After illness, a plague of paper Patients struggle with complex forms and delays in fight to get claims paid

May 02, 1993|By Scott Shane | Scott Shane,Staff Writer

Al Raeke got through his heart surgery in 1990 just fine. It' the paperwork that's killing him.

Three years after his operation at Johns Hopkins Hospital, Mr. Raeke, 66, sits hunched over the kitchen table of his house in Edgemere, despondently shuffling the stack of papers.

After hundreds of hours perusing the bills and forms, making phone calls and writing letters, he's still not sure what services he got, what his insurance should have covered, what he should pay and what might happen if he doesn't. The paperwork is a source of constant worry, a monster that seems to have moved permanently into the house with Mr. Raeke and his wife, Peggy, 63.

"All the terms and conditions, you need to be a doctor and a lawyer to understand," says Mr. Raeke, a retired plumber and printer. "Something here is all screwed up."

You've heard of the plight of the uninsured. Call this the plight of the insured. Ask an American about his experience coping with medical bills and insurance forms, and chances are good you'll hear a long, tangled story.

Over at the Edgemere Senior Center, where Mr. Raeke helps out with ceramics and shuffleboard, one woman tried unsuccessfully for two years to persuade Blue Cross and Blue Shield that she is not dead.

"The date of this service," say the notices, "was reported to be after the date of death."

Joan J. Melvin, a nurse in Chestertown, has struggled for more than a year with an anesthesia bill from back surgery at St. Agnes Hospital. The anesthesiologist's office has repeatedly mixed up code numbers, switched Ms. Melvin's first name and maiden name and failed to straighten out the errors even after the Maryland attorney general's office intervened.

"I do not wish to participate in this game any longer," says Ms. Melvin, 37. "It's gotten to the point where I feel like they should pay me for trying to resolve it."

Such bureaucratic harassment of recovering patients and bereaved families does not come cheap. More than 20 percent of all U.S. health spending goes toward administration, and perhaps half of that is spent writing up elaborate bills and submitting and resubmitting them to patients and to the nation's approximately 1,500 insurance plans.

"No other country has patients filling out forms or trying to get money back," says Donald W. Light, a sociologist studying insurance ethics at Princeton University. "The question the insurance industry is raising for more and more Americans is: What does it add? If its value is to find clever ways not to insure those who most need care and to delay and deny payment of claims, then it's just doing a disservice."

The insurance industry's little family secret is that complexity pays, by increasing the opportunities for errors on forms that can cause claims to bounce. The longer the money sits in insurance-company accounts earning interest, the better.

"We'd search for every legitimate way to not pay a claim," says John K. Lohrman of York, Pa., who formerly processed health insurance claims for self-insured companies and since 1984 has a business helping patients file their claims. "Virtually 30 percent of the paperwork we could reject on a daily basis because something was missing."

Major role for insurers

In Canada, hospitals have almost no billing department, because they are paid a lump sum each year by the provincial government to provide care to all comers. Doctors bill the national health plan on a standardized form. As in almost every other developed country, patients rarely even see a bill.

"In Canada, families commemorate the dead with flowers and contemplation," says Dr. Steffie Woolhandler, a Harvard Medical School internist who has compared the U.S. and Canadian systems. "Here the family spends the next three months trying to sort out the paperwork."

As a result of this simple, single-payer system, Canadian health administration costs amount to only about 10 percent of health spending. The General Accounting Office estimated in 1991 that if the United States were to move to such a system, the savings on bureaucracy would be enough to pay the health costs of the nation's 35 million or so uninsured citizens.

U.S. health insurance companies, which presumably would go out of business under a Canadian-style system, naturally object to the idea. They assert that they save more by preventing unnecessary treatment than they spend on paperwork.

Some health administrators say the savings from a single-payer plan can be overestimated. At University of Maryland Medical Center, only about 5 percent of the $229 million annual budget goes for paperwork-related functions, says Robert A. Chrencik, senior vice president for finance. But that includes such offices as admitting and medical records, which are indispensable. He figures a single-payer system would cut his hospital's costs by only $4 million, about 2 percent of costs.

To counter advocates of a Canadian-style system, the industry plays on traditional U.S. fears of costly government bureaucracies.

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