Posted By Andrew Stein On May 19, 2013
“The Higher Health Insurers’ Claim Denial Rate, the Higher the CEO Pay,” [4] Potter spotlights a correlation between CEO salaries and denial rates in Vermont.
Donegan said that what jumped out at her in the filing is that administrative denials accounted for the bulk of Cigna’s refusals. Administrative denials arise when there are clerical or administrative issues surrounding a claim.
What are known as “member-impact denials” arise when someone is denied care for a treatment or drug that is deemed medically unnecessary.
Generally speaking, health care professionals view administrative denials as more benign than member-impact denials because straightening out an administrative error is easier than filing an appeal for a medical reason.
But Potter wrote in his column that the high administrative denial rate is still concerning.
“It defies reason to think that the doctors and hospitals in Vermont submitted inaccurate claims to Cigna at almost three times the rate they did to Blue Cross,” he wrote. “One of the things you need to know about the private health insurance business is that insurers make a lot of money when they delay paying a claim.”
What’s more is that Cigna’s denials do not add up. Falko Schilling, consumer advocate at the Vermont Public Interest Research Group, pointed out the faulty math.
Cigna reports denying a total of 42,139 claims in 2012, 30,130 of those were administrative and 6,461 were member impact denials. The administrative and member impact denials are supposed to add up, but they don’t. They fall more than 6,500 short of the total mark.
Jon Sandberg said that this new filing is difficult for Cigna.
“We’re a national insurance company,” he said. “We don’t really keep numbers the way Vermont is asking us to comply with. We’re learning as we go, and I think there were a group on administrative denials who were approved. … We’re on a steep learning curve, and we’re doing our best to get it right.”
The state’s insurance company
Cigna contracts with Vermont to administer the health insurance plan for state employees.
“I haven’t had any problems with Cigna,” said Jeb Spaulding, secretary of the Shumlin administration. “When we hire someone, whether it’s Cigna or Blue Cross, they are using the rules that we set up.”
According to numbers from the Department of Human Resources, Cigna covers 23,365 lives (employees and dependents) for the state. Kate Duffy, commissioner of the department, said that the state plan had an overall denial rate of 1.3 percent this past year.
“The state has a pretty generous plan,” she said.
Cigna’s filing does not include these numbers; it only includes the 9,552 fully insured lives covered under its own plans.
Cigna provides coverage to numerous employers in Vermont, and it administers plans for large employers. It does not offer individual plans in Vermont, and the company is not going to offer plans on the state’s new health insurance marketplace, called Vermont Health Connect. The estimated 118,000 Vermonters purchasing individual plans, or with businesses that have fewer than 50 employees, will choose between Blue Cross and MVP plans.
A new member-owned health insurance cooperative, Vermont Health Co-op, is hoping to receive state licensure in the next month or two. If the cooperative receives the go-ahead, it would offer a third set of plans on the health insurance exchange.
This story was updated at 6:40 p.m. on May 19, 2013.