Keeping an eye on insurance companies that refuse to pay claims

Introduction

After writing a couple weeks back that we need to keep an eye on profit-hungry health insurers to make sure they are not refusing to pay for medically necessary care, I got a flood of emails and tweets from people with stories to share.

That column was published just as Arizona media were reporting that the country’s third largest insurer had told a Phoenix man he would have to pay a $165,000 hospital bill himself. Many wrote to tell me how outraged they were to hear that had it not been for the media attention, Cliff Faraci, called a good Samaritan for trying to save the life of a 19-year-old girl following a fiery crash in Arizona, might be facing bankruptcy.

I, too, was outraged, but, sadly, not at all shocked. It was just the most recent example of how health insurance bureaucrats insert themselves between patients and their doctors, all too often resulting in potentially life-saving treatment not being provided or patients getting stuck with bills far beyond their ability to pay.

The Arizona Republic wrote about Faraci’s nightmare as part of a series of stories about people who find themselves in financial trouble as a result of the country’s “fragmented health-care system.”

Here’s what happened, in reporter Robert Anglen’s words:

The accident happened in an instant. One second, traffic was moving steadily. The next, metal debris was flying past Cliff Faraci’s windshield as cars skidded across Loop 101 near Scottsdale Road.

Faraci jammed on his brakes. In front of him, a battered red car was stopped sideways and steaming. Inside, a teenage girl, covered in blood, slumped in the driver’s seat. Faraci ran to the car and tried to help her out. The driver and passenger doors were jammed. He talked to the girl, told her everything was going to be OK.

“I noticed smoke coming from under the hood,” Faraci said, describing the March 2013 accident as if it were still unfolding in front of him, the way it will play out inside his head for the rest of his life.

“I reached in through the driver’s window to turn off the ignition … but I could not reach it … I reached further into the car with both arms and upper body … I was halfway through the driver’s window.”

The engine ignited. Faraci, standing in a puddle of gasoline, was enveloped by searing heat and yellow flames. He jerked away, trying to stop the burning. The ruptured gas tank exploded and Faraci watched the girl inside the car die.

Faraci was taken to the burn unit at Maricopa County Medical Center where he was treated over the coming week for first-, second- and third-degree burns.

Two days after he was discharged, he got a letter from Aetna telling him that the company didn’t believe his injuries were “sufficient to warrant” a weeklong stay in the burn unit.

As Anglen wrote,

Almost overnight, the freeway Good Samaritan had become a victim of a health-care nightmare. His case is an example of what can happen when an insurance company decided to question the administration of care provided by doctors and other medical experts directly involved in the patient’s treatment.

Faraci said he was shocked to be denied coverage. He assumed that because he paid the premiums, his insurance company would be there for him if he ever had an emergency.

Faraci filed an appeal, but Aetna executives wouldn’t budge. They said in their denial letter that Faraci’s coverage extended only to services and supplies that Aetna — not his doctors or hospital staff — deems medically necessary.

Faraci decided to become a squeaky wheel. He hired a lawyer and contacted Channel 12 News.

When Faraci’s second appeal was also denied, his lawyer requested an external review of the case. Under the Affordable Care Act, insurers, which deny millions of claims every year, must have an approved external review process in place to resolve disputes. The reviewers chosen by the parties involved in an appeal must be physicians affiliated with an independent review organization and have training in the area of medicine in question.

In Faraci’s case, requesting the external review and asking Channel 12 to intervene paid off. The independent examiner ruled that Aetna should pay half of Faraci’s hospitalization. Soon after that, Aetna told Channel 12 that Maricopa Medical Center would not bill Faraci for the remaining $82,500.

Anglen wrote that an Aetna spokeswoman said the company was “pleased the matter is resolved,” adding that Faraci would be responsible only for his deductible and co-insurance.

As a former insurance company PR guy who used to deal with reporters when something like this happened, I can assure you that becoming a squeaky wheel can make all the difference.

Meanwhile, The Wall Street Journal reported on April 24 that Aetna’s medical loss ratio — “the amount of premiums used to pay patient medical costs” — fell to 80.4 percent during the first three months of 2014, down 81.9 percent a year earlier. That helped the company make $665.5 million in profits during the first quarter, an increase of 36 percent over the same period a year ago. The company seems to be muddling through.