On April 21, 2020, we discussed the growing concern that carriers are denying COVID-19 claims, how to avoid accidental self-insurance, coronavirus' impact on renewals, level-funded health plans in a time of crisis and more with Jack Stephens of National General.

ERISAfire COVID-19 Town Hall - Week 5
​April 21, 2020

The evidence of claims denials is only anecdotal, but it does look like some claims that are COVID-19-related are being denied in some parts of the country. There are a number of explanations for why it might be happening, and none of them are nefarious. First, the software systems of carriers and third-party claims administrators won’t necessarily know if a medical service or supply is COVID-19 related. Novel coronavirus testing in the US is very limited, meaning that a confirmed diagnosis with a diagnosis code that a carrier’s claims system can recognize is actually fairly rare. Most cases of COVID-19 are suspected, based on a patient presenting with a set of symptoms. It’s doubtful a carrier will pay a claim as being COVID-19-related without at least a presumptive positive test (meaning the lab test has been performed and the positive result is back but CDC has not officially confirmed the result).

Moreover, the claims adjudication software systems of carriers and TPAs are massive, and like most big systems, they don’t turn on a dime. The plan design changes being made by a carrier’s top brass are fairly significant, and it’s not outside the realm of possibility that claims would be denied for lack of documentation, if only to buy the carrier some time to adjust its systems.

The mandatory change in insurance plan designs to cover COVID-19 testing without cost-sharing, and the voluntary changes carriers are implementing to eliminate cost-sharing for COVID-19 treatment, have been widely publicized, and it wouldn’t be surprising if employees who know about these changes contact HR with questions or complaints about their claims, and HR may have to be more hands-on than usual. It would be prudent for employers with access to claims data (generally larger employers) to contact their medical carrier or claims administrator to get its claims adjudication standards for COVID-19-related claims so that the employee can be equipped to go back to the provider with instructions on how it needs to submit COVID-19-related claims.

Yes, The Hill has stated that COVID-19 will cost commercial insurance companies between $34 to $251 billion. As a result from the losses this year, and anticipated cost for next year, it is expected that there will be a drastic increase in insurance premiums in 2021. For example, the Covered California state exchange published an analysis that predicts premium increases of between 4% and 40%.

Employers that are partially or completely risk-rated (i.e., claims credible) should consider measures to keep people healthy. Keep promoting wellness programs. Be smart about bringing people back to work in group environments (offices, factories, stores, etc.).

Take the health plan to market, especially if that hasn’t been done in a few years. Real competition among carriers and third-party administrators does wonders. A mere threat to move the business won’t work.

Lastly, employers should consider self-insuring, either outright or through a level-funded product with a refund option. There are many more options nowadays for self-insuring, even for small groups.