SELF-INSURED VS. FULLY-INSURED HEALTH PLANS

IS THERE A DIFFERENCE WHEN IT COMES TO APPROVAL FOR BARIATRIC SURGERY?

Self-Insured or Fully-Insured?

We are often asked what the difference is and why it’s important for people seeking insurance approval for bariatric surgery.

Most bariatric surgery patients (like most people in the U.S.) get their health insurance coverage as part of the benefits offered to them by their employer. Generally speaking health insurance plans are categorized as either “self-insured” or “fully insured” based on how the benefits are funded (i.e., what/who is the source of the money used for paying claims for covered treatment).

FULLY-INSURED PLAN

Think of this in the same fashion as automobile or homeowners insurance. In those instances the insured pays a premium and if a claim is submitted, the payment is funded by the insurance company (e.g. State Farm, Allstate, Geico, etc.). Apart from uncovered items and deductibles the premium is the only financial obligation undertaken by the insured. Similarly, in health insurance, the employer pays a premium to an insurance carrier (e.g. Aetna, CIGNA, Blue Cross Blue Shield, UHC, etc.) and that company assumes all of the risk associated with paying covered health insurance claims for the employee group.

SELF-INSURED / SELF-FUNDED PLAN

In the case of self-insured (a.k.a. self-funded) plans, the employer assumes some or all of the risk associated with their employee’s claims against the plan rather than simply “shifting” that risk to an insurance company in exchange for paying a premium. Three in five covered workers are in a self-funded health plan. Self-funding is common among larger firms because they can spread the risk of costly claims over a large number of employees and dependents.

WHY DOES THIS MATTER FOR BARIATRIC PATIENTS?

It matters in several ways. First, you’re not always dealing directly with the plan even though the ultimate decisions about whether or not a surgery is covered may rest with the plan administrator (usually the employer) at the end of the process. Because an employer with a self-funded plan operates a completely different type of business and doesn’t know the first thing about processing health insurance claims, the plan will delegate that claims administration function to a third-party administrator (TPA).

Many times those TPAs are management companies which specializes in doing those functions for self-insured plans like Zenith Administrators, CoreSource or one of many, sometimes that claims administrator is an insurance company such as UHC, Aetna or CIGNA, etc. So, for example, if your plan documents say “Aetna,” your plan may be insured through Aetna or it may self-funded by your employer and merely administered by Aetna. That is one reason a patient may say “I have Aetna” and another patient says “Me too” thinking they have the same insurance while in reality they have completely different coverage.

Self-insured plans also have the ability to set-up their own criteria for when bariatric surgery is (or is not) a covered benefit.  Often that criteria is very different from what their claims administrator customarily uses when it is the insurer.  Appeals can be won because a claims administrator is wrongly using its own medical criteria instead of criteria called for by the plan. Appeals can be won, even in the face of exclusions when the plan administrator determines it is in the best interests of the plan as a whole to cover surgery for a particular patient. There are times when the plan language excludes treatment and the employer doesn’t even know it.  We’ve had several instances where our appeals have been presented to benefits committees for self-insured plans and when they become educated about the benefits of bariatric surgery for their employees they have the ability to revise the plan in order to cover everyone, not just the patient we helped! Insurance coverage

One memorable example of what positive things can be achieved when you get to educate a self-insured plan came when we represented an employee of a Fortune 100 company in her appeal.  Although the claims administrator denied it through the entire process because there was an exclusion for bariatric surgery in the plan language, we had the chance to present the appeal to a committee and we were successful getting her approved.   What we didn’t know until later was that, as a direct result of her appeal, the entire benefit structure for this very large company was changed to include bariatric surgery.  We found this out when our client wrote us an email telling us a story I won’t soon forget:

“I went to the company holiday party this year and was standing in line minding my own business, when a woman I have never seen before ran up to me and started hugging me. I had no idea who she was. Turns out she was the wife of another employee. When she was done hugging me she took my hand, her voice cracked, her eyes welled up and she said: ‘Thank you for fighting so hard for your surgery, because if you hadn’t fought that year long battle, I wouldn’t have been able to have my gastric bypass, and I would most likely be dead right now.’ “She kissed my cheek and walked away.”

Now THAT is a victory!

  1. Neil FlochNeil Floch05-23-2013

    Walter-
    Excellent article. It does seem unfair that employers have the right to exclude whatever they choose.

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