Hit By An Insurance Scam

Thanks to Paul Krugman I got evidence of what I suspected. I’m probably the victim of a scam.

A few months ago I got a new patient from out of state with insurance through United Health. My office contacted the insurance company before we saw her to determine if she would be covered. In situations such as this it isn’t always clear whether we’d be considered a participating provider for the plan since, not being a local plan, we do not have a contract with them. Many health plans have arrangements for situations such as this and we did receive a fax back stating they considered us a participating provider and outlined coverage for her office calls. After we saw the patient, United Health failed to pay on the claim. They stated that we are not a participating provider and that the office calls would be the patient’s responsibility. When we call they claim that they agree we are a provider and she will be covered, but they continue to deny the claims.

Previously there was the question of whether this is just an error which will be fixed or an intentional scheme to avoid payment. Paul Krugman’s column shows a pattern of such behavior:

Is the health insurance business a racket? Yes, literally — or so say two New York hospitals, which have filed a racketeering lawsuit against UnitedHealth Group and several of its affiliates.

I don’t know how the case will turn out. But whatever happens in court, the lawsuit illustrates perfectly the dysfunctional nature of our health insurance system, a system in which resources that could have been used to pay for medical care are instead wasted in a zero-sum struggle over who ends up with the bill.

The two hospitals accuse UnitedHealth of operating a “rogue business plan” designed to avoid paying clients’ medical bills. For example, the suit alleges that patients were falsely told that Flushing Hospital was “not a network provider” so UnitedHealth did not pay the full network rate. UnitedHealth has already settled charges of misleading clients about providers’ status brought by New York’s attorney general: the company paid restitution to plan members, while attributing the problem to computer errors.

The legal outcome will presumably turn on whether there was deception as well as denial — on whether it can be proved that UnitedHealth deliberately misled plan members. But it’s a fact that insurers spend a lot of money looking for ways to reject insurance claims. And health care providers, in turn, spend billions on “denial management,” employing specialist firms — including Ingenix, a subsidiary of, yes, UnitedHealth — to fight the insurers.

Republicans tell me I should fear “socialized medicine.” Of course they aren’t the ones who deal with our current mess of a health care payment system. I’ve never had problems like this with Medicare. Even when there are problems there are fair ways to fix them. Several years ago Medicare conducted an audit and claimed that around $13,000 paid wasn’t for valid services. Naturally I disagreed. I took my arguments to an administrative law judge (part of a documented appeals process available). The administrative law judge agreed with me and Medicare returned my money. The evidence in my favor was so strong I didn’t even bother using an attorney in this fight. Getting money out of United Health won’t be so easy.

Krugman goes on to discuss the entire health care system. This denial management, along with everything else the insurance companies do, costs money.

McKinsey & Company, the consulting firm, recently released an important report dissecting the reasons America spends so much more on health care than other wealthy nations. One major factor is that we spend $98 billion a year in excess administrative costs, with more than half of the total accounted for by marketing and underwriting — costs that don’t exist in single-payer systems…

To put these numbers in perspective: McKinsey estimates the cost of providing full medical care to all of America’s uninsured at $77 billion a year. Either eliminating the excess administrative costs of private health insurers, or paying what the rest of the world pays for drugs and medical devices, would by itself more or less pay the cost of covering all the uninsured. And that doesn’t count the many other costs imposed by the fragmentation of our health care system.


  1. 1
    G. Weightman says:

    I would write directly to the CEO or Board Chairman of United. Mail addressed to executives is usually handled by a critical inquiries unit. Once this unit sees the fax you received, I suspect you will meet with a different response (because you reasonably relied on United’s written statement).

  2. 2
    Ron Chusid says:

    I’m not sure the CEO or Board Chairman would care. If they don’t pay on the resubmitted claims the next step will be to file complaints with the insurance commissioners of my state and the state where the claim is filed. We would then send a letter to the company along with copies of the complaint which will probably carry more weight than simply writing with a complaint. Often when such complaints are filed insurance companies will pay before risking having the insurnace commissioners offices formally getting involved.

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