ObamaCare: “Per Beneficiary” Limits a Loophole Insurance Companies Can Drive a Truck Through?

“What we’re also discovering is that insurance is complicated to buy.”Barack Obama

By Lambert Strether of Corrente.

ObamaCare defenders consistently point to the abolition of lifetime or annual caps on dollar costs as one of the main benefits of ObamaCare. (Never mind that the administration delayed complete implementation of limits on out-of-pocket costs until 2015.) However, via Michael Olenick, from ObamaCare Facts (“dispelling the myths”) we read this:

While you may have to meet a certain amount of out-of-pocket expenses (deductible) before essential benefits are covered, the Affordable Care Act prohibits health plans (grandfathered and non-grandfathered) from imposing annual and lifetime dollar limits on essential benefits.

So far so good. Now get this:

Health plans can still however set limits on the number of times you can receive a certain treatment.

Hmm. How can this be? Let’s go to the text of the statute:

Subpart II–Improving Coverage
SEC. 2711. NO LIFETIME OR ANNUAL LIMITS.

(a) In General- A group health plan and a health insurance issuer offering group or individual health insurance coverage may not establish–

(1) lifetime limits on the dollar value of benefits for any participant or beneficiary; or
(2) unreasonable annual limits (within the meaning of section 223 of the Internal Revenue Code of 1986) on the dollar value of benefits for any participant or beneficiary.

That’s the dollar cap. Here’s what sure looks like a loophole to me:

(b) Per Beneficiary Limits- Subsection (a) shall not be construed to prevent a group health plan or health insurance coverage that is not required to provide essential health benefits under section 1302(b) of the Patient Protection and Affordable Care Act from placing annual or lifetime per beneficiary limits on specific covered benefits to the extent that such limits are otherwise permitted under Federal or State law.

OK, what are these “essential health benefits”? As it turns out, depending on your situation, they may not be all that essential. From the Glossary at healthcare.gov:

Essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

Leaving aside that hospitals can and will game the billing codes on such services, how would per beneficiary limits work out in practice? Here’s what RomneyCare does, faced with a similar situation:

Although the commonwealth’s health care reform was robust enough to require health plans to provide certain services to residents, it did not eliminate all annual or lifetime benefit limits. Specifically, the law prohibits health plans from imposing an overall annual maximum benefit limit or annual maximum benefit limit for covered core services [the equivalent for ObamaCare’s “essential services”]. But group plans, including fully-insured employer sponsored health plans, may be permitted to offer Massachusetts residents health benefit plans that contain lifetime or annual benefit limits on non-core services.

Examples of limitations that are allowed include, but are not limited to, the following: (1) benefit limits on substance abuse treatment to the extent consistent with federal law; (2) benefit limits on physical therapy; (3) benefit limits on inpatient rehabilitation care services; (4) benefit limits on durable medical equipment. Notably, effective Jan. 1, 2011, annual benefit limits are banned for prescription drugs.

Dental? Vision?

For ObamaCare, here’s UnitedHealthCare interprets the law and the rules, in its “Annual Limits” section:

Are plans allowed to have annual visit or day limits?
The Department of Labor (DOL) has informally commented [!!] that frequency limits are generally acceptable. Such limits, however, should not “transcend” into dollar limits. For example, a frequency limit of 10 visits alone may be acceptable, but if the plan also places a cap on reimbursement, such as $50 per visit, the net result would be a $500 annual limit. In such cases, the DOL suggested that tying the payment to reasonable and customary expenses, or similar action, may rectify the annual limit issue.

And again:

Can plans replace dollar limits with visit or other limits in high risk cases?

The question of whether plans will be allowed to have annual visit or day limits are not directly addressed by the law or the interim final rules. The DOL has informally commented that frequency limits are generally acceptable. Such limits, however, should not “transcend” into dollar limits. For example, a frequency limit of 10 visits alone may be acceptable, but if the plan also places a cap on reimbursement, such as $50 per visit, the net result would be a $500 annual limit. In such cases, the DOL suggested that tying the payment to reasonable and customary expenses, or similar action, may rectify the annual limit issue.

So, if I understand “transcend” in this context correctly, a frequency limit can be placed for types of non-“essential” but covered items and services whose dollar costs are not given in the policy, or not well understood.

But it seems to me that such items and services are exactly the kind of care that one would wish to insure against most, because they are potentially the costliest and riskiest. If you need to rehab your hip, and that’s going to take 20 visits, but the policy under Section 2711(b) only covers 10, then you get to choose between being a cripple and a really big stack of bills. If you need chemo, and that’s going to take 26 treatments, but your policy only covers 13, then you get to choose between the Big C and selling your house.* And so forth. (Note that your hip and becoming cancer-free are essential to you, but that doesn’t mean they’re essential under ObamaCare.)

As usual with ObamaCare, we have very little data, and since there have (presumably) not been all that many claims filed under Obama, we don’t have much information on how Section 2711 has been gamed applied in practice. So readers, here I’m handicapped by my horrified unfamiliarity with actual insurance policies. Does this interpretation seem plausible? Frankly, it would be nice to rule it out. What does your policy say, if you have one?

NOTE * “Prescription drugs” are in the “essential” category. I don’t read that as saying “all prescription drugs” and certainly not all medical drugs, like experimental treatments. No doubt in practice this will boil down to narrow formularies, exactly like narrow networks.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.

56 comments

  1. ArkansasAngie

    Gaming the system? Complexity is the name of the game.

    We fight so hard to prevent fraud by using weasel words that we actually enable fraud.

    Throw out Obamacare and start over.

    1. Jim Haygood

      ‘Effective Jan. 1, 2011, annual benefit limits are banned for prescription drugs.’

      Well then, Big Pharma is alright.

      As you would expect, since former WellPoint VP Elizabeth Fowler wrote the freaking bill, which Nancy Pelosi then passed to ‘find out what was in it.’

      Collecting her reward for services rendered, Liz Fowler is now employed by … Big Pharma (Johnson & Johnson).

      http://www.theguardian.com/commentisfree/2012/dec/05/obamacare-fowler-lobbyist-industry1

      One can see why former Senator Max Baucus, who hired Fowler to draft the bill, has exiled hisself to China. Too many aggrieved peasants with pitchforks and burning torches here inna USA!

      1. Bruce MacKenzie

        I suspect he hardly regards his new gig as “exile” but, rather, as a new opportunity for himself and his cronies. See http://freebeacon.com/max-baucus-advised-foundation-funded-by-u-s-branches-of-chinese-owned-banks/ Obama is handing our rewards to those who’ve helped him, in this case with getting WellPoint’s bill turned into “Obamacare”. Exile is hardly a reward. There’s something in it for Max, I suspect. And for the Chinese. And for Obama. But, likely, not for the average guy on Main Street, USA.

    2. Banger

      Those of us who are familiar with things like the Defense Department’s procurement guidelines know that gaming regs is the Washington art form and has built a swarm of McMansions in metro Washington over the years.

    3. Veri

      Considering that Obama invited all the corporate execs to write the bill… ACA is riddled with weasel clauses.

  2. tomk

    Crawled around a 4′ basement for two weeks at work. Then moved a big rock in my yard. Right knee started hurting like hell walking down stairs. My doctor ordered an MRI, said torn meniscus, referred me to orthopedic surgeon. He said it wasn’t too bad, he’d be happy to operate, but rehab would probably work, that the operations were largely guess work, scraping out debris, and often had only temporary success. My insurance was Anthem, my wife’s teacher policy. I could have legitimately put it on Worker’s Comp, but decided to use our insurance to avoid impacting my employer’s very small business. It was a a gray area.

    Anyway, the insurance paid for 12 rehab sessions, which helped, and I was told the insurance would cover the full cost. I ended up with a $400 out of pocket bill, the insurance company found the $250 for each rehab session a bit steep, or maybe it was the $50 charge for the disposable ice pack they insisted I apply at the end of each session, which I’m sure cost the hospital $2. My knee wasn’t all better, but I was more functional. I wasn’t cured until I had a job that had me walking up and down 4 flights of stairs on a regular basis. My knee’s never felt better. Exercise.

    1. Jess

      I, too, have Anthem Blue Crucifix coverage and found the same thing about having to pay “excess” rehab costs. Lucky you didn’t have to have surgery, because I’m pretty sure that any post-op rehab would have been ALL on you, since you had already used up your allotted number of covered rehab sessions.

      And BTW, anybody who has gone through post-op rehab knows that a limit of 10 or 12 sessions is a joke. The usual recommended frequency is 3 times per week but even at only twice a week that’s just 5-6 weeks in a situation with major knee or other joint injury where rehab can take 3-5 months. I know friends who’ve had hip or knee replacement surgery where rehab lasted 6-9 months, depending on their age.

  3. Cynthia

    Health insurance is a legal and modern-day mafia, and you better pay up unless you NEVER need medical attention. Why as a country are we paying a health insurer that keeps a large portion of the money pool for itself?

    If the US devised a massive money pool that excluded the insurance company’s profitability, then universal health care is easily paid for. It’s not socialism, it’s a massive group of people pooling THEIR money together for the greater good of us as a whole. Leaving Private insurance out of this equation leaves a giant pool of money that can only grow. Leaving out health insurance would also provide a trip to the doctor with only essential treatment while leaving more money in the pool. We could eventually balance a budget and pay off China with with the money that Private Health Insurance takes in for profit.

    This isn’t an issue of Democrat and Republican. It’s “This is money that I’m paying to have health care,” not “I’m pay someone with connections that will take most of my money and buy a boat and whatever’s left over from that boat you can have to pay for your health care.” This is not something that someone should be able to profit on. Should people be paid a living wage to run the money pool? Yes. Should people that got their fingers in the money pool (Investor’s, CEO’s) receive a large portion of that money? NOWAY. I want a doctor or a nurse or a janitor (people who actually work in a hospital) to get a large portion of that money. Not the middle man. I know taking health insurance out of it is a massive undertaking that would leave a lot without jobs, but this country cannot afford its own heath care because of middle man profiteering.

    1. Katniss Everdeen

      “It’s not socialism…”

      Would a system that provides universal access to affordable, effective healthcare be any less desirable if it WERE“socialism?”

      1. scraping_by

        If the alternative to the ACA is socialism, then most people are Socialists, and the rest would happily go along for the ride.

        Most people are ideological, but dare not speak the name. Calling things by their real names is a way to intimidate people into silence. Listen to G. Carlin’s late work for a broad survey on the matter.

    2. Marcie

      You assume that the alternative is holy and it is not. The predatory healthcare system exists to make profits not for patient care and they poison with impunity. The ACA has changed the incentives. Is insurance perfect? Absolutely not. However single payer and government run healthcare scares me speechless because overtreatment for profit will be unbridled, abusive and with impunity. Think Eric Holder on steroids in controlling the mass poisoning of the patient population.

      Why not give the Affordable Care Act a chance. I too hate insurance companies but they are going to perform an important role. The most important aspect of controlling behavior is incentives. Wall Street has taught us this lesson but too late and now our country’s financial system is a disaster.

      I am not pro-insurance company and my experiences have not been good with insurance companies. In fact Liberty Mutual my long-term disability insurer denied my benefits paying Michael Greher, PhD. of the University of Colorado (UCH) $4,970 to destroy my claim. I was a patient of the UCH at the time and mandatory reporting for conflicts of interest was $5,000. This is the neuroscience department where James Holmes attended (the movie theater masochist). In addition four doctors and professors at the UCH refused to help me and ignored the fact that I had been poisoned by GE and Bayer including a top toxicologist in the country.

      Abusive medicine and medicine for profit without regard to safety must be stopped. We will never get healthcare on the right tract if we don’t look at both sides of the equation and that is cost and motivation and health.

        1. Vatch

          Thank you, Waking Up. A few days ago, I expressed the opinion that single payer would benefit doctors, because there are so many administrative costs built into our multi-payer system. Some commenters disagreed with me, and that’s okay, since it is a very complex topic, and there are many things I don’t fully understand. But I still think that single payer would benefit both doctors and patients. Here’s a useful quote from what-is-single-payer:

          In the current US system, there are literally tens of thousands of different health care organizations—HMOs, billing agencies, etc. By having so many different payers of health care fees, there is an enormous amount of administrative waste generated in the system. (Just imagine how complex billing must be in a doctor’s office, when each insurance company requires a different form to be completed, has a different billing system, different billing contacts and phone numbers—it’s very confusing.) In a single-payer system, all hospitals, doctors, and other health care providers would bill one entity for their services. This alone reduces administrative waste greatly, and saves money, which can be used to provide care and insurance to those who currently don’t have it.

          One of my comments from a couple of days ago:

          NC comment

        2. Marcie

          May I suggest to you that I’m a former auditor with the DHHS/OIG. If you are not understanding the predatory nature of healthcare where profits dictate what treatment, drug or scan will be ordered or prescribed you are not getting the full picture. Unless you bring this into the discussion you or the author of the article are not considering a very important aspect of healthcare.

          We have known for a long time that 30% of the healthcare costs are due to administrative costs (although Medicare is the exception) there are plenty of corrupt providers including doctors that bilk the system. In auditing the first thing you do is look at internal controls and this was always a problem with Medicare. I worked on the audit that reduced the fee for Medicare reimbursement per dialysis treatment. Each provider is paid per treatment so they milk it for all its worth even someone wanting to end their life and request no more dialysis they still continue forcing dialysis on the patient because Medicare is going to pay for it and it is profitable for them to do so regardless of whether it is needed or wanted.

      1. Crazy Horse

        “single payer and government run healthcare scares me speechless because overtreatment for profit will be unbridled, abusive and with impunity.”

        Amazing how effective brainwashing is—-. I suggest you study the Canadian health care system, or that of the majority of civilized wealthy countries before you swallow the propaganda from the AMA/hospital/drug cabal hook, line, and sinker.

        Or take the extreme case– that of Cuba. No one would call Cuba a prosperous country, whether you attribute that to a dysfunctional economic system or 50 years of sabotage from the USA. Yet in terms of results, their health care system is the functional equivalent of the one in the US. Similar longevity, similar infant mortality, and a World Health Organization ranking that places both alongside each other in the high 30’s among the world’s nations. (of course the US is last among wealthy countries and Cuba is at the top of poor countries)

        And by the way, Cuba has SEVEN TIMES as many doctors per capita as the US. Different priorities.

        1. Marcie

          My husband is a Canadian citizen and I knew of a case of a woman that was poisoned by Bayer in the UK with gadolinium based contrasting agents. It took her over a year to get a biopsy and then months of waiting to get the results. The UK is as bad as this country as far as corporations and special interests controlling healthcare and they dictate treatments that are most profitable to them. You just don’t want to hear the flip side.

          In my opinion and about 2000 others that are on the ProPublica Patient Harm Facebook Group agree that it is very dangerous to go to a doctor in this country and many others. The pharmaceutical companies have expanded their footprint and if you don’t look at the mass poisoning of the patient population for profit you are not understanding what I am saying.

          They are still injecting Omniscan into people and the number is in the millions because Omniscan is the cheapest gadolinium based contrasting agent. It came out at trial that GE’s predecessor lied to the FDA and that 25% of the gadolinium in every bolus dose of Omniscan is retained. It is prevailing scientific theory that gadolinium that is retained is toxic to the human body and in Judge Polster’s ruling he states, it is undisputed that gadolinium in its free state is toxic to the human body and we continue to inject it into millions of people and wonder why we have double digit growth in chronic illnesses.

          I have been personally impacted by GE’s product Omniscan and Bayer’s product Magnevist but there are literally millions of other products, treatments, drugs and scans that are “toxic” but are allowed on the market. I only hope your family isn’t impacted by patient harm as my family was. I missed my daughter’s tender years because I was so sick while medical professionals lied to me repeatedly.

          1. Marcie

            Here is a sampling of articles posted on the Patient Harm Group. I suggest the author of this series join this group and listen to some of the stories of the victims. Many are from other countries and from the healthcare systems you say are so wonderful Crazy Horse.

            http://www.slate.com/articles/health_and_science/new_scientist/2012/01/the_nuremberg_code_set_up_to_protect_the_human_subjects_of_research_is_being_routinely_ignored_.html

            http://www.dolbey.com/uncategorized/transcription-outsourcing-leads-to-womans-death-140m-settlement/

      2. scraping_by

        Hating the insurance companies doesn’t jibe with giving the ACA a chance and not being pro-insurance companies.

        The reason it’s a godawful puree of contradiction and mouseprint is that is was written by insurance company lobbyists to benefit insurance companies. The AMA and Big Pharma are getting their share, but the insurance companies aren’t just along for the ride.

        1. Marcie

          The only comment I have to your disparaging remark is that the insurance companies, taxpayers and large self-insured companies will not survive the astronomical costs of healthcare in this country. It is unsustainable and it is unnecessary because healthcare is the cause of those high costs due to overtreatment, misdiagnoses and mass poisoning of the patient population. If that is all you can come up with (disparaging me) then you are missing the point.

          1. scraping_by

            Sorry, I didn’t realize you were a short essay on a web page.

            As to pointing out contradictions in reasoning, it’s what we do for 18 year olds in freshman English. They usually rethink or at least reword the contradiction. Often in the ‘writing is thinking vein’. So when they get jobs in the real world that involve writing, they can inform and persuade in a moral manner.

            1. Marcie

              I’m too tired and too sick to argue with you so I’ll just post the link to an article that captures the predatory nature of our healthcare system of which I have personal knowledge. The cost is unsustainable and the author of this article doesn’t want to address the elephant in the room. You too miss the point. The costs of overtreatment and mass poisoning of the patient population is unsustainable.

              http://www.nejm.org/doi/full/10.1056/NEJMp0911423

  4. Ep3

    Yves/lambert, I write to update on activities on the ground. My company employs lots of seasonal help as well as part time workers. The wages are of the retail level. According to the Obama formula, we will have more than 50 workers, forcing the company to provide a health insurance policy. Most of these retail workers could qualify for good subsidies on the exchanges and have affordable insurance. Yet, due to obamacare, since their employer has to provide health insurance, these workers have to pay the unsubsidized expensive employer plan. Or, the employer could acquire a plan that is woefully inadequate for anyone. But at least the plan would be affordable and satisfy the mandate.
    I do not see how this is effective. why can’t I have both options? If my employer offers a sh**ty plan and they compensate me $100 a month to buy insurance, why can’t I say “well I don’t like my employers options, I want to goto the exchange and shop with those dollars”? This to me, coupled with obamas continued ‘if u like your insurance thru your employer, you can keep it’ campaign line, makes me wonder what the ‘poor person financial crushing’ plan is thats behind this. Obviously this law was not meant to help poor ppl. And as much as Obama is a job killing socialist (*sarcasm), he hates poor and working poor people even more. So what is the political objective here that helps the insurance companies? Is it because businesses have less options? Or is it to push even more costs off on employees? For example, higher copays, deductibles, higher share of premiums paid? It only affects those that use the coverage so only they pay which keeps everyone from complaining.
    I remember in 1998 having zero copays on an insurance plan I had. It slowly inched its way up to where I have $30 copays today. I resist paying these at my visits. I have insurance. The insurance company should pay first. I like to look at the statements I get from the doctors when I have visits. My primary doctor charges me $36 without insurance for a general office visit. He charges the insurance company anywhere from 56-72 dollars for the visit. Then there are deductions for their agreed upon discounts that bring the visit down to $42-$46. Then I see on the bill “payment by insurance company” of about $8 and change. If I was nice enough to pay the copay at the time of visit, that is subtracted from amount due, leaving a balance. This balance is then “written off/adjustment” by the doctors office to bring my balance to zero.
    Finally, my 87 year old grandmother fell recently and hit her head. She was taken, by family, to the hospital ER. She spent 3-4 hours there to make sure she was alright, which she was. They did a CAT scan. My parents got the bill that was paid by Medicare. $11,000. She spent all of about 20 minutes with the doctors and nurses.

    1. NotTimothyGeithner

      I don’t think there was a single political objective when it comes to ACA.

      1. Obama’s ego/legacy which means an all encompassing bill has to pass in some form.
      2. HMOs, insurers, and big pharma although often aligned are still after the same pie.
      3. Obama’s effectively hands off approach meant no one but Bucks was overseeing what one hand was doing.
      4. The high priests of the deficit.
      5. Voters. Letting adults stay on their parents insurance was important to early popularity and a talking point, but those same invincibles who aren’t buying insurance are screwing how the exchanges are supposed to work even if young people had money to spend.
      6. Laziness. There are existing laws changed over decades, and changing those laws entirely without repeal and starting over would require extremely difficult work from Versailles.
      7. The voters again. As thankfully retiring war hawk Jim Moran pointed out, ACA was designed with an actual improved economy in mind.
      8. Ignorance of the state’s from DC. Devolution has impacted and ham strung states over the years, and Versailles has largely remained blameless for this. One idea was to turn elements of ACA over to states with budget crises with demand but no real plan about how the states might make it work. California and Oregon are already running terrible exchanges.

      What came about was a system which would be great if everything was different, but the insurers aren’t the only group Obama was trying to help or appease. Along with his and the true nature of the Democratic Party, it’s almost impossible for a true bailout of insurers to occur. Despite the best efforts of insurers, can they navigate the same process? The answer is no, not without waging war on HMOs and pharma.

      1. Curtis

        With respect to item # 1. Think Ozymandias. The rest of the points can be collected under the concept of “Peak Insurance” or “Global Health Care Warming. Start raising herbs.

    2. Marcie

      I can understand your frustration Ep3. There are going to be growing pains and I’m expecting problems with my treatment shortly. We are all going to have to get involved in fixing the myriad of problems with the newly implemented ACA. The other way was unsustainable too.

      1. Lambert Strether Post author

        What do you mean, “we”? I most definitely do not want to join the Democratic nomenklatura in “fixing the myriad of problems” in ObamaCare. In fact, ObamaCare doesn’t have a “myriad” of problems; it’s got one big problem, which your formulation conceals: That problem is that ObamaCare attempts to entrench the heath insurance rentiers into the health care system forever, and they demonstrably subtract value rather than adding it. ObamaCare should be done away with and replaced with a single payer system, which is superior in terms of cost, coverage, and equity (heck, common decency).

        NOTE The binary thinking that it’s ObamaCare or nothing — “the other way” — is classic “progressive.” There is a third alternative! Yet again, “progressives” censor single payer by refusing to bring it into the discourse. Shameful. (And please don’t deploy the typical riposte, which is “I love single payer, but _____.” If you loved it, you wouldn’t have to be reminded of it.)

        The carefully engineered empathy of “I can understand your frustration” is also classic “progressive.” Perhaps we should have a “conservation” about that.

  5. Gerard Pierce

    Eight or ten years ago, my wife was hit by a car while walking through a grocery store parking lot. The driver had minimum coverage, but I was surprised to find that I had chosen a rider on my own policy that covered her medical costs.

    After hospital treatment, I learned that followup care was limited to “reasonable and customary” expenses. I also learned that there were no doctors in our city who were willing to provide followup care for “reasonable and customary” compensation.

    I have a highly ethical insurance company and it’s clear to me that their choice of “reasonable and customary” was simply a matter of playing follow the leader.

    The lesson. if there is one, is that the people who advocate these policies (like the DOL) either have no clue how these policies work in practice, or they have been bought off by Lord Voldemort and the other lobbyists who’s name must never be spoken.

    1. NotTimothyGeithner

      the architects of ACA and the Voldemort-types (if we are saying his name now) probably have no clue what they are doing beyond a few short sighted views developed 10 years before action was taken. I tend to believe compassion breeds competence, and the cruel tend towards incompetence because they only care about themselves and have no genuine desire to learn how things they don’t control work.

      Stupid or evil? They run together very often. Also, legislation is hard, and a good deal of legislation is a result of fixing problems in earlier legislation which done without grasping how earlier legislation worked, and so when bills are written, it’s difficult to divine all the moving parts.

    2. Alexa

      U&C is the metric for paying ‘non-participating’ (or non-network) providers. This is a common insurance practice.

      [So it may be that your wife’s initial care was provided by an in-network hospital, according to the terms of your insurance rider, but that follow-up care was provided by a non-network provider.]

      It is true that some doctors prefer to provide treatment for in-network [agreed to] contract amounts.

      However, I once had a specialist who did not accept my insurer due to their propensity for low contract reimbursement rates, but who was more than happy to provide me medical care billed under U&C.

      Bear in mind, however, that I was ‘on the hook for’ the difference between what the Doctor billed, and the U&C that the insurer paid on my behalf.

      IOW, the Doctor got every penny he wanted, because my insurer agreed to “a waiver” on my behalf, paid him at U&C, and left me stuck with the balance.

      ;-)

  6. Katniss Everdeen

    I’d imagine that volumes can and will be written on this subject before all this is over.

    As a practical matter, however, it would be prudent to assume that in the event of a dispute, the issue will be resolved to the insurance company’s advantage. They have the checkbook, and they wrote the law.

    A familiar example, although not technically Obamacare, is getting a routine dental teeth cleaning using dental insurance. Pretty much all policies “cover” “preventive services,” usually defined as two “routine cleanings” per year. Through experience, if not explicit language, dental offices have learned to interpret this as “one every six months” and not a minute less. In many instances, dentists recommend more frequent cleanings, three or even four per year. While the dentist may consider this “essential” hygiene, the insurance companies absolutely do not, and these extra hygiene appointments are at the patient’s expense. It’s worth noting that charges for these extra “essential” cleanings are NOT applicable to the annual deductible.

    I would also caution policy holders to beware of the word ELECTIVE when used in reference to “coverage.” It MAY NOT mean what you think it means.

    I would suggest that patients familiarize themselves with the concept of PRE-AUTHORIZATION and begin to insist on it. This is where the provider submits an insurance claim for services BEFORE the services are rendered. The claim is clearly labelled a PRE-AUTH. The insurance company returns the forms specifying exactly what will be covered and what they will pay. The patient then knows exactly what payment, if any, will be out-of-pocket. When services are rendered, the pre-auth is re-submitted as a claim for payment.

    While pre-auths are not practical in emergencies, emergencies are usually covered differently that “essential” “elective” services.

    1. Dana

      I’ve had a claim that was pre-authorized, subsequently denied when it was submitted for payment. Appeal (joke) denied. It was “only” about $900 and so it wasn’t worth going to court over.

  7. Earendel

    After having delved into the original law’s text (what an awful labyrinth it is!), a quick google search proved more effective to answer whether there is a loophole here.

    42 U.S.C. sec. 300gg-11(a) (found as sec. 10101 of the original ACA) generally bans lifetime limits for “essential health benefits” as defined in sec. 1302(b) of the law (codified as 42 U.S.C. sec. 18022(b)). However, subsection (b) makes it clear that insurers can impose annual or lifetime limits on anything not considered “essential.”

    Additionally, sec. 300gg-11(a)(2) effectively makes these rules effective for the plan year starting January 1, 2014. Before then, apparently some limits were permissible.

    Admittedly, none of this resolves the issue of limiting the number of visits. I would note that informal comments from the federal government aren’t uncommon and supposedly reflect the ‘thinking’ of the agency on a matter while not generally having legal force.

    Also, the ACA is a bit unusual in its final draft, and Lambert was not wrong in honing in on the passages addressed in the original post as they are found in Title I of the Act (sec. 1001). These passages directly amend the Public Health Service Act as codified in Title 42 of the United States Code. By itself, this approach to lawmaking is common. However, more unusually, Title X of the Act then amends various parts of Title I. Thus, it seems that Title I cannot be read without checking Title X subsequently if one turns to the original bill.

    1. Earendel

      I guess the long and short of it is basically the same as Massachusetts. Just wanted to note the specific passages.

  8. diptherio

    I really don’t want to dive in and do the necessary research, but here’s one possibility for parsing section (b):

    (b) Per Beneficiary Limits- Subsection (a) shall not be construed to prevent a group health plan or health insurance coverage that is not required to provide essential health benefits under section 1302(b) of the Patient Protection and Affordable Care Act from placing annual or lifetime per beneficiary limits on specific covered benefits…

    ISTM that the relevant question to ask is “is this health plan required to provide essential services, under 1302(b)?” If the plan is required to provide such services, then this section would appear to be inapplicable. By my reading, this loophole can only be used by plans that are “not required to provide essential services,” which I would guess might be supplemental insurance (Medigap, perhaps?). Your reading seems to be that this section says that all plans can place limits on non-essential services. I think the distinction is in plans (required to cover essential services or not), rather than in services (is the service essential or not?), if that makes sense.

    If we condense the double negative, for instance, we’re left with “subsection (a) shall be construed from preventing a plan that is required to provide essential health benefits under 1302(b)…”

    Admittedly, I’m no lawyer…

    1. diptherio

      Well, I might be on to something here. From the DOL.gov ACA FAQ website:

      Q3: An employer has maintained a plan since before enactment of the Affordable Care Act that reimburses expenses for special treatment and therapy of eligible employees’ children with physical, mental, or developmental disabilities. The treatment or therapy is not covered by the employer’s primary medical plan or plans. Reimbursable expenses may include expenses for special treatment or therapy from licensed clinics or practitioners, day or residential special care facilities, special education facilities for learning-disabled children, or camps offering medically oriented programs that are part of a child’s continued treatment, or for special devices. The plan is operated separately from the employer’s primary medical plans; employees who are otherwise eligible may participate in the plan without participating in those primary medical plans. The plan limits the total benefits for any eligible child to a specified lifetime dollar limit.
      Would it be a reasonable good faith interpretation of the Affordable Care Act and the regulations thereunder for the plan sponsor to take the position that the plan does not violate the prohibition, under section 2711 of the Public Health Service Act (PHS Act) and the related interim final regulations, on imposing a lifetime dollar limit on “essential health benefits,” as defined in section 1302(b) of the Affordable Care Act (the lifetime limit prohibition)?

      Yes. In accordance with the preamble to the Departments’ interim final regulations implementing PHS Act section 2711, for plan years beginning before the issuance of final regulations defining “essential health benefits,” for purposes of enforcement, the Departments will take into account good faith efforts to comply with a reasonable interpretation of the term “essential health benefits.” (Of course, the regulations may differ in their definition of “essential health benefits” from reasonable interpretations used before the regulations are issued.) Accordingly, in the case of plans described above, for such plan years: (i) the Departments will treat as a reasonable good faith interpretation of section 2711 of the PHS Act and the regulations thereunder the position that the imposition of the per-child lifetime dollar limit on benefits provided under such plans does not violate the lifetime limit prohibition, and (ii) the imposition by such plans of such a limit will not result in an enforcement action by the Departments against such plans under PHS Act section 2711. [emphasis added]

      Thoughts?

      1. Nathanael

        I’m pretty sure you’re correct.

        What we’ll call the “regulated plans” — the individual market — are banned from imposing lifetime or annual limits.

        The “group health plans” and the plans which “are not required to provide minimum essential coverage” can do whatever they want.

        The result is interesting: the individual market plans are no longer the scam they used to be, but group health plans still are.

      2. Nathanael

        I think you’re correct that group plans and plans which aren’t required to provide “essential health benefits” can do whatever they like, while individual-market plans are actually regulated.

  9. diptherio

    …a health insurance issuer offering group or individual health insurance coverage may not establish–
    (2) unreasonable annual limits (within the meaning of section 223 of the Internal Revenue Code of 1986) on the dollar value of benefits for any participant or beneficiary.

    That “unreasonable” scares me. Anyone know what the IRS’s definition of “unreasonable” is?

  10. diptherio

    My above analysis, I should add, doesn’t detract at all from Lambert’s concern about benefit limit loop-holes. Note that only monetary limits are prohibited by the act. Limits on number of procedures allowed, however, appear to be just peachy (so far as the law is concerned).

    I wonder, are insurers allowed to place other, non-monetary, limits on patient care? Physical constraints perhaps? “There is no yearly monetary limit on your benefits; however, once we’ve spent $XX,000 dollars on you, we’ll post Vinnie outside the hospital with a baseball bat and a picture of your un-profitable mug” [apologies to my Italian friends for the stereotyping…although my hypothetical Vinnie is actually Chinese].

    1. Lambert Strether Post author

      It’s the limits on the number of items services under 2711(b) that concern me, yes. You could deny a lot of care by (a) a narrow implementation of “essential” services and (b) low limits on everything else, especially expensive stuff like cancer treatments.

  11. Jess

    “Medicare for All” has become a code for a universal single-payer alternative to our current medical system — err, fiasco/rip-off. However, as some readers may know, recently I commented on the shortcomings of Medicare using my particular case as illustration. In preparation for my appointment with my tax preparer later this month, yesterday I finished entering my 2013 medical expenses into the computer and I’d like to share those numbers with others.

    By way of backstory:

    I take two prescriptions on a daily maintenance basis: AndroGel 1.6 for low testosterone, and 500 mg Metformin to make sure my pre-diabetic status doesn’t progress to full on diabetes. For those whose initial reaction to the AndroGel may be that it is non-essential and I’m taking it for reasons related to libido/sexual function: Low testosterone is associated with diabetes, obesity, and heart disease as well as reduced energy levels. I had low-T scores on my blood work, but no physical symptoms of any kind, for ten years and only began taking artificial testosterone two years ago when symptoms of extreme fatigue set in and my blood sugar suddenly climbed into the pre-diabetic/borderline diabetic range. (And even though my libido — the urge to hunt for sexual gratification — did decline somewhat I never experienced any problems responding to opportunity.)

    My father died of colon cancer and there is a history of cancer throughout his side of my family. Therefore I get an annual prostate exam and 2013 was the year for my triennial colonoscopy. In June a disc that had been deteriorating for years finally ruptured, resulting in therapy, a spinal epidural procedure, and eventually in early Dec, surgery. I have Anthem Blue Crucifix Medicare Advantage Preferred Standard, which is the only PPO plan offered in the L.A. area where I live. My surgery was performed at the UCLA Santa Monica hospital by doctors from the UCLA Spine Center where all personnel, labs, facilities, etc., are In-Network. With all this in mind, here’s my medical costs for the year:

    Medicare premium deducted from SS: $1,259.
    Additional Blue Crucifix premium deducted from SS: $336.
    Doctors/Labs/Physical Therapy Co-Pays, Deductibles, and charges over and above “Regular and Customary” for my region: $3,758.
    Parking, plus cabs to/from the colonoscopy and epidural procedures: $402.
    Prescriptions: $1,839.
    Total: $7,594 (And BTW, that doesn’t include about $1,800 in charges that were billed late in the year that I didn’t pay until January so they’ll show up on this year’s tax return.)

    My total SS for the year? $18,503. Fortunately I don’t have to survive on SS alone, but as Lambert has pointed out, bankrupting seniors with medical expenses is a neo-liberal feature, not a bug, of our current healthcare system.

    1. Lyle

      Clearly you might be better under traditional medicare with medigap (if you can get it). Then the charges are limited to medicare max charges. Now as to the metformin have you looked at the stores with $4/$10 for a one or $3 month supply such as Walmart or Costco. (Both do mail order as well). In fact on my retiree plan from a megacorp the copay for these thru the medco is higher than Walmart charges. Now of course its possible you might have to change some physicians in the deal.

    2. Bridget

      Sounds as though many of your medial issues for the time period you describe are related to obesity. I would hope that you are addressing these issues through diet and exercise in addition to medication and surgery. Not only because of the expense, but for the sake of your overall well being.

    3. Lambert Strether Post author

      Medicare does seem to suffer from a neo-liberal infestation. It’s a shame to surrender the “Medicare for All” formulation, but the program is truly not what a single payer advocate would want.

  12. Dana

    My plan is pretty much the same as my pre-ACA plan in that regard.

    20 visit PT limit. Stretching, strengthening and massage of the hand, because it’s performed by OTs, is not covered because OT is not covered. Manual therapy by a DO, even though it’s performed by a DO, falls under the PT visit limitation.

  13. middle seaman

    Working for a decently sized private university with more than sufficient resources. My deductible is large and increasing. The copay is at $50. Looking at my health insurance records, it turns out that they pay pennies for doc visits, while I actually pay the bulk. Since I am under Medicare A, my insurance isn’t in danger of large expenses on me.

    Why do I even need a health care insurance if I pay the doc already? (Rhetorical question)

    1. Jess

      If I understand it, you have Medicare Part A and your university policy covers the unpaid portion of Medicare. Well, before you cavalierly walk away from that university policy you had better be prepared for some significant costs that are not covered by Part A. In fact, the reason for Part B was that it is/was supposed to cover a meaningful portion of those costs not covered by Part A.

  14. impermanence

    As is generally the case, the debate [private insurance v. national health care] does not address the Tyrannosaurus in the room, namely the fact that there is no way any country can afford to repair, replace, fix, etc. their entire populations’ body parts.

    This is an extortion plot of biblical proportions brought to us by all the usual suspects.

  15. ltr

    Important essay to think about, as I am thinking or worrying about what my coverage will actually entail.

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  17. Stephen

    I’m an Occupational Health RN, who generally works for an agency, contracted to a Corporation. Right now I’m unemployed and live in NH.

    I’ll have a job in a month or three but in the meantime, since I haven’t worked–I’m NOT ELIGIBLE for any ACA plan. It’s not a cost issue–of course I have enough to pay. I’m simply not eligible for ANYTHING.

    The sad part is that when I do get a job, later in the year I’ll probably be fined for not having taken a plan (which was denied).

    1. Nathanael

      You are, in actual fact, eligible for Medicaid, because you’re in NH which accepted the expanded Medicaid. Declare your current income ($0). If they reject you, they’re *wrong* and you have to go to your local DSS office (or whatever they call it in NH) and push them.

      1. Nathanael

        Oh, crap, spoke too soon, looks like NH has managed to NOT accept expanded Medicaid (I was reading a bad data source which was too optimistic). So you are screwed as long as you live in NH.

        Your best move is to cross the border. Whereever you are working you will be better off living in Vermont or Massachusetts.

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