Buying Health Insurance: A Pig in a Poke | naked capitalism

By Michael Gorback, M.D., board-certified in Anesthesiology and Pain Medicine. He taught for 8 years at Duke University and is the author of 32 scientific articles and textbook chapters, and one medical book. Dr. Gorback currently practices pain management at the Center for Pain Relief in Houston, TX, and claims that nobody has ever suffered due to lack of knowledge of his opinion. Cross posted from Testosterone Pit

I recently called my pharmacy to refill my blood pressure medication. I have taken this medication for years with good control and no side effects. There has never been a problem with refills other than my family doctor insisting that 5 years really is too long to go without being seen by him.

Until now.

This time the pharmacy called to inform me that the prescription would require “pre-authorization” – an interesting term that I can’t really distinguish from plain old “authorization.” I suppose there is post-authorization, in the form of “it’s better to ask forgiveness than permission,” but this rarely works with insurance companies. Actually it doesn’t work at all when someone is looking for an excuse not to pay for something.

I asked the pharmacy to forward the request to my family doctor, along with a picture of me so he would remember what I look like. Eventually my doctor’s office called and said they couldn’t get the medication pre-authorized and they prescribed another, similar medication that was ok with my insurance company. The difference between these two drugs was the cost. The insurance company, after years of paying for my medication, simply changed the rules and forced me to get another drug that cost less. The alternative was to pay full freight at about $170/month because they wouldn’t cover it at all.

The point of this exercise is not that there were cheaper drugs available that had the same pharmacologic action (a topic for another day) but that my insurer could change the rules without my knowledge or approval.

As it turns out, when you purchase a health insurance policy, you only think you know what you’re buying. You know parameters such as the deductible, coinsurance, premium, maximum out of pocket, and so on. You know whether or not you have maternity coverage, psychiatry coverage, a lifetime cap – and all sorts of nonspecific things.

But the devil doesn’t lurk in nonspecific things, does he? Your policy documents don’t specifically say that certain drugs aren’t covered, or that you might have to try one or more other drugs before they will cover it, or they might refuse to cover it because your condition is not listed as an FDA-approved use for the drug.

One of my colleagues relates an amusing story about this hypocritical farce. He prescribed pregabalin for a patient. The insurer denied it. He spoke with a doctor at the insurance company, who said they wouldn’t cover pregabalin because it wasn’t FDA-approved for that condition. He said they would cover a very similar drug called gabapentin. Gabapentin is cheaper than pregabalin. My colleague then observed that gabapentin wasn’t FDA-approved for that condition either. Upon which the insurance company authorized pregabalin. Or was it pre-authorized?

When it comes to hospital services you might know that they will pay for 60% of charges after the deductible is met, but what you don’t know is what rates they have contracted with providers of healthcare services. Suppose your insurer has negotiated a price of $1,000 for your surgery with the XYZ hospital chain. Another company might have negotiated $800.

Or maybe you had a stroke and now your arm is paralyzed and you need intensive physical and occupational therapy to learn how to do simple things like dress yourself or bathe, and try to recover whatever function can be salvaged. That’s when you learn what type of therapy is covered, how many sessions, and what your out of pocket will be. Most people have no idea how much PT or occupational rehab costs. It isn’t cheap.

There is no way you can know any of this when you sign your contract. Even if you could, they can change it whenever they feel like it, just like they did to me. One year they might pay for a certain treatment, the next year they might decide there’s not enough evidence and your coverage is gone.

You have to use your policy if you want to find out what’s in it.

Also by Michael Gorback, M.D.: Confused and outraged by the prices, often unknown upfront, that you and your insurance company pay for medical services? You’re not the only one. Enter the bizarre world of “Place of Service” pricing. Read…. Doctor: The Sheer Insanity of What You Pay For Medical Services