without checking the presenter’s credentials at your state securities regulatory agency.
  2. Ask the right questions: Suggestions are available from the U.S. Securities and Exchange Commission (SEC)
  3. Be wary of hot “new” investments, such as alternative energy sources and hedge funds.
  4. Most of all, be skeptical about what you hear.

For more on investment fraud and specific advice for seniors, visit the SEC website or the NASAA website. The SEC provides a wealth (pun intended) of information for investors.

Do not get me wrong, you should attend legitimate financial seminars. As the ICA, I endorse any legitimate educational opportunity for Florida’s insurance consumers. The difficulty comes in determining which “educational seminars” are legitimate or which are being put on by individuals with bad intentions. It is difficult enough for the State to determine if these seminars are legitimate, so it may be even more difficult for you. As Florida’s Insurance Consumer Advocate, a major part of my job is to protect you, the consumer. I want scam artists to know that Florida is not the state where you can take advantage of our citizens. You can also help us to help you by visiting our website. The website will provide you with other ways to be better prepared the next time you hear the term “Free Lunch Seminar.” You can also visit the Safeguard Our Seniors Task Force website for information about annuities, life insurance, reverse mortgages, estate planning and many other matters of particular interest to seniors.

If you do decide to attend any seminar I strongly encourage you to:

Always remember that old adage; “If something sounds too good to be true, it probably is.”

Florida Consumer Advocate Urges Governor to Veto Managed Care Legislation

TALLAHASSEE-Florida’s Insurance Consumer Advocate, Sean Shaw, sent a letter to Governor Charlie Crist urging him to veto SB 1122, managed care legislation.

“Allowing SB 1122 to become law would be a backward step from attempts to corral the spiraling cost of health care and more specifically, the direct cost to consumers,” Shaw said. “Florida would be heading in the wrong direction and at the wrong time.”

A copy of ICA Shaw’s letter follows:

Dear Governor Crist,

I am writing to urge you to veto SB 1122. Supporters of SB 1122 claim that all the bill does is change who the insurance company sends the check to for payment of covered medical services rendered by an out-of-network medical provider. Instead of sending a check to the insured patient, the check will be sent directly to the provider of services.

If it were this simple, no one would be opposed. Yet insurers and employers who provide group health insurance to their employees believe this bill will increase health care costs and health insurance premiums. I will leave it to insurers to explain why they think it will increase their costs and therefore premiums for employers and employees. The issue that concerns me the most is “balance billing.”

First of all though, it needs to be pointed out that the alleged justification for this bill is that many consumers do not pay their medical bills even when they have insurance. In other words, the insurance company pays money to the policyholder in order for the policyholder to pay a medical bill and the policyholder just keeps the money. Except for a single provider of drug and alcohol rehabilitation services, there was no evidence or testimony that this is in fact true. Supporters of the bill failed to show that it is justified.

This bill applies to health insurance plans that utilize a "preferred provider organization" (PPO) to provide medical benefits to their policyholders. A PPO consists of physicians, hospitals and other health care providers that are under contract with an insurer. Under the terms of the contract, the providers agree to accept reduced rates of payment from the insurer. The providers also agree that they cannot bill patients in the plan for any additional amount above what they are paid by the insurer.

The question of balance billing arises when patients receive treatment from providers who under contract with their PPO, usually through no fault of their own such as in emergency situations. Under current law and under this bill, a health care provider who is not in the insurer’s PPO can receive payment directly or indirectly from the insurer and then bill the patient more on top of that payment. This is the practice referred to as “balance billing.”

Instead of encouraging this practice, which this bill does, the Legislature should prohibit this practice altogether. This is not a new concept. Under Florida law, if a health maintenance organization is liable for services rendered to a subscriber by a provider, regardless of whether a contract exists between the organization and the provider, the subscriber is not liable for the payment of any fees to the provider (Section 641.3154, Florida Statutes.) Providers are prohibited from collecting or attempting to collect any fees from the subscriber. In other words, whether under contract or not, a provider who provides services that are covered by an HMO may not balance bill the patient.

Federal law prohibits balance billing by providers of services covered by Medicare and Medicaid.

As an example of the unfairness of balance billing, a business owner, who purchased a health care plan for his 250 employees, contacted the Office of the Insurance Consumer Advocate for assistance on a claim. The man’s son had a medical emergency. The child was air lifted by air ambulance to the PPO's contract facility where emergency surgery was performed.

The PPO did not have a contract provider for land or air ambulance services although such services were covered by the policy. The ambulance service submitted a bill for $12,000 to the insurer. The insurer determined that $4000 was the usual and customary fee and paid this amount. The ambulance service billed the balance of their fee, $ 8,000, directly to the policyholder.

The PPO did not have contract for anesthesia services needed for the surgery, even though the services were delivered in a PPO facility. The insurer paid $13,387.32 for anesthesia performed by a non-contract anesthesiologist. The physician billed an additional $5,170 in charges to the policyholder.

There was nothing that we could do for this consumer. The consumer was on the hook for over $13,000.

The scope of the network of preferred providers in a PPO is not subject to review or regulation – i.e., there is no requirement of law or regulation that a PPO network must include every provider specialty or contract service that could reasonably be expected to be required in order to deliver the benefits of a "major medical" health insurance contract. As a result, consumers who receive services from out of network providers usually haven’t done so by choice, contrary to statements by supporters of the bill.

A common problem for PPO’s across the country is the refusal of radiologists, anesthesiologists, pathologists and emergency service providers to participate in a PPO even when working within a participating hospital. Radiologists, anesthesiologists and pathologists are hospital based physicians but they are almost never hospital employees. Therefore, they are not subject to the hospital’s contact with the PPO. Some commentators refer to this situation by the acronym “RAPE.” In instances of emergency care, patients can not reasonably be expected to exercise "choice" of provider services or treatment. They are shocked when they receive bills from providers who they thought were covered by their insurance plan.

Supporters of the bill claim that the bill doesn’t impact these problems. They are certainly correct that the bill does not fix the problem with balance billing. In fact, the supporters successfully fought off repeated attempts to amend a balance billing prohibition onto the bill. They wrongly claim that the problem will not be exacerbated by the bill. The problem is that by allowing policyholders to assign their benefits to non-contract providers, it will encourage non-contract providers to provide services to policyholders because it will assure them of at least some payment for their services. If a person believes the argument that consumers don’t pay their medical bills, it appears that providers are willing to be paid at the same rate as contracted providers and therefore should have been willing to accept a prohibition against balanced billing. I doubt this is the case.

Balance billing is a nationwide problem. In a Wall Street Journal article from December 8, 2008, it was reported that “A growing number of state regulators are moving to crack down on balance billing.” The “New York State Insurance Department …is drafting proposed regulations that could force more disclosure by medical providers and insurers and shield consumers from unexpected charges. California regulators recently made it illegal for people covered by health-maintenance organizations to be balance-billed for out-of-network emergency services. And late last year Illinois put out a bulletin that protects many consumers from balance bills in certain situations if they make a "good faith" effort to use in-network doctors.”

Allowing SB 1122 to become law would be a backward step from attempts to corral the spiraling cost of health care and more specifically, the direct cost to consumers. Florida would be heading in the wrong direction and at the wrong time.

On June 10, 2009, Governor Charlie Crist signed SB 1122. However, we will continue to look at ways to address the concerns raised in the veto letter.

Florida Insurance Consumer Advocate Hosts Roundtable For Advocate Groups

By ICA Staff

Florida’s Insurance Consumer Advocate, Sean Shaw, hosted a roundtable in Largo Florida, in order to establish a positive dialogue among advocacy groups and organizations that have an interest in Florida’s insurance issues. At the meeting, Shaw brought up a variety of different proposed insurance initiatives, in the hope of bringing together groups from across the state to better communicate on behalf of Florida’s insurance consumers.

“This meeting was the catalyst for us to form a coalition among the different advocacy groups and create a stronger, more unified voice when presenting the concerns of our citizens to the lawmakers of the state,” said Shaw.

Shaw, along with Terry Butler, a senior attorney for the Office of the Insurance Consumer Advocate, presented to the forum several proposed initiatives concerning health care insurance, property insurance, workers compensation insurance and title insurance.  The roundtable also included a presentation covering property insurance reforms by the advocate organization Fair Insurance Rates In Monroe (FIRM), of Key West, Florida.

Florida’s CFO, Alex Sink, joined the forum via phone and praised all participants of the roundtable discussion.  “I would just like to thank you all for thinking that it was important to participate in this discussion.  Although I know we will not agree on everything, I think that this meeting is a big step in the right direction,” Sink told the group.

Participants expressed appreciation for the Insurance Consumer Advocate as well as the CFO in supporting the idea of an advocate coalition in the state of Florida.  “It is wonderful that we have the support of an aggressive consumer advocate who has the support of the Chief Financial Officer (Sink),” said Bill Newton, executive director of the advocacy group, Florida Consumer Action Network.

Participants at the roundtable included: Bill Newton, Florida Consumer Action Network; Brad Ashwell, Florida Public Interest Group; Heather Carruthers and Colleen Reppetto, Fair Insurance Rates of Monroe; Jan Bergemann, Cyber Citizens for Justice; and several others.

The participants agreed that health insurance issues that need to be addressed include the practice of balance billing of consumers for medical treatment by medical providers who are not limited by a contract with an insurance company or the company’s preferred provider organization; the practice of insurers charging health insurance rates that discriminate based on gender; and the practice by some insurers of denying health insurance claims because a consumer incorrectly answered a question on the insurance application.

The primary concern for property insurance is the expectation that the Florida Legislature will attempt to adopt legislation in 2010 to reduce or eliminate regulation of homeowners’ insurance rates. A similar bill was adopted in 2009 but was vetoed by Governor Crist. All participants agreed to fight any bill that would deregulate homeowners’ insurance premiums.

For further information about the roundtable and future meetings, please visit the Office of the Insurance Consumer Advocate online at MyFloridaCFO.com/ICA or contact Insurance Consumer Advocate Shaw at 850-413-5923 or insuranceconsumeradvocate@myfloridacfo.com.

Florida Insurance Consumer Advocate Shaw Unveils Online Assessment Calculator

By ICA Staff

In an effort to inform Florida’s insurance consumers about additional assessments that could be added to their insurance premiums in the event of a major hurricane, Florida Insurance Consumer Advocate Sean Shaw unveiled a new online insurance assessment calculator, found at www.MyFloridaCFO.com/ICA.

“Many Floridians are not aware that they could see additional costs tacked on to their insurance premiums in the event of a major hurricane,” said Shaw. “We are hoping that this online assessment calculator can help Florida’s consumers make better, more informed decisions about their insurance choices.”

Floridians can input their current policy information into the assessment calculator and receive an estimation of the assessments that could be charged to their policies in the event of a category 3, 4 and 5 storm hitting either the Miami or Tampa areas.

The methodology behind the assessment calculator was developed by an actuary in the Office of the Insurance Consumer Advocate, and has been reviewed and endorsed by several external actuaries. The calculator uses the terms 25-year storm, 100-year storm, and 250-year storm as a reference to storm categories; with a 25-year storm being equivalent to a category 3 hurricane, a 100-year storm being equivalent to a category 4 hurricane, and a 250-year storm being equivalent to a category 5 hurricane.

Users of the assessment calculator will notice that they will have to choose whether or not they are Citizens Property Insurance Corporation customers. Customers who are Citizens policyholders are encouraged to compare the significant difference in the estimation output of both Citizens and non-Citizens policyholders. The calculator gives an estimation based on homeowners, business and automobile premiums, as all of these policy types are subject to the added assessments in the event of a major storm.

The assessment calculator can be found on the front page of the Insurance Consumer Advocate’s website and at the following link: http://www.myfloridacfo.com/AssessmentCalculator/Consumers/default.aspx

Florida Insurance Consumer Advocate To Host Claims Dispute Resolution Roundtable

By ICA Staff

Sean Shaw at the round tableThe Insurance Consumer Advocate’s office has heard from Floridians who have struggled to maintain order in their lives while their homes go unrepaired and they deal with the stressful process of mediation, appraisal and litigation. In an effort to learn more about the claims process, Advocate Shaw invited members of the insurance industry and home repair/remodeling industry to a roundtable discussion on how damage and repair estimates are developed and what can be done to bring uniformity to these processes. The goal is to get homeowners back into their homes, mitigate further damage to the property, hold down the cost of claims and allow contractors to proceed with repairs without delays. If this goal is achieved, it will also reduce the expense of mediation, appraisal, litigation and perhaps premium increases. The roundtable was held on July 23, 2009, and several good suggestions were discussed. Currently, ICA staff is working with the roundtable participants to identify issues and develop recommendations. It is anticipated that there will continue to be an ongoing dialogue on this issue, as well as another meeting in the fall.

Participants of the Claims Dispute Resolution Roundtable include: