By Julie Appleby, USA TODAY
December 13, 2002
Jack Perry was stunned when he started getting medical bills for a surgery he’d had weeks earlier. He had called his insurer to make sure everything was covered and pre-approved.
“I was inundated with bills from doctors,” says Perry, 54, who had surgery in September 2000 to open clogged arteries in his legs.
With the tab climbing toward $20,000, the Merced, Calif., salesman repeatedly called insurer Blue Cross until he got an answer: His employer had stopped paying premiums without telling workers.
After three months, Blue Cross canceled the contract, leaving employees responsible, retroactively, for medical care provided in that period.
More than two dozen cases such as Perry’s involving various employers during the past year prompted the California governor to order that something be done. Regulators there are considering requiring insurers to notify patients when employers fall behind on paying for health insurance.
“The employers are prioritizing, and sometimes health insurance premiums slip to the bottom of the list,” says Daniel Zingale, director of the California Department of Managed Health Care.
Regulators expect to see more such cases as a combination of rapidly rising health insurance premiums and a stagnant economy hit small and midsize businesses. Some employers struggle to pay premiums, but fall behind. If insurance is canceled, workers might not find out until claims bounce.
It’s hard to say how common the problem is nationally because few other states have a computer database that can keep track of such complaints as well as California. But regulators in other states say the problem does occur.
“We’ve seen it in Delaware” says Gregory Sacco, a director in the state’s insurance department.
Typically, it’s a smaller employer that falls behind, Sacco says. “There are usually warning signs before it happens, such as paychecks being late or bouncing.”
Insurers say the problem is serious, but not widespread. Requiring insurers to tell patients could cause problems, they say.
“It’s not right to have an employee get a bill from an insurer, saying your employer didn’t pay the bill,” says Walter Zelman, president of the California Association of Health Plans. “But we need to tread delicately and be wary that the effort to address it may create a bigger problem.”
For example, Zelman says employers might be pushed to drop health insurance if the new rule doesn’t give them enough time to make payments before notices go to workers.
Perry’s bills were ultimately paid by Blue Cross. His company, Pacesetter Industries of Atwater, Calif., has since filed for Chapter 11 bankruptcy protection and could not be reached for comment. Perry has found another job, with health insurance. He’s glad the state is considering new notification rules.
“When I spoke with Blue Cross, they said, ‘It’s not up to us to notify you, because you’re not paying the premiums,’ ” Perry says. “They should have notified me so I could go to my employer.”