It's interesting to study the link between health insurance literacy and fraud, especially now as we prepare for year two of open enrollment in plans made available by the Affordable Care Act. Waves of potential customers will struggle to make sense of products on the exchanges, turning to navigators and others for help. With so many insurers vying for new business and so many plans to choose from, how do people decide what to buy? Do they understand how products work at the point of sale, or will they rely on claims experience later to see what their benefits and cost sharing obligations are?
Health insurance complexity is a gift to those who defraud and abuse the system. Think about it: Fraud flourishes where it's undetected. If large segments of the insured population don't understand how their coverage works, if they don't know the meaning of basic insurance terms or can't make sense of their explanation of benefits forms, then they're less apt to notice and report suspicious claims.
Uninformed customers may also participate in kickback schemes or accept "free" medical equipment they don't need. They may be easy marks for criminals.
Uninformed customers may not keep their insurance identification cards secure. They may not know the risks of disclosing their identification numbers to strangers or letting friends borrow their insurance identity.
So if payers work to improve insurance literacy, one payoff may be deterring and detecting fraud, waste and abuse. Payers need to see customers as anti-fraud resources and cultivate them not just through educational outreach, but by simplifying what confuses people about health insurance.
When I was a Medicare analyst, regulators used what they called a "fog index" to audit letters to beneficiaries. Auditors would count the number of lines and polysyllabic words in letters (I'm not kidding) and multiply that by a set factor to measure the clarity of our writing. "Fogging" letters was a precursor to later plain language initiatives. Some were mandated, some were not. All were well intended but off the scent.
It's not just the language payers use that fosters insurance illiteracy; it's the complexity of the business itself. Health insurance can be like a swamp customers are lost in, and our challenge is to empty that swamp and bring people onto dry land. From there, they can help us fight fraud.
There are plenty of opportunities to simplify business. Do insurers need, for example, to maintain and sell so many product variations? Do we really need so many deductibles in certain health plans to control costs? Customers meet their annual deductible only to find that--oops--a separate deductible applies to out-of-network services. They may also be hit with a third deductible attached to a particular benefit category. That kind of product design makes people cry "uncle." Can we blame them?
I know of a case where a medical professional was disabled by Parkinson's disease. She chose an out-of network neurosurgeon based on the assumption that her maximum out-of-pocket cost would be $3,000 if he operated on her brain. She was wrong. She misinterpreted the benefit summary. Appeals reaffirmed that she was responsible for paying the huge difference between the surgeon's reported charge and the insurance payment; but she didn't have the money for that.
Too many customers like this woman learn how health insurance works the hard way. They're whacked in the wallet unexpectedly, just as undetected fraud, waste and abuse whack at the funding of our programs.
The longer I work in this field, the clearer it becomes to me that recognizing relationships is central to fraud fighting. In view of that, improving insurance literacy isn't just good customer service; it's good for program integrity. - Jane (@HealthPayer)