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Q&A with Lisa Girion: Pulling back the veil on the insurance industry

Q&A with Lisa Girion: Pulling back the veil on the insurance industry

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Unless someone has had a bad experience with an insurance company, most people think of insurers as either benign or positive forces in their lives. It's the president from "24" telling us in a deep, reassuring voice that we'll be taken care of.

Lisa Girion, one of the best health reporters in the country, exposed the practice of "rescission," where insurers deny benefits to patients based on alleged problems with the patients' applications or other paperwork. The story started with a simple list of legal cases, the kind of list most health reporters never see. Girion interviewed a family from Santa Ana, Calif., and soon had the beginnings of a great investigation. (Check out her ReportingonHealth essay on covering rescissions here.) 

She is moving from the Los Angeles Times business desk to the metro section, where she will work for investigations editor Julie Marquis. Antidote is certain that we will see some incredible projects as a result.

Antidote reached Girion at her office. The interview has been edited for space and clarity.

Q: Even with all of your reporting on insurers, there are some numbers that have remained off-limits, like the total number of rescission cases. Will that number ever come out?

A: Still to this day, insurance companies don't have to make any public accounting of their rescissions activities. It is impossible to know how widespread the practice has been. I think a really important metric would be how many people are rescinded out of the total number of people who file claims over a certain amount. Because it's the high-cost cases that the insurers are worried about. If companies had to report that number quarterly or annually and they had a high number, nobody would buy their product. That's something that has been proposed as a requirement for insurance companies, but it has never made it into law.

Q: Have you seen that number for any company?

A: I would love to know that number. There are some numbers in discovery in some of the cases that have been in litigation in California. Nationally, a congressional committee did an investigation and subpoenaed documents and found 20,000 a year nationwide. But that's still a subset.

Q: Out of all the claims that are made very year, that has to be a drop in the bucket, right?

A: It totally is a drop in the bucket. That's what the insurance companies always say, "We pay out billions in claims every year." But the important denominator is, of the people with serious claims in any given year, how many of those people are rescinded? That's going to be a much bigger fraction. If you pay your premium year after year, they are collecting a lot of money from you. The promise that they will take care of you is still there. You only test that promise when you get sick, and that's when it really matters.

Q: Were you surprised that insurance companies told Congress in June that they would continue cancelling policies for sick customers?

A: I was totally surprised. I think I might have been the only reporter in America who attended that hearing. I did it virtually. I was on the computer in my home office and listening to it. It was at least three hours. Congress trotted out all these witnesses across the country. One was a woman from Texas who had been helped by Congressman Joe Barton. She had breast cancer but had failed to tell her insurance company about some acne treatments she had in the past. They used that to rescind her. Then these three insurance company executives were raked over the coals. And all of them wrung their hands and said, "We're really sorry we have to do this. But, given the way the market is set up and because there's no individual mandate we have to weed out risk. We can't accept people who have pre-existing conditions because it's going to drive up costs for everybody else."

The congressmen said, "Can't you find out whether people made innocent mistakes or a doctor wrote down something that didn't turn out to be case?" Sometimes a doctor will write down heart disease and ultimately it turns out to be acid reflux. But that's not on their chart. So if the person ends up developing heart disease, the insurance company can say, "The doctor wrote down five years ago that you may have heart disease but you didn't report that." So all of these executives said, "No. We can't limit rescissions to people who are guilty of fraud. We have to keep rescinding innocent people." At that point during the hearing, I had turned my attention to something else, and I said, "What did I just hear?" I hit rewind, and, of course, I had heard correctly.

Q: You found that HealthNet was paying people annual bonuses based in part on how much they saved through rescission. Isn't that just good business sense?

A: For one thing, consumer lawyers argued there was a disregarded law on the books that said claims adjustors can't be incentivized to deny claims. And that an insurance company has to look at any claim in the most favorable light for the claimant. They really have to go to great lengths to do everything fairly. If you sort of tip the scale to decide against the claimant by incentivizing denials, that might conflict with the law.

Q: Have people been surprised to find out that insurance companies have that level of access to their personal information and medical histories?

A:  I think people have this sense that there are a lot of companies that have a lot of access to their information and know everything about them. Certainly, when you sign an application for insurance, you are giving them the right to look back at your medical records. What surprises people is that they don't look back at your records before they approve the insurance application. They only look back when someone submits a big claim.

Q: They're trying to save money on the front end, right? They don't want to have to investigate everybody until it really matters.

A: The regulators in California made them clean up their applications. And they told the insurers, "Now you have to investigate and do your underwriting before you issue coverage, not after." Investigating an application after a claim has been submitted is called post-claims underwriting. There is a law on the books in California that should prevent that, but it hasn't been enforced. The companies say it takes too much time. They want to get paying customers in the door and don't want to take three weeks to do an insurance policy.

Q: You've said that you don't think that nonprofit insurance companies are much different in their business practices than for-profits. What makes you say that?

A: The nonprofits have said as much. They have said, "we have to operate the same way as everybody else. There are these market rules that are out there and for-profit companies interpret them this way and they rescind people. If we don't rescind the way they do we will be the suckers who get all the people with preexisting conditions. That will drive our costs up, and we will lose people with less risk to the for-profit companies." It becomes a death spiral, in insurance speak.

Q: Have you seen much in the way of memos, emails or other documents that talk about the way rescission decisions are made?

A: There's been precious little discovery in the rescission arena. So we still don't know a lot about how these companies meted out rescission. Usually, the judges threw out the cases against the insurance companies on summary judgment, so they hadn't reached the discovery phase yet. In cases where they survived summary judgment, they all settled confidentially before they went to discovery.

With one exception, a Blue Cross case where all the discovery records were put under seal. But I went down to the courthouse anyway to see if the most significant parts of the discovery were referenced in motions that were public, and I found that some of the records were not, in fact, under seal that should have been. And I found that according to Blue Cross' own documents – even though they had told me that rescission was something that rarely happened – they had a secret unit called the Underwriting Investigations Unit that had its own staff that investigated every single application on claims that were triggered by a software review. Their software would detect certain diagnostic codes that would then lead to a review by this unit. If you submitted a claim with any of these things, your application would automatically be investigated.

Also, there was deposition testimony from one of the employees in this unit who was asked if Blue Cross ever investigated to find out whether the applicants intentionally lied or were aware of the omissions in their applications. She answered, "No." Intent to defraud was never part of their investigations. It's not about fraud. It's about people leaving things off the applications, accidentally or not.

Q: Did you catch any heat from Blue Cross or anyone else for including information in the story that was supposed to have been sealed?

A: I did not receive any heat. But that same week that the story was published, the judge ordered the documents that I had seen to be sealed.

Q: More recently, you have been trying to help people understand all the components of health care reform. What has been the most difficult part of that work?

A: There's just so much to it. The House version and the Senate version (of the health reform bills) are both over 2,000 pages long. They cover everything from requiring people to have coverage, requiring insurance companies to sell to everyone, a ban on rescission an expansion of Medicaid.

While there is a lot of specificity and it seems like the Congresspeople are fighting over specifics, my analysis is that the language is still very broad and a lot of the important work will happen after Obama signs a bill and the regulations are developed. I'm afraid that people at that point aren't going to be paying much attention.

There were a lot of laws that were supposed to protect insurance customers from rescission for years, and yet the companies were rescinding people. There were never any regulations to implement the anti-rescission laws. In 1996, the last time Congress visited health care, they did a mini-reform with HIPAA. A lot of people think that's about privacy but the other part of HIPAA is portability, that you should into be underwritten out of the market. There was an anti-rescission piece that was never enforced, not at the federal level nor the state level. Primarily because the feds never backed up the law with supervision or expectations or standards for the states. That contrasts with the privacy part. As you well know, everyone is afraid of the HIPAA privacy rules.

Q: How do you think the marketplace will shift if health reform in its current iteration is passed?

A: The insurance industry, if they have to take all comers, will still be looking to avoid risk any way they can. What they will try to do is design insurance plans that appeal to younger, healthier consumers.

Q:  Do you think problems with people being denied care will go away?

A: No. I think rescission should be less of a problem, but if they can't rescind people, they have to take on all this bad risk that they have been avoiding. Insiders tell me that they will only be able to make the margins that Well Street is looking for by stepping up the rate of denial of treatment. They have you as a customer and can't dump you or refuse to sell to you, but insiders say they will look very closely at the kind of treatment and services that your doctor thinks you need and try to prevent you from getting them.

Q: Can you give me some examples of things that you think are standard for insurers to cover now but might become rarer under health reform?

A: They will be required to offer a minimum benefits package. But you will have cases where, at the individual level, they will say this particular patient doesn't qualify for a heart transplant because he has some other problem. It won't be effective on him.  Then it will be up to the patient to fight that with the medical literature or with expert doctors. That's a very difficult battle to mount when you're sick. It's a very difficult battle to fight even in California, where we are supposed to have some of the best patient protections.

Q: We often hear that tougher regulations drive companies out of the marketplace and eliminate competition. Have California's strong patient protection laws driven companies out of the insurance market there?

A: No. We have all the biggest players. United Health. Wellpoint. You can't ignore the California market. And, the truth is, under the Department of Managed Care, all the health insurance sold does have high patient protection laws. They have a minimum benefit threshold. If your company happens to be regulated by the Department of Insurance, instead, the standards for what constitutes health insurance are really negligible. You can sell just about anything, including coverage that doesn't include maternity benefits. So the insurers are moving toward skinny, lean products on the Department of Insurance side. They are wanting to cover what they call the "young invincibles." Young men who aren't going to get pregnant and have families and whose worse problem might be a ski accident.

Q: It sounds like they are going for the same demographic as Axe antiperspirant.

A: I wrote story that talked about Tonik, the first Blue Cross product to go after young invincibles. Their marketing and Web site is in neon colors and showed snowboarders jumping across the screen.

Q: Why do they target men? Is it because women have longer life spans?

A: Actuarially speaking, women are more expensive to insure then men. They can get pregnant. That's one reason for it.

Q: You have talked about the way that insurance companies use the literature strategically to prove their points. How did you find this out?

A: Through court cases that I've reported on. It's only when you get sick that you really find out what the medical guidelines are that govern the kind of coverage you're going to have. The insurance company is going to look at that and say, yes or no. If they say no, they have to give you a reason, which you usually see in a denial letter. It says it's not medically necessary or it's investigational. "We clearly say in our policy that we don't pay for investigational therapies." They might cite an article from medical literature that says this is what we are basing this on. I've wanted to write a story about how they select the medical literature that they choose.

Q: Have you ever had to challenge anything with your own health insurance provider?

A:  I've been lucky, in that nobody in my family has been really sick. But one thing I know is that people like me who get their insurance through their large, self-funded employer really have very little recourse when any treatment is denied. The insurance companies are exempt from lawsuits by people in employee- sponsored health plans.

I wrote about this exact case. That was the Nataline Sarkisyan case. She needed a liver transplant and her insurer said, "we cover them but we don't think in your case it would be effective." Her parents sued Cigna, and last spring a federal judge threw out the suit, accepting the all-purpose defense that insurance companies have an exemption for liability from those kinds of decisions.

The only place you can go to appeal is to the insurance company itself and possibly to the employer. You have the people who made the decision to deny you coverage now deciding your appeal. There are 132 million people in the US with that kind of coverage, by far the biggest group. These people are denied access to the courts, and that won't change with health care reform. Some lawmakers would like to see that change, but they don't have the votes. The legal exemption that insurance companies have for their treatment decisions is unique for private companies.

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