Insurance Law Hawaii

Faulty Data Base Increases Out-of-Pocket Medical Expenses

    If you have ever sought out of network health care, here is a story to make your blood boil. 

    Today's New York Times reports that Congressional investigators have discovered a faulty database overcharged patients for seeing doctors outside their insurance plan network.  The database was operated by Ingenix, a subsidiary of UnitedHealth Group.  The Congressional investigators found insurers submitted data that underestimated the costs of medical services, making patients pay out-of-pocket expenses that should have been covered by insurance. 

    Thanks to my fellow Damon Key blogger, Mark Murakami (hawaiioceanlaw.com), for forwarding this story to me. 

Hawai`i Court Upholds Medical Insurer's Denial of Excluded Procedure

    Whether coverage for an allogeneic stem-cell transplant ("allo-transplant") was properly denied by the insurer was at issue in Hawaii Medical Service Association v. Adams, No. 28899 (Haw. Ct. App. May 21, 2009) [here].  An allo-transplant, used to treat myeloma, involves the harvesting and transplanting of stem cells from a matched donor.  A "myeloma" is a form of cancer which affects the bone marrow cells and involves several different bones at the same time.

    Hawaii Medical Service Association ("HMSA") denied pre-authorization for an allo-transplant for the insured.  Based on Blue Cross Blue Shield Association's Guidelines ("BCBSA Guidelines"),HMSA determined the request was "investigational."  An internal appeal was filed pursuant to the policy's procedures.  The appeal upheld the denial of pre-authorization for the allo-transplant because multiple myeloma was not listed in the policy as a condition for which an allo-transplant would be covered.  Further, the BCBSA Guidelines only recommended use of allo-transplant to treat multiple myeloma in a clinical trial setting.   

    The insured appealed HMSA's denial to the Insurance Commissioner.  The Notice of Proposed Order recommended HMSA be ordered to provide coverage for the allo-transplant.  HMSA then approved the coverage, and the insured received the allo-transplant.  The Commissioner's Discussion and Order agreed that an allo-transplant for multiple myeloma was not covered, but the exclusion was not specifically enumerated as an excluded benefit in Chapter 6.   

    The Circuit Court upheld the Commissioner's decision, but the Hawai`i Intermediate Court of Appeals reversed.  The relevant statute, Haw. Rev. Stat. 432E-1.4 (a), stated coverage must be provided if recommended by the treating health care provider and determined by the health plan's medical director to be medically necessary, unless specifically excluded. 

    The policy language "specifically excluded" an allo-transplant as a treatment for multiple myeloma.  Chapter 6 of HMSA's policy stated there was no coverage for transplant services other than those described in Chapter 4.   Chapter 4 limited benefits for bone marrow transplants to allo-transplants "for the specified diseases or conditions described in this section."  Chapter 4 then listed fourteen specific diseases or conditions for which an allo-transplant was covered, but did not include transplants for multiple myeloma.

    Under the Commissioner's interpretation of the policy, HMSA would be required to list every conceivable medical condition for which coverage for allo-transplants would be excluded.  This was neither practical nor reasonable.

    Special thanks to my Damon Key colleague and fellow blogger, Mark Murakami (hawaiioceanlaw.com), for early notice of the Adams case.

Insured's Settlement With Tortfeasor Cannot Eliminate Subrogation Rights

    The issue before the New York Court of Appeals in Fasso v. Independent Health Assoc., No. 21 (N.Y. Feb. 24, 2009) [here] was whether the injured party and the tortfeasor could settle on terms that extinguished the insurer's subrogation rights? 

    Plaintiff was treated by Dr. Doerr and subsequently developed complications that required her to undergo a liver transplant.  She then sued Dr. Doerr for medical malpractice.  Plaintiff required a second transplant, resulting in medical expenses of approximately $780,000, all of which was paid by her insurer, Independent Health Association, Inc. (IHA).

    IHA intervened in Plaintiff's suit against Dr. Doerr.  Shortly after the trial commenced, Plaintiff and the doctor reached a settlement.  Plaintiff would receive $900,000, Dr. Doerr would admit no wrongdoing, and IHA's equitable subrogation claim would be dismissed because Plaintiff was not "made whole" since the settlement payment was less than her actual damages.  Although IHA did not object to Plaintiff's receipt of the monetary settlement, it did contest the dismissal of its equitable subjugation claim because after payment of the $900,000 settlement, there still remained $1.1 million in potential insurance coverage.  The trial court approved the settlement and dismissed the subrogation claim.  Since Plaintiff was not being paid the full amount of her damages, the subrogation claim could not survive.  The Appellate Division affirmed.

    The Court of Appeals reversed.  Generally, an insurer's subrogation rights could only be pursued against the tortfeasor once the injured party was "made whole."  Here, the doctrine did not prevent subrogation because the settlement between Plaintiff and Dr. Doerr left a potential source of money.  Consequently, the made whole rule did not mandate dismissal of IHA's equitable subrogation claim merely because the Plaintiff decided to accept a settlement figure that did not completely compensate her for the full extent of the damages.  Once an insurer paid a claim, the wrongdoer and the insured could not agree to terminate the insurer's claim for subrogation without its consent.

Hawaii Legislation Extends Health Plans to Self-Employed

     The Hawaii legislature recently passed HB No. 2224, a bill requiring group health issuers to offer small group health plans to self-employed individuals.  The effective date of the bill is September 1, 2008.  The bill authorizes the Insurance Commissioner to exempt certain group health plans if the group health issuer does not have the capacity to deliver services adequately to new enrollees given the issuer's obligation to existing employer groups.  The bill will be repealed on July 1, 2013.

     Although the governor has been busy signing bills, this bill has not yet been signed.

HMSA to Raise Rates 9.2%

     The Honolulu Star Bulletin reports Hawaii Medical Service Association (“HMSA”) will increase its rates for large-employer groups of 100 or more employees by 9.2 percent, the steepest increase since 2002 when the rates were raised 12.9 percent.  HMSA, the state’s largest health insurers, says although hospital admissions are not increasing, medical payments to hospitals and physicians substantially increased last year.

     Insurance Commissioner J.P. Schmidt said he is concerned about inadequate reimbursements to providers.  Schmidt believes HMSA has one of the lowest reimbursements levels in the country for hospitals.  Reimbursements are typically a percentage above Medicare rates, but Schmidt believes the federal government gives Hawaii an unfairly low Medicare reimbursement rate.  By using Medicare rates as a guide, HMSA’s payments are low.  Some doctors believe HMSA is shifting money to pay for certain procedures while decreasing the amount of reimbursement for other procedures.