In 2012, the Vermont legislature passed a law requiring insurance companies who do business in the state to complete an annual report to help consumers compare insurers. The reports include statistics on how many claims are filed, how many are denied, appealed and eventually paid. Insurance companies must also report their marketing and advertising expenses, lobbying and legal expenses and political contributions. Salaries and bonuses paid to top management and board members are included as well.
The information being reported is nothing that the insurance companies don’t already report, in various forms, to the state’s Department of Financial Regulation (DFR). The goal, says Susan L. Donegan, Esq., commissioner of the DFR, is to have it all in one place for consumers.
“Much of the information we have already in our department, in various filings,” she says, “but they wanted it in one document and put the responsibility on the insurers to gather it together.”
The bill was introduced by Sen. Anthony Pollina (D/P), Sen. William Doyle (R) and then-Sen. Vincent Illuzzi (R), who felt that consumers had a right to know the facts before purchasing insurance. The state’s insurance exchange is set to open in October with coverage starting in January, 2014.
“We felt that shedding light on the insurance companies’ practices would give people buying insurance the ability to use that information when making comparisons,” says Pollina. “It would also force change in the industry.”
The first year of reports was submitted in March and is available on the Web site of the DFR. In April, data on denials was collated and presented to the House Committee on Health Care by the Vermont Public Interest Research Group (VPIRG). The group found that in the past year, 9 percent of all claims had been denied, with the majority of them for administrative reasons. Of the denied claims, only 0.1 percent of all denials were appealed and of those, 52 percent were later paid.
According to Donegan, the numbers did not raise a red flag with the agency because in many cases, the denials can be because of errors in how a claim was filed.
“There was nothing surprising to us, since we already had this information,” she says. “And if you are looking at the denial numbers, there are all sorts of reasons why a claim will get denied. Many of them are administrative issues, the timing on filing or codes were input wrong and the claim got kicked out of the system.”
For Pollina, the fact that the claims may have been denied because they were not properly submitted puts the burden on the consumers and health providers who are tasked with filing the claims.
“It is indicative of a problem in the system,” he says. “Providers already must wade through all of this information to file claims with so many codes and time spent dealing with insurance companies. That is part of the problem, not an excuse. “
By Catherine Robertson Souter