Below are frequently asked questions. For more information for consumers, go to Resources for Consumers.
- Where can I find reliable data about health care costs?
- How does the insurance company decide what is "allowed"?
- Does an insurance company have to cover medical conditions you learned about prior to getting insurance?
- If an individual is covered under the spouse’s employer-sponsored health insurance coverage, and a divorce or separation is anticipated, what do they both need to know about COBRA?
- Does the Supreme Court decision in Aetna v. Davila and Cigna v. Calad (link to descision below) mean that when health plans deny coverage, they no longer have to give notice to enrollees of their right as individuals to sue the plan?
- Who is eligible for COBRA coverage?
- If a consumer moves to or returns to the United States and accepts group coverage with a new employer, must that employer accept the proof of coverage from abroad as creditable coverage under the portability provisions of the Health Insurance Portability andAccountability Act (HIPAA)?
1. Question: Where can I find reliable data about health care costs, such as hospital charges for specific services, and other statistics related to health insurance coverage? I am particularly interested in information that is specific to my state.
Answer: Finding reliable health care data specific to a state or a region within a state can be difficult. Still some data sets exist that may be helpful.
There are several sources of data that are collected by the federal government that may provide useful state-level information. The largest source of health care cost data is the Medicare program. Information about all of the available types of data collected by Medicare can be found on the CMS website for researchers. Specifically, Medicare's Healthcare Cost Report Information System (HCRIS) contains cost information by service from facilities participating in the Medicare program and is available for purchase. Data related to the behavior and characteristics of the United States population, such as data about the number of uninsured and the characteristics of individuals who see a doctor regularly, are available through two federal studies: the Behavioral Risk Factor Surveillance Survey (BRFSS) and the Current Population Survey (CPS). CPS data are generally reliable at the state level but may not be useful if you need more specific data on a region within a state. The BRFSS, which contains different information than the CPS, has more detailed data because states can choose to pay the federal government to increase the number of their residents surveyed.
There also may be sources of data within your state. Most states that have a Certificate of Need (CON) program require hospitals and other health care facilities covered by the program to submit data on costs and utilization to a state health care quality agency or office. In some cases, this data collection is handled by a state university. Population-level data about the behavior of individuals in certain situations may be collected by your state's public health agency or Medicaid agency. States that have received a policy planning grant from the federal Health Resources Services Administration (HRSA) may also have undertaken additional surveys specific to health care access and costs. Generally, all information collected by a state are subject to freedom-of-information or open-records laws that require the information to be disclosed to you, in a format that protects the confidentiality of the facilities or individuals, if you request the records.
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2. Question: My insurance policy is supposed to cover 80% of my doctor's charges while I pay the remaining 20%, but when I received my Explanation of Benefits statement, the insurance company paid 80% of what it considered to be an "allowed" amount. There is no contract between my insurance company and my provider, so I am responsible for the remaining balance which exceeded 20% of what the doctor actually billed. Is this legal? How does the insurance company decide what is "allowed"?
Answer: Your question is about "usual and customary" charges. Most PPOs (Preferred Provider Organizations), indemnity plans, and HMOs with an out-of-network option have provisions in their policies stating that they will pay a percentage, like 70% or 80%, of the charges. However, when you read the policy carefully, you will see that the insurance company will pay that percentage based only on the usual and customary charge. This means if your physician charges more than the insurance company's usual and customary charge, you will pay a greater percentage of the total cost of the service. If the physician charges less, you are usually still required to pay your full share, generally 20% or 30%, of the total bill.
Some states do have "balance billing" laws, but they vary dramatically from state to state. In most cases, however, balance billing laws protect the consumer only if the physician and the plan have a contractual relationship. Advocates need to investigate the laws in their state to know if there is one on balance billing and, if so, when it protects consumers.
The use of usual and customary charges is very common in the insurance industry and something that consumers need to understand so they can receive the optimal benefit from their plan. The usual and customary amounts for various services, like an office visit, vary by insurer and by geography. Some insurers compile their own usual and customary schedule based on claims received, among other data. This is why physician charges are typically greater than a plan's "usual and customary" charges; otherwise, physicians will have no grounds on which to request annual increases in the fees they receive from the insurance companies with which they contract. Because of this practice, patients should expect to pay more than 20% of the actual charge if they go out of network and are subject to that co-insurance structure.
Other insurers use a schedule published by America's Health Insurance Plans (AHIP), an association of health insurance plans. The only way to know definitely what your health insurance plan considers to be usual and customary is to ask the plan. Although insurers will often refuse to provide you with the entire schedule, citing the proprietary nature of it, most reputable insurers will give you that information for basic services or services you are about to receive. Many insurance companies are now establishing web sites that help you compare the charges of various participating providers so you can choose providers whose charges are closest to the plan's accepted charges. Consumers can also do this on their own by negotiating with a physician's office, ideally before a service is rendered, or getting multiple quotes for an expensive service, like an MRI.
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3. Question: If you have been without group health insurance for a while (because, for example, you were unemployed or because you were a temporary employee for a company and not entitled to health benefits) and then you become eligible for health benefits through a new permanent job but were diagnosed with cancer or became pregnant during your period without health insurance, does the company have to cover those conditions?
Answer: The answer is both yes and no. If you are without group coverage and you become covered by an employer-sponsored group health plan, the plan can impose pre-existing condition exclusions on any conditions you had, such as cancer, before you joined the plan. However, how long these exclusions can be applied are governed by the federal law known as the Health Insurance Portability and Accountability Act (HIPAA). HIPAA says these exclusions cannot last more than 12 months for a new enrollee in a group plan, or 18 months for a late enrollee, and may be shorter depending on how many months it has been since you had group coverage. Also, if you have not had a significant break-in-coverage, you may reduce the pre-existing exclusion period of a group plan if you have creditable coverage.
However, pregnancy is an important exception to this rule. While not all group health policies cover all conditions, a group health plan that does cover pregnancy MUST cover your pregnancy regardless of your prior insurance status. The plan can not treat pregnancy as a pre-existing condition. It is important to note that employers can still impose a waiting period, such as 30 days or 60 days, before allowing you to join the group plan as long as they impose this requirement on all people joining the plan. If you are subject to a waiting period, your coverage, including coverage for your pregnancy, will not begin until your waiting period is over.
It is also important to note that in the individual market pregnancy cannot be a pre-existing condition for individuals who move from group to individual coverage and are HIPAA-eligible. However, individuals who are not HIPAA-eligible, and those moving from individual policy to individual policy in a state, do not have the same protection. In those situations, a pregnant woman, just like someone with cancer, has few protections unless she follows her state’s portability rules carefully.
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4. Question: If an individual is covered under the spouse’s employer-sponsored health insurance coverage, and a divorce or separation is anticipated, what do they both need to know about COBRA?
Answer: COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act of 1986, requires certain employers to offer qualifying individuals the option of continuing their health care coverage when they would otherwise lose coverage. COBRA rights extend to spouses and dependents of the employee who are covered by the plan at the time of the qualifying event. More information about who is eligible for COBRA is covered in our June 2004 Q&A. Under COBRA rules, in the event of divorce or legal separation, a covered employee’s spouse may obtain up to 36 months of continuation coverage under COBRA but must notify the health plan administrator within 60 days of the divorce or legal separation.
Questions arise when an employee removes a spouse from the coverage in anticipation of a divorce or separation. If the spouse is not a member of the plan at the time the actual divorce takes place, what right to continuation coverage does the spouse have? The Internal Revenue Service has ruled that when determining if divorce is a qualifying event, the plan must disregard the spouse’s removal from the plan (which causes the spouse to not be covered on the plan the day before the qualifying event) and provide the spouse continuation coverage for up to 36 months from the date of the divorce or legal separation if the spouse would have received the continuation coverage otherwise.
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5. Question: Does the recent Supreme Court decision in Aetna v. Davila and Cigna v. Calad mean that when health plans deny coverage, they no longer have to give notice to enrollees of their right as individuals to sue the plan?
Answer: No. Private health insurance plans still need to give consumers notice when they deny coverage. Section g(1)(iv) of the Rules and Regulations for Administration and Enforcement of the Employee Retirement Income Security Act of 1974 (29 CRF 2560.503-1), which requires the notice to include a statement of the patient's right to bring a civil action under 502(a) of ERISA when they are denied benefits, is not affected by the decision. The Supreme Court’s decision does not eliminate a consumer’s right to bring a suit under 502(a) of ERISA. Instead, the court's decision is about whether a state law which requires HMOs to exercise a duty of care or to pay damages to the consumer is preempted by ERISA.
If a state law is preempted by ERISA (as the Texas law has now been), the only remedies available to the consumer are those already available under ERISA, which allows consumers to recover only the value of any benefits found to be wrongfully denied to them. While this is often less than what a consumer could recover under state law, it is nonetheless an important way for consumers to recover something when their benefits are denied. Therefore, the Supreme Court’s decision means it is even more important now that consumers receive notice of--and understand--the right that they have to bring a civil action to recover any benefits or coverage wrongfully denied to them.
Visit HAP’s web site on ERISA for details about the appeals process and time limits that apply when a plan denies consumers coverage for health benefits.
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6. Question: Who is eligible for COBRA coverage?
Answer: COBRA, or the Consolidated Omnibus Budget Reconciliation Act, is the federal law that generally requires employers with twenty or more employees to offer certain employees and their dependents the choice of temporarily continuing their group health coverage after they lose coverage that is still offered by the employer. In order to determine if a person is eligible for COBRA, consider three things:
- Is the individual's employer or group required to offer COBRA coverage? Employers must comply with COBRA if on more than 50 percent of its typical business days in the previous calendar year they had 20 or more full-time equivalent workers. Smaller employers are governed only by state law and are not required under federal law to offer continuation coverage, though the local jurisdiction may require these smaller employers to do so.
- Is the employee, spouse, or dependent a qualified beneficiary? In order to be eligible, the employee or dependent must be covered by a group health plan on the day before the event that qualifies them for COBRA takes place. (See the July 2004 Q&A for some exceptions) Children born to, or adopted by, a person covered by COBRA also are eligible for the duration of the COBRA coverage.
- Has the employee, spouse, or dependent experienced a "qualifying event"? Qualifying events are the following:
- voluntary or involuntary termination of employment for reasons other than gross misconduct,
- voluntary or involuntary reduction in the number of hours of employment (such as when a full-time employee is becomes a part-time employee who is not offered health insurance),
- the covered employee's becoming eligible for Medicare,
- divorce or legal separation of the covered employee,
- death of the covered employee, and
- loss of dependent child status under the plan rules.
Each person in the employee's family has a separate right to elect COBRA, meaning one person can choose COBRA coverage while another does not. (A new final rule was recently published by the US Department of Labor about when and how employers and employees and spouses must notify each other and the health plan when qualifying events take place. HAP will be holding a conference call on this rule on June 29th.)
The Health Assistance Partnership provides more information about COBRA and the rights and responsibilities of individuals and their employers.
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7. Question: If a consumer moves to or returns to the United States and accepts group coverage with a new employer, must that employer accept the proof of coverage from abroad as creditable coverage under the portability provisions of the Health Insurance Portability and
Accountability Act (HIPAA)?
Answer: The final regulations for HIPAA, issued December 30, 2004, have changed the answer to this question. Previously, universal coverage sponsored by a foreign government would not have been considered creditable coverage. However, the new HIPAA rules changed the definition of a public health plan. Under the final rules, any health coverage provided by a governmental entity is a public health plan, and therefore, the coverage is creditable coverage. Thus, foreign government universal coverage is creditable coverage. Also, in the United States, veteran’s coverage will be creditable coverage under the final rules. The new rules are effective for plan years beginning on or after July 1, 2005.
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