By Lauren Weber
WASHINTON DC—The more than $34,000 in medical bills that contributed to Darla and Andy Markley’s bankruptcy and loss of their home in Beloit, Wisconsin, grew out of what felt like a broken promise.
Darla Markley, 53, said her insurer had sent her a letter preapproving her to have a battery of tests at the Mayo Clinic in neighboring Minnesota after she came down with transverse myelitis, a rare, paralyzing illness that had kept her hospitalized for over a month. But after the tests found she also had beriberi, a vitamin deficiency, Anthem Blue Cross and Blue Shield judged that the tests weren’t needed after all and refused to pay—although Markley said she and Mayo had gotten approval.
While Darla learned to walk again, the Markleys tried to pay off the bills. Even after Mayo wrote off some of what they owed, her disability and Social Security checks barely covered her insurance premiums. By 2014, five years after her initial hospitalization, they had no choice but to declare bankruptcy.
Anthem Blue Cross and Blue Shield spokesperson Leslie Porras said company “records do not indicate that Ms. Markley had tests authorized that were later denied.”
Markley said she never would have had the tests done if she had known insurance was not going to pay for them. “I feel for anyone that finds themselves in that predicament,” said Markley, a nurse who was pursuing her Ph.D. in education. “You can go from an upstanding middle-class American citizen to completely under the eight ball.”
The billing quagmire into which the Markleys fell is often called “retrospective denial” and is generating attention and anger from patients and providers, as insurers require preapproval—sometimes called “prior authorization”—for a widening array of procedures, drugs and tests. While prior authorization was traditionally required only for expensive, elective or new procedures, such as a hip replacement or bypass surgery, some insurers now require it for even the renewal of some prescription drugs. Those preapprovals are frequently time-limited.
While doctors and hospitals chafe at the administrative burden, insurers contend the review is necessary to ferret out waste in a system whose costs are exploding and to ensure physicians are prescribing useful treatments.
But patients face an even bigger problem: When insurers revoke their decision to pay after the service is completed, patients are legally on the hook for the bill.
Prior authorizations may now include a line or two saying something like: “This is not a guarantee of payment.” This loophole allows insurers to change their minds after the fact—citing treatments as medically unnecessary upon further review, blaming how billing departments charged for the work or claiming the procedure was performed too long after approval was granted.
In other cases, a patient will be told that no prior authorization is needed for a certain intervention, only to hear afterward that the insurer wanted one in this particular case. It then refuses to pay. Oftentimes, approval conversations happen primarily between the insurer and the provider—leaving the patient further in the dark when the bill appears.
The American Medical Association drafted model legislation to combat the problem for lawmakers to introduce, but the measure has not been widely picked up.
Martha Gaines, director of the Center for Patient Partnerships at the University of Wisconsin Law School, co-authored an article in the Journal of the American Medical Association on the issue and sees firsthand the time and money patients lose fighting such retrospective denials—for coverage they thought they had.
“How broken can you get?” she asked. “How much more laid bare can it be that our health care insurance system is not about health, nor caring, but just for profit?”