Reinsurance Claim Denials

[Guest MN UW]

What have others (brokers, employers, TPA's) seen in the way of reinsurers' behavior in this ever-tightening market?

We have seen lasers imposed on individuals up to four months after the plan effective date, claims denied because someone was diagnosed and treated (not hospitalized) for an "alarming" diagnosis in the final days of a prior plan year. If a TPA does not have a report that summarizes EVERYTHING that may be "in the hopper" prior ro a carrier change, the employer cannot disclose, but the reinsurer still lasers or denies coverage for non-disclosure.

Employer groups and their TPA's are being held to a standard of PERFECT knowledge, whether it is reasonable or not. Carriers are, it seems, looking for ways to deny claims the moment they appear! "Rules" that were followed only loosly in the past are being adhered to tightly, without any prior notice. New requirements appear out of nowhere! Groups are being completely re-underwritten based on a full 12 months of claim data, and often the final terms are not available until well after the employer group has either lost their prior coverage or given a termination notice!

We understand that carriers and reinsurers are still recovering from two or three very bad years, but the climate seems to be getting hostile! Please tell me we aren't the only ones experiencing this!

[Guest Damien]

You are definitely not alone. I would have to describe the atmosphere with reinsurers as border-line hostile. I have encountered (non)-disclosure situations very much like the one you described. Short of sending a team of agents out to every plan member and dependent the day before renewal to verify they are not hospitalized or otherwise ill, I don't know what the reinsurers expect administrators to do.

I have had reinsurers practically ask me to assess their risk due to certain plan members in groups up for renewal. Some of the information/speculation they want (i.e. what is going to happen with this patient) I doubt the attending physician could or would produce.

In my experience the most troublesome new trend of all is the procedure of asking for every conceivable piece of information and documentation in response to a claim. Some of the requests I have received were specious at best, but they kept me running in circles and delayed the day thay would have to pay up. And of course, the more they ask for, the better their chances of finding some pretext to deny a claim.

Of course not all reinsurers are the same, and I have worked across the table from some reinsurance people I respect. There does seem however to be an increasingly antagonistic atmosphere industry wide.

I would also be intetrested in hearing anyone else's experience with the current reinsurance market.

[Guest mmarin]

I agree with everything said so far. Another problem area that we, as a TPA have found is in the reinsurance policy language. A few carriers have changed the language of their policies which no longer mirror plan documents and in fact are problematic when it comes to HIPAA compliance on discrimination issues, differing definitions of Experimental/Investigational; Medically Necessary; and Usual & Customary. Just another area to watch out for.

[Guest IRAHS]

The "hostility" in the reinsurance arena is far from over; moreso, it appears to be increasing. It is not endemic, so please do not feel all alone. It seems to effect specific claims just as badly as aggregate claims; although, aggregate claims usually have much more at stake.

The backwash of this market is beyond damaging to the TPA. Afterall, everyone will blame the TPA for the claims not being paid and this will consequently lead to a loss of business for the TPA. Furthermore, depending on the marketing practices of the TPA, there could be some liability judicially placed on the TPA. At the very least, the TPA is going to end up in a very costly legal mess of which it truly has no liability. Of course, this brings E&O coverage in to play (and they do not want to pay either!) and leads to higher E&O premiums. It's all a vicious circle.

I believe we have found a way to counteract some of these bogus reinsurance denials and I would be happy to discuss strategy. Please feel free to email me regarding your particular situation(s).