THCB UPDATE Get email updates of new posts and industry news.July 22, 2008
Mega Life parent "hurt a lot of people"
By Matthew Holt
Is this what Blackstone, Credit Suisse & Goldman Sachs want said about their investment?
"The severity of their actions certainly warranted that level of penalty. They hurt a lot of people," says Washington Insurance Commissioner Mike Kreidler, whose state and Alaska led the investigation.
Today a group of insurance commissioners handed down a $20-million fine to parent company HealthMarkets for the behavior of Mega Life & Health, and also its corporate siblings Chesapeake Life and Great West
$20 million isn’t exactly a huge fine, and it doesn’t put HealthMarkets out of business. It’ll be interesting to see whether Mega changes the quasi-fraudulent structure of its benefit plans. After all, they’ve been ruled legal in California, and my sources tell me that the medical-loss ratio is around 30 percent.
My guess is that they know that eventually they can’t stay in business this way. So they face the choice of either changing the business completely to become more worthy and less profitable, or instead to try to bleed every last dollar out of their subscriber base and semi-trained sales team. I wonder which they’ll try.
July 22, 2008 in Health Plans | Permalink
Comments
I recently spoke with the California Insurance Commissioner's office about MEGA Life & Health, after being turned down for an application to their alleged PPO via Health Markets. CIC person said if they are offering a PPO in California, which is what the Health Markets rep claimed to be selling me, they are not allowed to deny an application on the basis of pre-existing conditions, since it is a group policy.
Prior to that, I managed to speak to an underwriter at MEGA, who, among other things,
a) would not reveal her last name. When I commented that this was an unusual business practice, she said that nobody at the company gives out their last name, because they fear for their personal safety.
b) refused to provide a copy of their guidelines for approval/not.
c) would not tell me why my claim was denied, citing HIPAA regulations. Their policy is to send the reason for denial to the primary care physician.
d) revealed that MEGA has a policy of denying coverage to anyone who has ever used an illicit drug. This appears to be the policy regardless of whether there have been any detectable health consequences, and regardless of time passed, or current behavior. I asked if this meant that if someone, for example, smoked marijuana once 20 years ago, they could be denied coverage. she said "yes, we've done that" and "yes, that is our policy". I asked her to clarify if they deny coverage based on past substance abuse, or past substance use. She said use. When pressed, she said the same went for past alcohol abuse (with no attendant current or past medical conditions associated with it). In other words, if you ever binge-drank in college, and they found out about it, it would be within their policy to deny you insurance. She also tried to claim that smoking marijuana (once) "does something to your liver" and is therefore a health risk. (you could say the same thing about eating a cheeseburger, but I digress).
e) suggested I apply for insurance via California's MRMIP program, which is only for people who have exhausted their COBRA (not applicable to my situation).
f) after I questioned the need for health insurance at all, given the market conditions and value proposition, she stated that people need it not just for health coverage but for liability, as with car insurance. I stated that car liability insurance is to cover against damages/medical costs incurred to someone else, and this is not an issue with health insurance. She adamantly disagreed, stating that someone who has an infectious disease can be sued if they infect someone else, so they need health insurance to protect them re liability.
At this point I was really wondering what planet she was from. Planet Fear, I suppose.
Other aberrance:
1. MEGA cashed the check (for the first month of coverage) I sent BEFORE they denied my application, by a good 2 weeks. This is a standard operating procedure with them. She said they "were in the process" of refunding it.
I am posting this as a public service announcement.
Posted by: Anon | Jul 24, 2008 2:40:56 AM
Mega Health should be put out of business right now. After paying over $15,000.00 out of pocket for our childs treatment for Hodgkins Disease a policy that was supposed to have a maximum deductible of $8,000.00 turned out to be a sham! Not one person at Mega understands the policies they sell and our agent quit over the guilt he felt in selling us this deceptive policy. Upon researching new Health Insurance we encountered numerous agents who once worked for Mega. All of them agreed the company is a sham and offers no training for any of their employees. The woman above states the claims personel do not give out their last names, I never understood why until now. I could list all of the people we dealt with first name, last initial. They operate by shuffling you from one person to the next. It is horrific enough watching your child receive chemotherapy without having to deal with a bunch of crooks at Mega Health. How they sleep at night is beyond me.
Posted by: Margaret Popovich | Jul 24, 2008 10:43:26 AM
This fine is a mere slap on the hand as usual. These guys make 20M a day! When we kick the insurance lobbyists out of Washington, these operations will cease to exist. No logic can explain how reputed companies continue to reak havoc.
Posted by: Florida Health Insurance | Aug 7, 2008 9:10:18 PM
Health Care Problems is dedicated to gathering information for the same purpose the orthopedic surgeon gathers information: to make possible diagnosis and treatment of a problem.
-------------------
Abdulla
Alcoholism Treatment
Posted by: Abdulla | Aug 13, 2008 11:30:27 PM
Mistake ----- Not Great West -- Great West is a PPO Network uaffiliated with these organizations. Midwest National is the company you're thinking of.
Posted by: Kent Roberts | Aug 22, 2008 10:24:55 AM
God bless the internet? Hopefully this relatively new means of discloser and info. sharing will, over time weed out such nonense within our industry.
Letter exerpt -
Picking the right insurance carriers is a lot like picking the right spouse. You have to not look at the surface as much as what’s inside. That’s what I tell my wife anyway.
TAKE A CLOSER LOOK.
We are not going to mix words. Under your current health insurance plan, if you or your husband have a substantial health insurance related claim between now and when you both reach age 65, you will be responsible for medical bills in the tens of thousands of dollars that you now believe are covered.
Within this letter, please find photo copies of policy information pertaining to your current carrier.
Please note the EXCLUSIONS AND LIMITATIONS.
Think about these facts.
• Outpatient surgery – not covered
• Outpatient facility charges – not covered
• Prescription drugs – not covered
• Chemotherapy – not covered
• Cat scans,EKG,Angiogram,MRI,Upper/Lower G.I. , etc. (1000 overage per day) You can go through 12,000 dollars in 3 – 4 hours.
By all means talk, to your current agent. Me, I think it is important to see these things in writing ?
We should speak further, you can do MUCH better.
Sincerely,
Joe Jessome
Smart Health Insurance Inc.
www.SmartHealthInsurance.com
800-828-2950 (M – Sat. till 9:00 P.M)
Posted by: Joe Jessome | Sep 20, 2008 12:37:07 PM
Picking the right insurance carriers is a lot like picking the right spouse. You have to not look at the surface as much as what’s inside. That’s what I tell my wife anyway.
TAKE A CLOSER LOOK.
We are not going to mix words. Under your current health insurance plan, if you or your husband have a substantial health insurance related claim between now and when you both reach age 65, you will be responsible for medical bills in the tens of thousands of dollars that you now believe are covered.
Within this letter, please find photo copies of policy information pertaining to your current carrier.
Please note the EXCLUSIONS AND LIMITATIONS.
Think about these facts.
• Outpatient surgery – not covered
• Outpatient facility charges – not covered
• Prescription drugs – not covered
• Chemotherapy – not covered
• Cat scans,EKG,Angiogram,MRI,Upper/Lower G.I. , etc. (1000 overage per day) You can go through 12,000 dollars in 3 – 4 hours.
By all means talk, to your current agent. Me, I think it is important to see these things in writing ?
We should speak further, you can do MUCH better.
Sincerely,
Joe Jessome
Smart Health Insurance Inc.
www.SmartHealthInsurance.com
800-828-2950 (M – Sat. till 9:00 P.M)
Posted by: Alabama-Health-Insurance-1.com | Sep 20, 2008 12:42:49 PM
Hi,
There is much talk about individual insurance companies and how bad they are. Why not make recommendations on the good companies out there? Trying to find any objective information on the internet is extremely difficult.
Thanks
Posted by: KT | Oct 1, 2008 5:27:52 PM
Mega Life was and is a growing company, as with any growing company, growing pains occur. This is something every small business owner knows as a truth.
Mega Life suffered growing pains two or more years ago and was adequately punished while found to have not been criminally negligent. My question to the diligent researchers of small business health care is this: Since the public rebuke associated with Mega life's growing pains, has Mega Life corrected the noted deficiencies, or has Mega Life continued with a lack of morals and ethics?
For a growing business to encounter difficulties is certainly expected; to not correct rouge unethical conduct is unforgiveable.
As noted above, this is a wonderful age of technology and advanced communication. Thourgh this technology and communication fair play requires an ethical update on Mega Life's current business practices.
Posted by: John Entingh | Dec 4, 2008 2:50:17 AM
Mega Life was and is a growing company, as with any growing company, growing pains occur. This is something every small business owner knows as a truth.
Mega Life suffered growing pains two or more years ago and was adequately punished while found to have not been criminally negligent. My question to the diligent researchers of small business health care is this: Since the public rebuke associated with Mega life's growing pains, has Mega Life corrected the noted deficiencies, or has Mega Life continued with a lack of morals and ethics?
For a growing business to encounter difficulties is certainly expected; to not correct rouge unethical conduct is unforgiveable.
As noted above, this is a wonderful age of technology and advanced communication. Through this technology and communication fair play requires an ethical update on Mega Life's current business practices.
Posted by: John Entingh | Dec 4, 2008 2:55:56 AM
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