CalPERS & Anthem’s Standardized Representations

Facts of Class Rep                              CalPERS and Anthem’s Standardized Representations

Definition of Allowable Amount              Fairhealth.org

CalPERS’ and Anthem’s Standardized Representations  

The content of CalPERS’ standardized PPO inducements and other publications has remained substantially the same over the period between January 2006 and December 2014. Exhibits 24-26, 28, 39 -53, 55, 60.

The PPO coverage offered by CalPERS and Anthem was explicitly directed at, and the only coverage made available to, those CalPERS members who were seeking health insurance benefits for non-emergency care by “out-of-network” physicians. CalPERS’ and Anthem’s promotional materials have been consistent through the time period. Exhibit 24-26, 28, 39 -53, 55, 60.

Consistently from 2006 to 2014, CalPERS and Anthem represented in their Evidence of Coverage (EOC), which was made available after contracting, that it/they would calculate the “Allowable Amount” at the same rate for PPO providers as Non-PPO providers. Exhibits 24-26, 28, 41-45.

In their publications, forms and each year’s detailed Evidence of Coverage (“EOC”) booklet for a particular PPO plan, CalPERS and Anthem represented that they were offering a PPO plan that was consistent with industry standards, including that they would provide benefits at a specific percentage of the usual, customary and reasonable (UCR) rate and/or appropriate reimbursement amounts. Exhibits 3-55, 59-60.

CalPERS and Anthem represented in the EOCs that the deductible or co-pay would increase 100% when using “out-of-network” service providers (from 20% to 40%).

CalPERS and Anthem fail to disclose by example or otherwise that the single biggest detriment involved in buying a PPO plan and then “going “out-of-network”” is a greatly reduced “Allowable Amount.”

Representations That Allowable Amounts Would Be the Same “In-Network” or “Out-of-Network”

By way of example consistently applied, from 2006 to 2014, CalPERS and Anthem represented that it/they would calculate the “Allowable Amount” at the same rate for PPO providers as Non-PPO providers. For example, page 25 of the Evidence of Coverage (EOC) for the PERSCare Basic Plan Preferred Provider Organization effective January 01, 2008 – December 31, 2008 reads:

Preferred Provider Non -Preferred Provider
Allowable Amount – the allowance or negotiated amount under the Plan for service provided (see definition on page 91). Note this is only an example. “Allowable Amount” varies according to procedure and provider of service $35,000 $35,000

 

(Exhibit 24, page 25, PERSCare Plan 2008)

This identical chart is also presented in the PersChoice Basic Plan EOC for January 1, 2009 covering the period of January 1 2009 to December 31, 2009. Exhibit 25, page 31, 2009 PERSChoice Plan.

This identical chart is also presented in the PERSChoice Basic Plan EOC for January 1, 2009 covering the period of January 1 2010 to December 31, 2010. Exhibit 25 and Exhibit 26, page 31, 2010 PERSChoice Plan.

The identical chart is also presented in the PERSChoice Basic Plan Preferred Provider Organization evidence of coverage effective January 1, 2011 – December 31, 2011. Exhibit 44, page 26, 2011 PERSChoice Plan.

A nearly identical chart is also presented in the PERSChoice Basic Plan Preferred Provider Organization EOC effective January 1, 2012 – December 31, 2012. Exhibit 43, page 26, 2011 PERSChoice Plan. The numbers have changed but the parity of Allowable Amounts between the two categories remains the same.

 

Preferred Provider Non-Preferred Provider
Allowable Amount – the allowance or negotiated amount under the Plan for service provided (see definition on page 91). Note this is only an example. “Allowable Amount” varies according to procedure and provider of service $75,000 $75,000

 

A nearly identical chart is also presented in the PERSChoice Basic Plan Preferred Provider Organization EOC effective January 1, 2013 – December 31, 2013. Exhibit 45, page 27, 2013 PERSChoice Plan. Again, the numbers have changed but the parity of Allowable Amounts between the two categories remains the same.

 

Preferred Provider Non -Preferred Provider
Allowable Amount – the allowance or negotiated amount under the Plan for service provided (see definition on page 91). Note this is only an example. “Allowable Amount” varies according to procedure and provider of service $85,000 $85,000

The material terms that were represented were that “Allowable Amount” should have been the same, resulting in the following:

Heinz when Dr. Walker was a Preferred Provider Heinz when Dr. Walker was NOT a Non -Preferred Provider
Billed Charge– the amount the provider actually charges for the covered service provided to a Member $420 $420
Allowable Amount – the allowance or negotiated amount under the Plan for service provided (see definition on page 91). Note this is only an example. “Allowable Amount” varies according to procedure and provider of service  $ 299.57[1]

 

(EX 14, page 3)

 $ 299.57

 

(EX 14, page 3)

 

Anthem and CalPERS Secretly Calculated “Allowable Amount” at a Huge Discount

Instead, the calculation of the “Allowable Amount” is drastically reduced for participants who have used non-PPO providers or incurred “out-of-network” expenses.[2].

Therefore, for Heinz,[3] the reality was:

 

Heinz when Dr. Walker was a Preferred Provider Heinz when Dr. Walker was NOT a Non -Preferred Provider
Billed Charge– the amount the provider actually charges for the covered service provided to a Member $420 $420
Allowable Amount – the allowance or negotiated amount under the Plan for service provided (see definition on page 91). Note this is only an example. “Allowable Amount” varies according to procedure and provider of service  $ 299.57

 

(EX 14, page 3)

 $113.31 (2008-2010)

$128.41 (2010-07/11)

$76.91 (8/11-11/2013)

$136.86 (5/13-present)

 

Exhibit 23, page 1

 

 

Then Heinz was paid, as the plan clearly provides, 60 percent of the reduced Allowable Amounts.

Representations of “Plan Payment”, Reimbursement, and Other Terms Based on Allowable Amount

The PPO plan documentation does not put one on sufficient notice of the changed “Allowable Amount,” the hidden exclusion of reduced “out-of-network” reimbursement, and reduced reimbursement, especially to the level of disclosure required by a fiduciary or in an insurance contract. Exhibit 24-26, 28, 41-53, 55.

The EOCs provide that the difference between reimbursement for “in-network” care and “out-of-network” care would be in the percentage of reimbursement of the “Allowable Amount.” Exhibits 24-26, 28, 41-53, 55. Buyers of PPO plans expect to receive overall a smaller reimbursement amount because they have to pay a greater percentage of the “Allowable Amount” for “out-of-network” medical expenses, but they expect the difference to be built into the differing percentage of the co-pay but not also suffer a large reduction in the “Allowable Amount.” Exhibits 1-23, 54.

The “Plan Payment” is the percentage of the “Allowable Amount” that CalPERS or Anthem will pay. Since the “Plan Payment” (in the EOC and other documentation) is calculated at 60 percent of the “Allowable Amount,” the amount of the Plan Payment is reduced in tandem percent-wise as the “Allowable Amount” falls. The reduced “Allowable Amount” starts a cascade of substantially lower reimbursements. Exhibits 3-55, 59, 60, 61.

 [1] Walker was billed at $420, but his “Allowable Amount” in-network was around $320 at its peak, and $299.57 at an earlier point in time.

  [2] At the same time and without any explanation or logic, Anthem and CalPERS afforded a higher “Allowable Amount” to a Ph.D.-holding practitioner in Dr. Walker’s practice than to the services of Dr. Walker, a board-certified physician  with more experience.

  [3] Potential enrollees were not provided with the EOC before choosing plans. Instead, they received only marketing materials and summaries that gloss over any particulars about the “Allowable Amount” and how it is determined. In addition, once a participant was enrolled, the participant must act affirmatively to request a copy of the EOC.