Two articles help explain anger at insurers

April 18, 2025

Summary: Employers can help diminish anger at insurers through careful review of plan documents and monitoring of insurers to prevent some patient abrasion.

Two recent articles on prior authorization help to explain why so many people are deeply angry at the insurance industry.

1. Breaking the Sacred Promise (New England Journal of Medicine, April 5, 2025. Nonsubscribers can sign up to view two free articles a month)

Parents faced a prolonged fight to obtain coverage for cochlear implants for their baby with sensorineural deafness. The summary plan description explicitly said these were covered, but another unrelated section said coverage was excluded. This is an essay by the pediatrician caring for this child. The insurer eventually overturned its denial when an aunt who was a lawyer intervened.

2. Slow Pay, Low Pay or No Pay (Propublica, April 12, 2025)

A jury found a health plan guilty of fraud for offering prior authorizations to women needing breast reconstruction but then refusing to pay for the services. This left many with large balance bills, and the carrier paid this high-priced out-of-plan specialized center less than 9% of its billed charges. Further, the insurer received a portion of “savings” from affiliated out-of-state plans where their payment policies led to decreased payments to the center.

While the insurer routinely denied payment to this center, the company did pay this specialized center for operations on wives of its executives through “single case agreements.”

Although the article is highly sympathetic to the doctor-owned hospital, its prices are indeed very high, and paying these high rates would not be consistent with good stewardship of plan resources.

I think the anger at health insurers is increased by the sense of unfairness in the action of insurance plans.

- Many feel that insurers are using technicalities to avoid paying for bills that they should pay. In the first, there were inconsistencies in the plan documents. In the second, a caveat in the prior authorization intended to exclude payment for members who lose eligibility after the prior authorization was used to exclude payment for those with valid plans.

- Both articles also highlight uneven treatment of plan members. Those who are highly connected received benefits denied to others. In the first article, the family benefitted from a supportive pediatrician and a lawyer in the family. In the second article, the plan paid for services delivered to insiders, but not other plan members.

Implications for employers:

● Plan documents matter, and employers should review these for consistency. It’s not fair to tell plan members something is covered on one page and then convey that it is not covered on another.

● Employers should be cautious about “one-off” approvals. These often lead to the plan terms being applied differently, even if the exception is well-meaning. If an exception is made for a well-connected executive, for example, policies should be changed so that all plan members have equal access to care.

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Monday: New report shows mortality associated with childbirth