©Elizabeth Lee Vliet MD 9-9-12
KVOI Radio: “America’s Fabric” September 9, 2012
Hold Harmless Clauses in Health Insurance – Clauses That Can Kill You – and Conflict with America’s Tradition of Economic Freedom
Good Morning. I am Dr. Elizabeth Lee Vliet. I am an independent physician in private practice in Tucson and Dallas TX, and the author of several health books for consumers.
My medical website is www.HerPlace.com.
My last show focused on the loss of medical and economic freedom if states implement the new “exchanges” required under the 2010 healthcare law. In these exchanges, you will “exchange” Your medical freedom for more government control – whether by the state or by the federal govt.
Today we will be discussing how existing health insurance contracts and the new insurance “exchanges” contain clauses that are other ways the health insurance industry interferes with your economic and medical freedom.
The issues we are discussing today are
- the opposite of our American tradition of God-given liberty
- the opposite of our tradition of individual freedom to decide how we spend our money, and
- the opposite of our tradition of freedom to choose when, where and with whom we seek medical treatment….
- and the opposite of our God-given right to life…when these particular clauses buried in health insurance contracts may actually cost US our lives.
I am referring to clauses called Enrollee Hold Harmless that exist in most contracts between your doctors and insurance plans they may contract with, and between hospitals and other health facilities and insurance plans they contract with to provide medical care.
Such language may sound “harmless” but….they are only holding your health insurance company “harmless”! These clauses may be deadly for YOU, as we shall see.
I have a guest with me this morning who will help explain this complex subject. Dr. Jane Orient is a practicing internal medicine physician in Tucson, and the Executive Director of the Association of American Physicians and Surgeons. AAPS is the only medical organization in the country to sue to overturn the new 2010 healthcare law. AAPS has been a voice for private independent physicians and patients’ medical freedom since 1943.
But first, I’d like to tell you the story of Sandra Lobb. She could be any of us. Tragically, she is dead. She had access to medical care. She had health insurance. She had “coverage” for the treatment she needed.
So what happened? A faceless, non-medical employee of her health insurance plan, hired to review cases and approve or deny treatment, overrode Sandy’s physicians, and decided that “given Sandy’s age and her condition, the cost of the care being prescribed can nott be justified.”
How expensive was her treatment? The particular medical services she needed cost about $7000. Her husband said he would pay cash for her to have this medical care. He knew that without it, she would die. He asks, “Who among us wouldn’t take the responsibility for $7,000 if it meant life or death for ourselves or a loved one?”
But what happened next was truly astonishing. The hospital insisted on discharging Sandra when her insurer denied payment as “unjustified,” and adamantly refused Mr. Lobb’s offer to pay cash for further care. Then, to make matters worse, and to their shock, after the insurance company’s refusal to pay, no other hospital would admit Sandra. Under the Enrollee Hold Harmless Clause, there was no way any hospital – or doctors –could be paid in cash for the services!
Patients think that insurance companies decide coverage, and that doctors decide treatment. Sadly, that is not the case. Doctors who contract with insurance companies, and Medicare, have less and less ability to make treatment decisions for patients. Even though health insurance plans are not supposed to “practice medicine,” in reality, that is exactly what they are doing. In Sandra Lobb’s case, the insurance company decided to terminate her medical care and discharge her from the hospital – not her doctors making that medical decision. After the insurance company decision, the first hospital received no payment whatsoever.
The Lobbs tried to find another hospital for Sandra to have her treatment.
BUT ALL of the hospitals they consulted turned them down, and refused to accept cash for her medical care! Why on earth …in the U.S., the epitome of capitalism and supposedly free markets…why couldn’t the Lobb’s pay cash for Sandra’s needed medical care?
Frank Lobb, a businessman, spent 10 years and 5 lawsuits trying to get answers to these very questions. He was trying to figure out how he might have been allowed to pay for his wife’s medical care. His book, the Great Health Care Fraud, available on Amazon.com, documents what he found, and how it can be risky for YOUR life too.
The key, it turns out, are the Enrollee Hold Harmless Clauses in insurance contracts. Frank Lobb calls them “the beating heart of the managed-care industry’s business plan.” It is a secret the insurance industry tries very hard to keep hidden from you…. though the clauses are in plain sight IF you know what the legal language means, and IF you know where to look in the contract.
And now I’d like to ask Dr. Orient to explain the key concepts of Enrollee Hold Harmless Clauses and how these clauses affect your freedom to pay cash with your own money for medical services you may need.
Welcome to America’s Fabric, Dr. Orient.
I think it is important to remember, we live in an Orwellian world of newspeak and contradictory meanings. “Insurance” and “coverage” are warm, benign-sounding words. The more, the better. With “universal” and “comprehensive” coverage, everyone would be safe and secure, right? No more worries about families being bankrupted by medical bills, for example.
But there are other more ominous meanings for “coverage.” It can be stifling, restrictive, and limiting. It can refer to coverage of six feet of earth over your grave! And with a health insurance plan, which is really a managed care plan, which is really not the same thing as insurance….the bankruptcy protection is for the PLAN, not for YOU.
Virtually all provider contracts contain the innocuous-sounding Enrollee Hold Harmless Clause. It was written by the National Association of Insurance Commissioners (NAIC), and actually was enacted into state law in most, if not all, states. Officials will say that the purpose of these clauses is to protect subscribers against balance billing. Balance billing means the doctor or hospital billing YOU for the difference between their charges and what the insurance company pays.
What the hold harmless clause actually does is to serve as an absolute roadblock to prevent providers of medical services from accepting any payment, other than deductibles and co-payments, from any source outside the plan for any “covered” treatment. A service is “covered” if it is available under the plan, even if the plan denies payment for it in an individual case like Sandra’s. If Sandra had wanted experimental treatment, or something like cosmetic surgery, it would have been non-covered and her husband could have paid for it.
Dr. Vliet: So even if the insurance plan we buy says something is “covered” it can still be denied for a particular patient. That is just frightening. Why is such a clause needed? Who does it really benefit?
Insurance companies will pretend that the Hold Harmless Clause is needed for insolvency protection—but it is really insolvency for the health plan. These clauses actually prevent the hospital, or a doctor, from accepting payment for medical care that the insurance company has decided is not necessary… or desirable… or appropriate for a particular patient. So as Mr. Lobb ultimately learned, it was this clause in the insurer’s contract with the hospital that prevented him from paying for his wife’s treatment. He went to court to try and get an explanation about how he could have paid for his wife’s care, given the language of that clause.
Dr. Vliet: So it wasn’t the language in hiscontract with the insurance company, it was the language in the hospital’s contract with the insurance company.
Dr. Orient: Exactly. The subscriber never signs this contract with the insurance company, and never sees it. It is the contract between the provider and the insurance company.
Dr. Vliet: Just to be clear for our audience who don’t know the terms we live with every day, “subscriber” means the patient, that means YOU.
Dr. Orient: Exactly.
Dr. Vliet: So why would a health plan want to prevent a Subscriber –or patient – from paying for health care services?
Dr. Orient: That really sounds strange, doesn’t it, that they would care about your paying your own money. What do they have to do with that? But the way it can threaten the solvency of the plan is that the plan has agreed to pay for all necessary and appropriate medical services. Now, if the health plan reviewer says medical services are not necessary and appropriate, and then a physician goes ahead and provides that care anyway, then that’s evidence exists that the plan violated its promise to patients to provide all the “necessary” care. Then what subscribers might do is pay for the service, then turn around and sue the insurance company for violating its agreement …(and that threatens the solvency of the health plan). Because after all, physicians are not allowed to provide unnecessary or inappropriate services.
Dr. Vliet: So… basically, what they are really doing is “covering” themselves when they hire a reviewer who says the care isn’t necessary and the doctor thinks it is.
Dr. Orient: Well, and they will claim they are not practicing medicine when they are doing that. The fact is, though, that they have such control over the physicians that the physicians will agree with them in virtually every case that this care was not necessary or appropriate.
Dr. Vliet: The physicians, in a way, once they sign the contract, are trapped because they can be kicked off the plan and lose huge volumes of patients which could force them out of business. So even though the health insurance plan isn’t supposed to define necessary and appropriate care, the companies end up doing it, and the doctors feel they have no choice. Is that what you are saying?
Dr. Orient: That’s exactly right. Now the physician might well be willing to provide care for the patient knowing that the contract he signed, he cannot bill for it. However, the other problem is that the health plan can throw him off the panel, or the hospital can throw him off the medical staff. If he does this all the time, of course, he would go out of business if he provides care he isn’t paid for. But bad things can happen to him even sooner because of the health plan and the hospitals.
Dr. Vliet: So if a patient is caught in a terrible trap like this, they don’t find out until it’s too late, what does Mr Lobb say is the reason for all this, and what can patients do?
Dr. Orient: Well, they don’t want anyone to find out really. That’s why it took him ten years of litigation! He is a very persistent individual. Because neither the state department of insurance nor the insurance companies themselves want patients to understand it. He felt that companies steadfastly chose to mislead the court by stressing that the Lobbs were always free to pay for pay for a ‘Non-Covered Service’ and implying that a ‘Non-Covered Service’ was something the insurer refused to pay for….even if the insurance company paid ZERO! He said these statements are false or deliberately misleading. Because, in fact, the service is covered, even if they don’t pay, as long as it is available under the contract to some people.
Dr. Vliet: So her medical care was covered. They were just saying that she was too old and too poor a condition to justify the cost.
Dr. Orient: Right, and they are not going to pay for it, and because of these contracts, no one else is allowed to accept payment for it. Maybe Mr. Lobb is free to pay, but what good does that do you if the person can’t accept the payment?
Dr. Vliet: So it’s a good example of when coverage, and health insurance, and even access to care, are no good if you can’t get a doctor or a hospital to deliver the treatment. (Added to written version, not in audio: Because insurers dominate the local market and have the ability to enforce their provider contracts nationally, and to force providers to join networks through sheer market power, he notes that there really isn’t an alternative source of help when an insurer refuses to approve and pay for care.)
Dr. Orient: Well, as our past president, Dr. Lee Hieb, a key factor in the
3 C’s of access to care is CASH –the ability to spend your own money to buy a lifesaving service. This is increasingly being denied.
Dr. Vliet: I think most people don’t realize that. They keep thinking, well, if the government controls my healthcare choices, and my treatment isn’t allowed, I’ll just pay go pay cash and get it anyway. I think we are finding, in the US anyway, that those doors are rapidly closing and it’s time for patients to wake up, and realize the threats that they face.
Dr. Orient: I think the insurance companies are counting on the fact that patients want somebody else to pay for their medical care, and they wonder why anybody would even be concerned about losing the right to pay cash. In fact, one person even asked Mr. Lobb that question, and Mr. Lobb said “Who are you to deny me the right to spend my own money to help my wife?”
Dr. Vliet: So he determined that managed care subscribers can’t really contract for the care they need outside of the plan?
Dr. Orient: Exactly. And he points out that the right to contract is vitally important. People say they care about freedom of speech and freedom of the press , but none of these rights really have any meaning if you can’t form contracts with other individuals to actually carry out these activities.
Dr. Vliet: So without the right of contract, if we don’t have that, then we are left naked in our dealings with each other, business, institutions, and most importantly, even the government. Contracts are the structure that really allow us to manage our life, our family and all of our dealings every day.
Dr. Orient: That’s right, because we have to be able to rely on other people to provide what we need, and they can’t provide what we need unless they can rely on being able to accept payment for it.
Dr. Vliet: Talk a little about how this may relate to Medicare. People think Medicare will be there for them, and we know that the 2010 healthcare law cut $716 billion out of the Medicare budget to serve younger people. How does this other provision affect Medicare patients being able to pay cash for medical care they may need?
Dr. Orient: Well, under Medicare Part B, it operates in a similar way, even though there is not this Enrollee Hold Harmless clause. If you are on Medicare Part B, and the government does not pay enough to make it possible for hospitals and doctors to provide the services, then you really can’t get them, because it would be a crime for the doctor or hospital to accept your money. So if the services are covered, even if Medicare says this is worth zero dollars and zero cents, you can’t pay for it, and you can’t have it.
(Note: Medicare beneficiaries have the right to pay for services that are non-covered. But patients are not free to pay cash or pay any more than the Medicare allowable amount for services that are covered, even if Medicare decides to reimburse those covered services at zero dollars).
Dr. Vliet: So what might happen to a physician who went ahead and did that and provided the service?
Dr. Orient: If he did that, and said, well we just won’t file a Medicare claim so they won’t know about this, Medicare can fine a physician $2000 for not filing a claim! Isn’t that crazy? That it is a crime to turn down a government benefit?
Dr. Vliet: And a crime to not bill Medicare, save them money, and accept cash. This is absolutely an alternate reality universe. It’s crazy.
Dr. Orient: Patients are finding out this reality every day. If they are a new patient and they want an appointment with a doctor and they are on Medicare.
Dr. Vliet: That’s true, it is taking longer and longer to get in because more and more doctors are opting out of Medicare because they can’t honor the Oath of Hippocrates focus on the individual patient, and they can’t stay in business if the the government is continuing to lower the reimbursement for the services they provide. Mr. Lobb’s book, The Great Health Care Fraud, really serves another purpose, I believe, for patients. What is that?
Dr. Orient: One thing that he does: he provides these documents (Enrollee Hold-Harmless Clause, a representative provider contract) that are really very difficult to find. The patient doesn’t sign these contracts, so he may have a difficult time getting a copy so that he can understand what’s going on. But Mr. Lobb thinks that there is potentially a way around this. That is if a patient can find a physician (i.e. one not on the insurance plan) who is willing to prescribe the care, then the hospital is obligated by law to provide necessary care, as long as the patient offers to pay. But then, the hospital can’t really submit a legally enforceable bill. So all the patient has to do is write on the bill “this is not a legally enforceable bill.” And he gets the service. Theoretically.
However, if a physician is so bold as to do that, he is likely to be found to be a disruptive physician, and he can be discharged from the hospital staff, and find that he can’t work anywhere as a physician after this happens, because managed care and hospitals have such a stranglehold over the provision of medical services that patients are at very grave risk.
Dr. Vliet: This also seems to me to interfere with Arizona’s Prop 106 – the Healthcare Freedom Act – which guarantees the citizens of Arizona citizens have the right to spend their healthcare dollars as they see fit. I really am concerned that we need people to understand how these issues infringe on the freedoms that our founders thought were so critical to our life and liberty.
Dr. Orient: Patients may not realize that their physicians have signed away their right to accept their money. So what it says in Prop 106, the physicians have just voluntarily waived.
Dr. Vliet: That is mind-boggling. These were the kinds of things that I saw in 1986 when I actually read these (insurance) contracts, and I thought, I can’t do this…I am selling out my patients. So I have stayed independent, and what we need are more doctors who are independent. I believe this is the goal of our medical group.
Dr. Orient: The Association of American Physicians and Surgeons wants to educate physicians and patients about the importance of staying independent, and of directly contracting with each other.
Dr. Vliet: Absolutely. Thank you, Dr. Orient, I so appreciate your coming and educating our listeners today.
Last time I talked about the “Health Insurance Exchanges” EXCHANGING YOUR FREEDOM FOR MORE GOVERNMENT CONTROL. Today we talked about the “hold harmless” clauses in contracts that doctors and hospitals sign with insurance companies, and how these clauses are used to prevent YOU from getting the medical treatment you need and using your own money to do so.
All of these are ways that governments – state or federal – are controlling your decisions about your life and medical care. If we continue down this road, we will have limited choices in our medical insurance, our medical insurance premiums skyrocketing, and we may even face premature death.
We must return to our CORE FABRIC OF AMERICA and Founder’s belief in a God-given individual life and liberty, bestowed by our Creator, not by government. Our Founders knew, and we must always remember:: a “right” that is granted by government is really only a privilege that can just as easily…and abruptly …. be taken away by government.
But our Founders’ visions are being ripped apart by elites now in power who are focused on the “collective good,” not on you as an individual, with God-given rights to live in freedom.
This focus on the collective, or community good, and the focus on all of “belonging to the government” is the complete opposite of our Founders’ vision and what our Constitution was set up to protect. These state-required “enrollee hold harmless clauses” that prevent you from spending your own money on medical care you need are just more egregious examples of out-of control government intrusion into our lives.
Each of us must engage in the fight to preserve our economic freedom, our medical freedom, our religious freedom and the ability to live our conscience, and to determine our own destiny. 2012 marks a major fork in the road for our future direction: Will we chose to preserve our Founder’s Vision? Or will we chose the road leading to the government dictating every aspect of our lives and how we spend the money we earn, plus how and when we die. The time is NOW. We won’t get a second chance to preserve liberty for us and our children and grandchildren. Once lost, Liberty is rarely regained.
As citizens and patients, YOU have to be active, informed, and vigilant and involved in the fight to protect your medical freedom…and your life!
This is Dr. Vliet, signing off for today. Go to www.AAPSonline.org, www.PatientPowerAmerica.com or www.HERplace.com for more on healthcare and ideas on how America’s tradition of ECONOMIC freedom points the way to true reform of the payment for medical services in ways that lower costs, improve patient control over their services, improve patient outcomes, improve patient satisfaction, and also preserve our religious and medical liberty. Until next time, stay well! and…Live Free.
End of Show
Further comments on The Great health Care Fraud, by Frank Lobb, from a Book Review by Dr. Jane Orient:
“It is an essential manual for patients and their families caught in the trap of needing services the insurer does not want to pay for, and also a tool for physicians who want to try to break the stranglehold that the managed-care industry has established over medicine. Despite the complex and convoluted nature of the material, much of which had to be teased out of deliberate attempts to be secretive or to obfuscate, Frank Lobb’s book is a surprisingly good read. A businessman with no background in the “healthcare industry,” Lobb has, through perseverance and meticulous, methodical analysis, managed to penetrate some of the insurance industry’s most closely held secrets about how they limit our medical care choices and options….and even contribute to premature deaths. It appears to me that if subscribers were to exercise their rights, it is possible that the entire managed care industry could crumble. The drawback is that the method requires the cooperation of physicians. This might be difficult to obtain if it conceivably could mean the end of a physician’s career because of the power that hospitals hold over him.”