Each year, fewer and fewer Americans are covered under traditional fee-for-service health insurance plans, in which insured individuals go to a doctor of their choosing and then submit health insurance claims. Today, more and more Americans are covered by one of the following arrangements:
- Health maintenance organization (HMO) - an HMO provides health services through a network of doctors, hospitals, laboratories, etc. The health care providers may either be HMO employees or have some other contract arrangement with the HMO. HMO plans pay providers a monthly set amount (a capitation fee) regardless of the number of services performed. When you enroll in an HMO, you choose one of the doctors as your primary care physician (PCP) to manage all of your health care. Whenever you need health care, you first consult your PCP. Your PCP may refer you to an HMO-approved specialist.
- Preferred provider organization (PPO) - a PPO is a group of doctors, hospitals and other health care providers (preferred providers) who have agreed to provide services to members of a health plan for discounted fees. Some employers combine the PPO with a traditional major medical plan so you can use providers who are not on the PPO's preferred list. But to encourage you to use a provider who is on the PPO list, you will usually have lower out-of-pocket expenses than if you use a provider who is not on the list.
- Point of Service Plans - these plans are essentially HMOs that allow members to use services provided outside of the network without prior approval from a network doctor. Point of service plans offer lower deductibles and no coinsurance for visits to doctors inside the network. Visits outside the network normally require the payment of deductibles and coinsurance the same as a standard insurance policy.
Checking Out a Health Insurance Provider
Before you buy health coverage, find out about the company selling the plan. Here are factors to consider:
- Customer service - find out how the company services its policyholders. Does the company have a toll-free customer service number?
- Complaint history - has the company had an unusually high number of consumer complaints?
- Licensing status - call the North Dakota Insurance Department to find out if the insurance company is licensed to do business in North Dakota.
- Cost - premiums for health insurance will vary greatly because there are no standard plans. When you look at bids from several companies, you will also need to look carefully at the benefits offered. Also, keep in mind that the actual cost for your health coverage will be determined after you submit information about your health.
- Financial stability - financial stability helps ensure that a company can pay its claims. The Department establishes requirements that each company must follow and continually monitors the financial stability of insurance companies operating in North Dakota. Independent organizations also rate the financial stability of insurance companies. Keep in mind that these ratings are opinions only and do not guarantee that a company is financially sound.
Questions to Ask When Shopping for Health Insurance
- What does the plan pay for?
- What does the plan not pay for/exclude?
- What are the limits on pre-existing medical conditions? Will the plan pay for preventive care, immunizations, well-baby care, substance abuse, organ transplants, vision care, dental care, infertility treatment, durable medical equipment or chiropractic care?
- Will the plan pay for prescriptions?
- Does the plan have mental health benefits?
- Will the plan pay for long term physical therapy?
- Do rates increase as you age?
- How often can rates be changed?
- How much do you have to pay when you receive health care services (copayments and deductibles)?
- Are there any limits on how much you must pay for health care services you receive (out-of-pocket maximums)?
- Are there any limits on the number of times you may receive a service (lifetime maximums or annual benefit caps)?
- Has the company had an unusually high number of consumer complaints?
- What happens when you call the company's consumer complaint number?
- How long does it take to reach a real person?
The Scope of State Insurance Regulation
State insurance regulation of health insurance covers an estimated 77 million Americans, roughly three out of five (62 percent) of those with private coverage. The health insurance regulatory structure in the U.S. is as follows:
- State regulation - some employer or employee groups purchase health insurance coverage from an insurance company. Others may purchase group health coverage from a health maintenance organization. Both are called fully insured health benefit plans. Insurers of such plans are regulated by state insurance commissions.
- Federal regulation - some employer or employee groups, however, provide what are called self-funded health benefit plans. This means your employer or employee group may set aside funds and employee premiums each month to pay health coverage claims submitted to the plan. If the plan is self-funded and offered by a private sector employer or bona fide union, the designated regulatory authority is the U.S. Department of Labor's Pension and Welfare Benefits Administration. States are not permitted to regulate most valid self-funded plans authorized by Congress under terms of the Employee Retirement Income Security Act (ERISA). In most cases, this means: (1) state insurance departments have no authority to investigate complaints that involve valid single-employer or union-sponsored self-funded ERISA plans; (2) certain other group health plans provided by governments, churches, some school districts and out-of-state Blue Cross organizations also are exempt from most state regulations; and (3) state laws requiring specific benefits in health care plans seldom apply to valid self-funded ERISA plans.
An external review is a process that provides you with an opportunity to have a health insurance claim dispute reviewed by experts who have no affiliation to your insurer. If you are denied coverage or payment under your health insurance plan, you can appeal to your insurer internally. Contact your insurer or look in your plan benefit packet for more information on how to file an internal appeal. If you are not satisfied with the outcome of your internal appeal, or if your insurer waives the internal appeal, you may request an external appeal.
The following questions provide general information about what is required by North Dakota law. If you have specific questions on how external review laws apply to your situation, please contact your insurance company or the North Dakota Insurance Department.
Who conducts external reviews?
Grandfathered plans (those issued prior to March 23, 2010) - external reviews are conducted by North Dakota Health Care Review, Inc., another peer review organization meeting the requirements of section 1152 of the Social Security Act, or any person designated by the Insurance Commissioner.
Non-grandfathered plans (those issued March 23, 2010, or later) - external reviews are conducted by Independent Review Organizations (IROs) that are contracted by the Department. IROs are nationally certified, which shows that they are unbiased and have procedures to ensure that their reviewers are qualified and independent. Once you are determined to be eligible for an external review, the Department will randomly assign an IRO to review your request.
What types of disputes can be decided through an external review?
Grandfathered plans - an external review can address whether medical care rendered was medically necessary and appropriate to the claim.
Non-grandfathered plans - an external review can address a decision based upon requirements for medical necessity, appropriateness, health care setting; rescission; and level of care or effectiveness, including decisions against treatment that is experimental or investigational. There is no minimum dollar amount for the value of your claim for it to be eligible for external review.
When can I request an external review?
Grandfathered plans - in most cases, you will need to complete your insurer's internal grievance procedure before requesting an external review. Your insurance company may require external review applications to be submitted within a certain timeframe following the date of the denial.
Non-grandfathered plans - whenever your insurer makes a coverage denial determination that is eligible for an external review, it must provide you with information on your appeal rights, including its internal grievance procedures and your right to request an external review. It must also explain how you can obtain additional information on its internal grievance and external review processes. In most cases, you will need to complete your insurer's internal grievance procedure before requesting an external review. External review requests must be submitted within four months from the date of the denial unless your insurer allows a longer period of time.
How do I request an external review?
After you receive the insurer's final decision on your internal appeal (if applicable), you can request an external review by filing a request with your insurer or the Commissioner.
What if I need care now?
Generally, you must complete an internal appeal procedure before requesting an external review. However, you do not need to complete this process if both you and the insurer agree to proceed directly to an external review if you need immediate medical care.
Grandfathered plans - your insurance company may provide an expedited external review process. North Dakota law does not require it.
Non-grandfathered plans - if you need immediate medical treatment and believe that the time period for resolving an internal appeal will cause a delay that could jeopardize your life or health, you may ask to bypass the insurer's internal appeal process and apply for an expedited external review.
Is there a cost involved?
Grandfathered plans - if the independent external reviewer upholds the denial of a claim, the consumer is responsible to pay all costs associated with the external review.
Non-grandfathered plans - an insurance company, nonprofit health services corporation or health maintenance organization (HMO) may require the consumer to pay a nominal filing fee, not to exceed $25. The fee may be returned to the consumer if the claim denial is reversed.
How long does the external review process take?
Grandfathered plans - your insurance company may process external reviews according to a specific schedule. North Dakota law does not mandate a timeframe in which external reviews must be completed.
Non-grandfathered plans - once your request has been determined to be eligible for external review, an IRO has up to 45 days to return a decision. However, in the case of an expedited review of an urgent medical decision, the IRO must return the decision within 72 hours of its receipt of a request.
How does the IRO make its decision?
The IRO must consider all of the documentation and other information provided by you and by the insurer, including medical or scientific evidence, the applicable insurance contract and any legal bases.
Does my health plan have to abide by the decision?
Yes, the outcome of an external review is binding.
What if I have more questions?
Your insurance company's customer service department should be able to answer any questions you may have regarding the external review process. You may also contact the Department.
With rate increase requests, the North Dakota Insurance Department strives to balance the need for insurance to be affordable with the ability of the company to continue to pay claims.
A company requesting a rate increase must provide information satisfactory to the Department to justify the level of the requested increase. If the Department has questions about the material provided, or additional information is needed, the company will be asked to provide it. As information is received from the company, the Department will review factors that affect the overall increase in cost to provide health care services, including:
- Price inflation – including increases in provider reimbursement (payments to medical facilities and doctors)
- Increased use of services – may be due to aging, product promotion, improved services, etc.
- Cost shifting (the costs associated with serving people who don’t have insurance)
- Leveraging effect of fixed deductibles and co-payments – while health care costs may increase from one policy year to the next, deductibles and co-payments usually remain the same, resulting in the amount paid by the insurance company increasing
- Technology improvements
- Government mandates, benefits and other legislative changes
- Increased costs due to federal health care reform
The Department also reviews historical (actual) experience to date, including previous rate increase request amounts, frequency and results.
The Insurance Commissioner has the ability to approve the requested amount, offer a lower increase or deny the request. The entire process of reviewing, analyzing and making a decision on rate increase requests typically takes two months.
The company then has legal rights available to it if it does not agree with the decision, starting with an administrative hearing before an administrative law judge. If the company is unsatisfied with that result, it can then appeal the matter to the appropriate district court and ultimately, the North Dakota Supreme Court.
In addition to a general rate increase that is approved by the Department, consumers may also receive an age-related increase, which is commonly referred to as an “age band.” Rates related to age are used by insurance companies to account for the fact that as people age, they typically use more medical services, supplies and pharmaceuticals. These age-related rates may be combined into rate bands of one or more years. For example, with regard to a five-year age band, when policyholders hit five-year marks, they will experience an additional increase over and above the rate approved by the Department. The advantage to consumers when using this type of pricing is that no additional adjustment is made to the approved rate within the band. The disadvantage, of course, is that when the next age band is reached, the increase is larger.
While medical providers and insurance companies need to cover their costs and want to be able to charge prices that will allow them to do so, policyholders are not always able to increase their income to cover the increased cost of health insurance. As the regulating body for North Dakota and an advocate for policyholders, the Department will approve only those increases that are justified.
The Comprehensive Health Association of North Dakota (CHAND) was created by the North Dakota Legislative Assembly in 1981 and became operational in 1982. Its initial purpose was to provide comprehensive health insurance benefits to residents of the state who have been denied health insurance or have been given restricted coverage or excessive health premiums because of high-risk health problems.
CHAND offers health insurance to North Dakota residents who either are unable to find adequate health insurance coverage in the private market due to medical conditions or who have lost their employer-sponsored group health insurance.
Insurance carriers licensed to do business in North Dakota must inform individuals denied health insurance coverage by their company about CHAND.
CHAND covers major medical and prescription drug expenses, subject to benefit plan limitations and exclusions. An individual is eligible to receive $1,000,000 in benefits from CHAND during their lifetime. An individual who has received $1,000,000 in CHAND benefits from enrollment in any combination of benefit plans is not eligible to obtain new coverage through the association.
Premiums fund approximately one-half to two-thirds of the program, not to exceed 135 percent of premiums charged in the state of North Dakota for similar coverage. The balance is covered by assessments to companies that write $100,000 in annual premiums on behalf of residents of North Dakota. Additional dollars may also come through federal grants.
Applicants are required to meet CHAND eligibility requirements to qualify.
For more information, visit CHAND's website at www.chand.org.
The North Dakota Life & Health Insurance Guaranty Association is a statutory entity created in 1983 when the North Dakota legislature enacted the North Dakota Guaranty Association Act. The guaranty association is composed of all insurers licensed to sell life insurance, accident and health insurance, and individual annuities in the state of North Dakota. In the event that a member insurer is found to be insolvent and is ordered to be liquidated by a court, the Guaranty Association Act enables the guaranty association to provide protection to North Dakota residents who are holders of life and health insurance policies and individual annuities with the insolvent insurer.
The purpose of the North Dakota Life & Health Insurance Guaranty Association is to protect resident policyholders in the event of an insurance company insolvency. Specifically, when a member insurer is found to be insolvent and is ordered liquidated, a special deputy receiver takes over the insurer under court supervision and processes the assets and liabilities through liquidation. The task of servicing the insurance company's policies and providing coverage to North Dakota's resident policyholders becomes the responsibility of the guaranty association. The protection provided by the guaranty association is based on North Dakota law and the language of the insolvent company's policies at the time of insolvency.
The National Association of Insurance Commissioners has additional information and resources available to consumers regarding Health Insurance Considerations for All Life Situations.