Volume 3 Issue 2 ● 2nd Quarter 2011
Welcome to the ninth issue of The Advocate’s Advice newsletter. The Office of the Insurance Consumer Advocate continues to publish informational articles and advisories on our website http://www.myfloridacfo.com/ica/. The Advocate’s Advice continues to be a great way for us to communicate directly with the insurance consumers of this state.
The Patient Protection and Affordable Care Act (PPACA) that was enacted by Congress in 2010 will be implemented over a period of many years. The Office of the Insurance Consumer Advocate has previously reported on numerous benefits for consumers that have already become effective. This Act also included a provision to create a government insurance program that sells coverage to uninsured people with pre-existing conditions. This program will be available until 2014, when insurers will no longer be permitted to decline health coverage to individuals with pre-existing conditions. The U.S. Department of Health and Human Services recently announced that, effective July 1, 2011, premiums for health insurance coverage in the Pre-existing Condition Insurance Plan will be reduced by 40 percent for Florida participants. Read more about the Plan below.
Another article on health insurance discusses the fact that health care plans often require consumers to have treatment pre-approved. Failure to obtain approval to use certain services, drugs or providers many result in denial of coverage. If you have any doubt about whether pre-approval is necessary or whether a provider is truly in your provider network, contact your health care provider to be sure.
Finally, this newsletter contains an article about a subject that has recently been noted in a couple of Florida newspapers. Some property insurance companies, including Citizens Property Insurance Corporation, are reviewing the policy limits on their insurance policies to be sure that property owners are fully covered. They are also using a new property valuation tool. The result is that some consumers will see increases in premium if it is determined that the cost to rebuild their home or business is greater than the amount of coverage under their current policy. In our opinion, consumers should be fully insured so that their homes can be rebuilt in the event of a total loss.
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Sincerely,
R. Terry Butler, Esq.
Interim Insurance Consumer Advocate
Health Insurance for Persons with Pre-Existing Conditions
By: R. Terry Butler
The U.S. Department of Health and Human Services (HHS) recently announced that premiums for health insurance coverage in the Pre-existing Condition Insurance Plan will be reduced by 40 percent for Florida participants. This change will be effective on July 1, 2011.
The Pre-existing Condition Insurance Plan (PCIP) makes health insurance coverage available for persons who have been unable to obtain health insurance in the private marketplace due to the existence of a pre-existing condition. A pre-existing condition is a condition, disability or illness (either physical or mental) that you have before you enroll in a health plan.
The Federal Affordable Care Act of 2010 included a provision to create the PCIP as a bridge to provide pre-existing condition coverage between now and 2014, when insurers will no longer be permitted to decline health coverage to individuals with pre-existing conditions. Coverage through this program will be available until January 2014 when more health insurance coverage options will become available through a Health Insurance Exchange. Each state was given the option to operate its own PCIP or choose to participate in the plan run by the Department of Health and Human Services. Florida chose to participate in the HHS plan along with 23 other states.
This rate decrease is great news for the thousands of uninsured Floridians who are eligible for the PCIP. The rate decrease makes PCIP more affordable and the rates will be more in line with comparable rates charged by the commercial insurance market for individual coverage.
PCIP delivers health coverage to consumers who have a pre-existing medical condition, have not had insurance for six months and are U.S. citizens or legal residents of the U. S. Starting July 1, 2011, people applying for coverage can simply provide a letter from a doctor, physician assistant, or nurse practitioner dated within the past 12 months stating that they have or, at any time in the past, had a medical condition, disability, or illness. Applicants will no longer have to wait on an insurance company to send them a denial letter.
PCIP applicants who are approved to participate in PCIP can choose from three plan options, with different levels of premiums, calendar year deductibles, prescription deductibles and prescription copays. One option provides an opportunity to open a Health Savings Account, a tax-exempt account where you can deposit funds for eligible medical expenses. Each of the three PCIP plan options provides preventive care (paid at 100%, with no deductible) when you see an in-network doctor and the doctor indicates preventive diagnosis. Included are annual physicals, flu shots, routine mammograms and cancer screenings. For other care, you will pay a deductible before PCIP pays for your health care and prescriptions. After you pay the deductible, you will pay 20% of medical costs in-network. The maximum you will pay out-of-pocket for covered services in a calendar year is $5,950 in-network/$7,000 out-of-network. There is no lifetime maximum or cap on the amount the plan pays for your care.
Depending on your age and the plan you choose, rates vary from $118 (up to age 18) to $376 (age 55 and over) a month in the standard plan and from $158 to $505 in the extended plan.
To increase access to the program, HHS will also begin paying agents and brokers later this year for successfully connecting eligible persons with the PCIP program. Up to this point, the Plan has not insured as many people as expected. By allowing agents to participate in the process, HHS expects to reach more uninsured persons who are eligible but not enrolled in the Plan.
To apply, go to http://www.pcip.gov or call (866) 717-5826.
Is Your Home Fully Insured?
By: Vicki Twogood and R. Terry Butler
While home values continue to fall due to the collapse of the real estate market, many homeowners are questioning why their insurance company has kept the value of their home the same or have even raised the value of their home for insurance purposes. At first glance, it may appear that the insurance company is placing a value on the home in excess of its market value so that they can collect more premiums from the homeowner rather than reduce premiums. However, it is important for homeowners to know that the insurable value of their home should be equivalent to the funds needed to rebuild the home in case of fire, hurricane or other insurable event that results in a total or almost total loss.
Homeowners in Arizona whose homes were recently destroyed by wildfires and homeowners throughout the South where hundreds of people were killed and whole towns were flattened by severe storms and tornadoes have been described as overwhelmed and underinsured. The fact is, about 2/3 of the homes in the United States are underinsured. In the past, homes were insured for the amount of the mortgage or the appraised value. Unfortunately, this practice often left many homeowners without sufficient funds to rebuild their homes after a loss because the amount of the mortgage or the appraised market value may be far less than the cost of rebuilding the house.
As a result, most insurance companies have taken the guesswork out of the process and have begun utilizing computerized valuation systems developed by independent companies. This enables them to more accurately estimate the replacement or rebuilding cost of the home so that consumers are fully protected. This is a good thing! Therefore, when completing an application for insurance coverage, homeowners are urged to be prepared to provide their insurance agent with detailed information pertaining to the construction of their home, such as square footage, roof shape, floor coverings, upgrades in the kitchen and bathrooms, crown molding, number of air condition units and fireplaces and any other built-in item that makes your home unique. In addition to the information provided by the homeowner, the valuation system will calculate the current costs for materials, labor, permit fees, contractor’s overhead and profit, local building code requirements and other costs. Unfortunately, while home values have dropped in the last couple of years, costs for building materials and labor have remained consistent or slightly higher in most areas.
Most homeowners don't think much about their insurance policies once they have purchased them and don’t think to notify their insurance agent when they renovate or upgrade kitchens, bathrooms or other areas of their home. Homeowners are encouraged to review their insurance policy limits and to contact their insurance agent if they have any questions. Since the annual hurricane season is now upon us, if you haven’t reviewed your coverage lately, now would be an excellent time to do so.
In addition, for a minimal fee, homeowners can go on-line to complete a replacement cost valuation questionnaire to confirm whether they have enough insurance coverage for their homes. There are several consumer-friendly websites, such as Xactware’s Home Valuation http://www.xactinfo.com/apps/hov/ and Marshall Swift/Boeckh‘s AccuCoverage http://www.accucoverage.com/. These are the same programs that are used by most property insurance companies.
Florida’s insurance consumers who have any questions or need assistance with an insurance related issue are encouraged to write to Department of Financial Services at www.myfloridacfo.com or contact the Division of Consumer Services’ toll-free Helpline at 1-877 MY FL CFO (1-877-693-5236) or (850)413-3089 from out-of-state.
Have You Gotten Permission from Your Health Care Plan?
By: R. Terry Butler
There was a time when most people knew precisely what their health insurance policy covered (almost everything) and how to obtain treatment (go to just about any doctor or hospital you wanted to). When I was a kid (many years ago!), there were no Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) or Exclusive Provider Organizations (EPOs). Managed care did not exist. Insurance companies were in the business of collecting premiums and paying medical bills for their policyholders.
Over the past 40 years, there have been tremendous advances in medical treatment which enable people to live healthier and longer lives. These advances also mean people receive more treatment and more expensive treatment. In turn, this creates higher health insurance rates. In order to maintain affordable insurance premiums while at the same time making a profit for investors, insurers and HMOs have raised copayments and deductibles and restricted coverage. Unless consumers pay attention to the details of their insurance coverage, they may be in for a rude awakening when they receive a bill for using providers who are not in their policy’s network or for treatment they assumed was covered because it was prescribed by their doctor.
Many health care plans require their participants to obtain approval for many services. Prior to undergoing a test, procedure, mental health or substance abuse admission, or even filling a prescription, you will generally need approval from a health care administrator employed by or under contract with your health plan. Most plans have pharmacy benefit administrators, mental health administrators, orthopedic administrators, critical test administrators, and the like. These administrators determine the “contractual medical necessity” of treatment prescribed by your physician. Your physician can be overruled by the health care plan. If the physician prescribes a test, procedure or treatment by a different provider, check with your health plan to make sure it is covered and find out if prior authorization is required. The physician should do this; however sometimes they drop the ball. When this happens, the patient may be responsible for paying the bill.
For example, we recently heard from a consumer, let’s call her Sally, who had a severe eating disorder. Her treating physician prescribed 31 days of inpatient mental health therapy. When she checked in, the facility said that they would get the necessary approvals, but had her sign a financial responsibility form as a formality. The plan, however, approved only 3 days of inpatient treatment. Sally did not become aware of this until she had already spent 21 days in the facility at a cost of $1,500 per day. The consumer did not contact the plan, nor did the referring physician. The facility was going to take care of getting the necessary approvals – and failed to get the entire admission covered. Even though the plan does cover up to 31 inpatient days per year for mental health disorders, it is only covered if it is authorized prior to receiving the services – unless it is an emergency. This leaves Sally having to appeal to her insurer for coverage for the full time she was in the facility.
It seems every year health insurance plans are limiting or excluding more tests, procedures, medications and therapies from coverage so it is imperative for everyone to review health coverage on an annual basis. If your employer changes health plans, do not assume the coverage is the same as the previous coverage. Study the new plan documents you receive. You may discover that what was previously covered is now limited or in some cases not covered at all.
In another example, Joe sprained his knee and his primary physician ordered an x-ray and an MRI. Prior to having the MRI, Joe was notified by the plan that it wouldn’t allow the MRI without more information. Joe wanted to know if the health plan could override his doctor’s orders. The simple answer is yes. The plan’s orthopedic test reviewer, using standardized protocols for the condition, decided that less expensive treatment, such as physical therapy or anti-inflammatory medications, should be utilized first. Treating physicians need to check with health plans before they order the more expensive tests.
All types of health care plans are required to provide participants with documents that contain a brief description of the benefits, coverage, exclusions, etc. Know how your health plan works! If you have physician network restrictions, make sure you use an in-network or participating provider. DO NOT ASK IF A PROVIDER (hospital, doctor, lab, etc.) TAKES YOUR INSURANCE. That is the wrong question and could cost you thousands. Verify with the provider and with your health plan that a physician, service or other provider is in the network of your particular plan. Several health plans have multiple plans and provider networks – a provider may be in the network of ABC plan 001, but not in the network of ABC plan 002 through 007. Provider contracts are usually negotiated on an annual basis. A provider that you utilized previously may no longer be in the network.
If a health plan denies treatment or service, especially if it is a procedure that is time sensitive, you may request an expedited appeal of the denial. If you go through with the procedure or service without resolution, you must understand that you may be responsible for the full cost of the procedure. If you are covered under an HMO or EPO, you have additional appeals available after you exhaust the plan’s appeal process - you can appeal to the Statewide Subscriber Assistance Program through the Agency for Health Care Administration. They may be reached at 1-888-419-3456. If you are covered under a PPO or point of service health plan, you may get assistance from the Division of Consumer Services under the Department of Financial Services at 1-877-693-5236.
The Insurance Consumer Advocate is appointed by Florida Chief Financial Officer Jeff Atwater and is committed to finding solutions to insurance issues facing Floridians, calling attention to questionable insurance practices, promoting a viable insurance market responsive to the needs of Florida’s diverse population and assuring that rates are fair and justified.