Confidently Incorrect: Most Americans Don’t Understand Insurance

Many Americans feel that health insurance is designed to be intentionally confusing. Although most Americans don’t understand insurance, they’re not just being cynical; the facts seem to be in their favor. Health insurance confusion is one of the most serious and common issues for our clients.

In Tricks of the Trade: How Insurance Companies Deny, Delay, Confuse, and Refuse, the American Association for Justice notes, “Some of America’s most well-known insurance companies—the same ones that spend billions on advertising to earn your trust—have endeavored to deny claims, delay payments, confuse consumers with incomprehensible insurance-speak, and retroactively refuse anyone who may cost them money.”

One Farmers’ executive told claims representatives to stop paying claims, saying, “Teach them to say, ‘Sorry, no more,’ with a toothy grin and mean it.”

American Association for Justice (Tricks of the Trade, pg 4)

Insurance companies have clearly succeeded in confusing us all about how insurance works. Let’s explore how they play us against each other.

Three Entities

Insurance billing involves three entities. Each has a different level of understanding:

• Insurance companies have a better understanding of insurance billing than providers and patients.
• Providers (and their billers) have a more nuanced view of insurance billing than their patients.
• Patients are often both ill-informed and confident about what they think they know.

If your patients know so little about insurance, why do they argue with you about their coverage?

Bend Financial Outlines the Problem

In February 2021, HSA provider Bend Financial conducted a survey of 2,000 Americans to gauge public understanding of health insurance. The survey confirms what you probably already know: Americans don’t understand insurance very well.

Despite being confident in their own abilities, over half of Americans are hopelessly confused by health insurance — so much so that the average American has a D-grade level of knowledge.

Bend Financial

More than 90% of respondents reported feeling at least somewhat confident in their ability to navigate the healthcare system; 29% were completely confident. Among people without insurance, though, just 6% felt completely confident.

At the same time, 56% of respondents reported feeling “completely lost” in trying to understand health insurance specifically. This feeling was most common among people on a family member’s job-based insurance (75%), for people on COBRA (68%), and for people without insurance (64%).

Forbes

Takeaways

• 1,800 respondents were confident that they understood health insurance “at least somewhat”.
• Despite their confidence, 1,120 respondents felt “completely lost”. 840 of these found employer-provided insurance plans confusing.
• Collectively, respondents only answered 10 out of 15 questions correctly — a D-grade proficiency. 920 respondents thought they correctly answered “all or most” of the questions.

Isn’t That… Kind of… Inconsistent?

Oh my goodness, YES. Americans don’t understand insurance, but they sure think they do.

Why Americans Don’t Understand Insurance

It’s tempting to place all the blame on insurance companies; but patients are partly responsible. Your patient’s confusion about health insurance is a source of misinformation.

Patients Ask the Wrong Questions

In 2020, Medicare announced limited coverage for acupuncture. As a result, there are two different kinds of acupuncture benefits:

Let’s say your patient has a United Healthcare Medicare Advantage policy with Medicare-covered acupuncture only. If you’re an acupuncturist, you’d tell the patient that your services are not covered.

The patient might contact Member Services to ask, “Do I have acupuncture coverage?” The representative would say “yes”, seeing the Medicare-covered acupuncture benefit.

The patient will probably think they’ve received correct information from the carrier, and that you’re wrong. Now, there’s a trust issue.

It doesn’t help that…

Carrier Representatives Are Clueless About Alternative Care

Generally speaking, carrier representatives are unfamiliar with alternative care. To avoid misinformation, sometimes we need to be better-informed than carrier representatives. Medicare-covered acupuncture is easily recognizable: it always covers chronic low back pain only, for 12 visits a year. When a representative describes these terms, we know that services rendered by a licensed acupuncturist are not covered. The representative probably won’t.

Patients Think Coverage Can Be Guaranteed

Your patient may believe that coverage is guaranteed for the benefits listed on their policy. They’re wrong; insurance companies won’t guarantee coverage.

Coverage is contingent upon a variety of factors, including:

• Provider type and network status
• Authorization and referral requirements
• Timely filing
• Frequency of visits
• Allowed procedures (see the carrier’s fee schedule)
• Allowed diagnoses (see authorization documents, carrier medical policies, or common-sense billing guidelines)
• Complexity of claims (number of units, procedures, and diagnoses)

For acupuncturists: Aetna publishes their list of allowed diagnoses here; Cigna’s list is available here. For these carriers, coverage is contingent upon the use of allowed diagnoses. Usage of non-covered diagnoses will result in denial.

Coverage is a multilayered issue. The policy must cover your services; you must be eligible to treat the patient; if authorization is required, you must secure it; you must follow the carrier’s billing guidelines; you must bill reasonably and promptly. Jump through the hoops correctly, and your odds of coverage are good.

Of course, carriers may deny for no good reason. That’s because…

Sometimes Insurance Companies Are Jerks

No, really. They’ll sell you out for a pizza party.

Farmers even ran an employee incentive program, “Quest for Gold,” that offered incentives, including $25 gift certificates and pizza parties, to adjusters who met low payment goals.

Tricks of the Trade, pg 4

Insurance companies are fund managers. Like other financial entities, they engage in risk management strategies, and are obligated to prevent fraud, waste, and abuse (FWA); but there’s fiscal responsibility, and there’s callousness.

Unfortunately, sometimes insurance companies care more about saving money than the well-being of your patients:

Claims supervisors at AIG have reported locking checks in safes until claimants complained, delaying payments until they were a year old, and disposing of important correspondence during routine “pizza parties.”

Tricks of the Trade, pg 6

Don’t Get Played

Patients delay care when they’re uncertain of coverage. The prospect of incurring out-of-pocket costs makes treatment stressful. Health insurance confusion amplifies the stress. Insurance companies are counting on it.

Insurance companies profit when Americans don’t understand insurance. When you or your patient throw up your hands in exasperation, they win. In their world, the ideal scenario is for patients to keep paying their premiums, delaying treatment, and covering treatment costs out-of-pocket.

Don’t let them win. You and your patients deserve better.