ITIJ 210, July 2018
Continuing concern about ever-increasing healthcare bills in the US has focused attention on the importance of crafting precise policy terms and conditions that, while meeting the needs and expectations of foreign travellers, build in a brake on costs for assistance operators and insurers. David Kernek reports
What’s in a word? Almost everything when it comes to writing a travel policy, insists Dr Cai Glushak, International Medical Director at AXA Assistance USA, who contrasts the T&Cs found in the health cover policies bought by Americans with those for travellers heading to the US. “I’m a US citizen and emergency physician who experiences all sides of the equation – using health services, providing medical care, and working to effect cost control and responsible assistance on behalf of insurance clients. So I know that on a very palpable level, Americans have learned from our environment; tight private insurance conditions have modified our behaviour, and we live with limited choices,” he said. It is ‘virtually impossible’ to find a private health insurance policy that allows a totally free choice of medical providers without any cost sharing with the consumer, said Dr Glushak: “Typically, if I choose to go out of network, I am obligated to pay 20 to 40 per cent of the charges. This certainly makes me think twice about whom I choose to see. When I decide on the emergency room I will use, I choose one that is in-network; otherwise I risk taking on thousands of dollars in charges that will constitute my percentage of the bill. Americans no longer go to just any provider without first checking whether they are in network. Why don’t we do this in the travel insurance industry?”
One answer, he suggests, might be market forces: “Clearly, competition to offer consumer-friendly choices with minimal restrictions has driven insurers in some markets to strip policies of key consumer obligations that would allow us to impose network preferences and responsible behaviour. On the other hand, given all the attention and frustration consumers express about pre-existing medical restrictions, screening and other exclusionary conditions, mightn’t it be more palatable to apply reasonable provider network conditions that apply to all insureds?”
In Dr Glushak’s experience, the number and size of claims that end up being rejected for typical UK policies, in which the burden of proof regarding a pre-existing condition is generally quite high, represents a very small percentage of cases. “But if our policies had heftier co-pays – say 20 per cent or higher – for going out-of-network for other than life-threatening conditions, paired with a strong ‘phone first’ requirement that would give us the opportunity to direct patients to preferred providers, I could negotiate considerable discounts in currently highly resistant provider markets that would apply to all insureds, not just the few that we end up excluding.”
Glushak summarises some of the growing challenges insurers and assistance companies are facing:
- Medical costs will continue to rise, proportionate to the usage by insured travellers and the rise of the middle and privileged classes in emerging countries.
- While there are many legitimate providers of high quality, ambitious providers will continue to target dependable payers.
- Travel providers will become ever more sophisticated and educated in our insurance behaviours to maximise their revenues and strategies to spend our funds.
- Competition among insurers will impede initiatives to impose reasonable expectations on insured travellers … instead of enforcing reasonable conditions for coverage at the risk of being a less attractive policy, they will avoid impositions on the traveller and thus remain obligated to pay any charges the provider decides to levy.
- We will continue not to be smart, and not engage the consumer at the earliest possible point of contact to encourage responsible behaviour.
“The only weapons insurers have,” he says, “are their assistance network negotiators and, more importantly, their T&Cs. We all like to service policies that respond to the needs of patients. However, we are only as good as the T&Cs and rely entirely on policy wording that empowers us to take cost-effective measures and ensures excellent care while compelling responsible behaviour from the provider and the customer.”
What is needed are T&Cs with some teeth, says Dr Glushak, which means: clear wording obligating the customer or family to contact the assistance company before seeking medical care unless they are facing a life-threatening emergency and at the earliest point possible in their care, always before accepting admission; reasonable provider network conditions that incentivise or require use of the approved medical network; clear wording that failure to communicate and follow the instructions of the assistance organisation will or might result in the annulment of benefits.
In return, he says, insurers can expect from assistance companies:
- First contact practices that engage the customer on the first call and make further requirements for coverage crystal clear: their obligation to communicate when they need approval before going any further.
- Medical network direction – patient steering – from the very first contact to our preferred providers.
- Meticulous documentation – preferably recordings – of communication attempts and conversations.
- Early intervention by assistance medical staff to discuss and, if necessary, dispute the necessity of the treatment plan, including admission.
“With these weapons, there would be aggressive negotiation with local providers who will know we have real control over payment approvals,” Dr Glushak told ITIJ. “Let’s start taking real measures to rein in our costs to reasonable levels. Give us the teeth we need, and we will deliver excellent service and acceptable costs.”
One step ahead
At assistance and cost management company GMMI in Florida, President Raija Itzchaki agrees that policy wording and US travel adds up to a problem. “Absolutely. Travel policies are often written broadly, without the required specifics of the healthcare system of the destination country. In the case of the US, where healthcare is notoriously expensive, this can create problems. While there are effective methods to cost contain medical treatment received by the travellers, our strategy is to recommend to clients that they should be as proactive as possible prior to the member’s departure. Establishing a clear set of policy terms and guidelines from the start can help to lay out the framework for success in controlling healthcare costs.”
Policy wording, she told ITIJ, can be tailored to tackle American healthcare cost drivers, while maintaining the coverage expectations of insurers and their customers. “The key to this is directed care. While it is important to direct patients to in-network medical professionals, directing patients to the right level of care is even more important. Whenever possible, the most effective way to influence member behaviour is to create incentives or penalties. Examples of this could be the application of an excess/deductible for out of network provider use or for an inappropriate level of care – such as Emergency Room treatment for a cold – or waiving a deductible for contacting the alarm centre first in order to be directed to the appropriate course of care.”
‘Is the term reasonable expenses defined? It should be.’
Another aspect of important policy language pertains to strong and clear subrogation and co-ordination of benefits clauses, said Itzchaki: these are of great importance within the US market for a complete and comprehensive cost containment solution. GMMI provides a tactical approach to cost containment through co-ordination of benefits and recovery services, supported by our in-house legal counsel, to reduce costs.”
However, how can travellers be guided, when they become patients, to network providers? Itzchaki says that her company tackles what it calls ‘patient steerage’ at different instances during the member’s journey. It often refers to patient education tools that are deployed to enhance and address the complexity of policy documents. Some of its solutions involve technologies that allow it to tailor contact information for multiple digital platforms, then send the data to its clients’ members. “This allows us to communicate clear information, such as provider look-up links, or relay policy and coverage information,” said Itzchaki, “These digital solutions not only improve the member’s experience through ease of access, but also encourage a higher rate of in-network patient self-steering.” The idea is to impact the decision-making process for the member ahead of the medical episode. “This is now bringing the cost containment process full circle by proactively guiding and allowing members to access the right care without delaying urgently needed treatment. The right level of care at the right time, at the right place for the right cost will result in the right outcome!” stated Itzchaki.
She flags up pre-existing conditions as a problem area in which cover wording needs to be tightened, however. “We often observe loosely written policy language when it comes to defining pre-existing conditions. What constitutes a pre-existing condition often differs from policy to policy. Good policy wording leaves little room for interpretation and allows all parties involved to have a mutual understanding of what the coverage is and that the exclusions are.”
It is possible to provide policy wording that is clear and understandable to all of the involved parties, she says – an idea that goes back to tailoring the policy verbiage to the healthcare system in the destination country. “This can also present an opportunity in which global travel insurers, assistance and cost containment sectors can collaborate effectively to reduce overseas costs,” said Itzchaki.
The pivotal significance of policy wording was also highlighted by Global Excel’s general counsel, Paul Reed. It is, he says, the primary document forming the insurance contract between travellers and insurers.
“It is where we must turn to answer questions about the scope of benefits and exclusions, as well as many other terms and conditions,” he told ITIJ, adding that normally a contract does not affect third parties, but in travel insurance, the benefits are often paid to third parties – usually medical providers – on behalf of the traveller. “These third parties have an interest in the policy, and when they are American hospitals, their position is usually that they are entitled to payment of 100 per cent of their billed charges up to the maximum coverage provided by the policy,” he said. “They argue that an insurer must pay the billed amount, or accept whatever discount the hospital might be offering, even when the charges exceed the hospital’s average reimbursement rate by many multiples.”
Insurers, however, intend to cover only the reasonable expenses incurred by their insureds, continues Reed: policy wording should thus be used to spell out this intent. “Is the term ‘reasonable expenses’ defined? It should be. We like it to be based on a verifiable benchmark such as Medicare. A corresponding exclusion for charges that exceed the reasonable value of the services or supplies is further reinforcement of this intent,” he told ITIJ.
To help ensure that directional care and case management measures can be effective, Reed says, policies ought to include provisions detailing the consequences of failing to call the designated assistance provider as soon as possible, along with benefit differentials between providers in and out of networks.
“Finally,” adds Reed, “a forum selection provision is highly recommended. Policies generally indicate that they are governed by the laws of the jurisdiction in which they were issued. This is known as a governing law clause, and it is important. Forum selection goes a step further and designates the forum to which a dispute must be brought. It can be the courts of the jurisdiction where the policy was sold, or it could be an arbitration venue. Either way, it is useful for this to be someplace other than the American hospital’s backyard!”
Not so small print
Christian Deloughery, CEO of Dubai-based Assistance Group Menasa, finds the arguments for tighter wording in policies for US travel less than convincing. “It’s naïve to think that in emergencies the problem can be tackled through the wording. When you are sick and you need assistance, what happens in reality is that the patient would go or be taken to the nearest hospital, and we would be contacted once he or she is there. In many cases, the policyholder will be in a hospital that’s not within the assistance company’s network. Then we have to find out whether the hospital will accept your terms of payment or not.”
He says policy wording is not a problem peculiar to travel cover for US-bound customers. “It’s general; I wouldn’t narrow it down only to the US. The biggest first hurdle to overcome is always to determine whether the patient has pre-existing conditions. Once you have a case, it’s vital for the policyholder and the insurer to have a medical assessment, and that will determine if there’s existing pre-condition. That first examination will always be covered, because it has to be covered, whether it’s in an approved network hospital or not. From thereon, it could become difficult if there’s an existing pre-condition, because most insurers would refuse coverage for any future treatment, and of course that is a major factor in the US, where healthcare is very expensive. The factor that puts the spotlight specifically on travel in America is not so much policy wording but the cost of healthcare there, and that’s why premiums for cover there are more expensive.”
Deloughery is skeptical, too, about the argument for policy wording that would in a dispute be sufficiently comprehensible to all parties – travellers, medics, administrators, lawyers, and the judges or regulators making a decision on a rejected claim.
“Wording of that kind could double the length of the small print that nobody would read, and policy summaries would also be much longer and complicated," he said. "Insurance policies are already complicated. Of course, we ought to read everything, but in our busy lives we just don’t read the small print, especially when cover is being bought online. My opinion on that is that it would not in emergencies prevent people going to hospitals outside the network. It would look after the interests of underwriters and insurance companies, but certainly not those of policyholders, and it wouldn’t necessarily help to reduce costs.”
It’s naïve to think that in emergencies the problem can be tackled through the wording
It would, he suggests, be of little if any help to customers in the Middle East. “Many of the people travelling from this part of the world to, say, Schengen zone countries, do not look at travel insurance as something from which they might benefit. They see it as a mandatory requirement of governments in the Schengen area; to get a visa, they must have travel insurance. The travel cover is just a means to obtain a visa, and very seldom do they read the policy wording.”
That, then, guides us to the unanswered question. Tighter policy wording would help assistance and insurance companies to curb medical costs in the US, but could that be achieved without yet more fine print in policies that are already averaging 29,392 words and taking, for buyers who have the time and resilience, 88 minutes to read, if not comprehend? Probably not; but it would certainly protect insurers’ bottom line to the extent that they could continue to offer affordable comprehensive cover for travellers to the US. Giving assistance providers the power to negotiate optimum cost savings on their behalf through more explicit policy wording around networked hospitals and patient steering, insurers are practising one of the most effective forms of cost control available to them when it comes to coverage for the US. ■