The Numbers Don’t Add Up

Vermont’s ground breaking denied claims disclosure law has been making a lot of news lately. Last year VPIRG worked to pass one of the nation’s strongest disclosure requirements for denied claims and non health related spending. Earlier this year Falko Schilling, VPIRG’s Consumer Protection Advocate, presented our initial findings to the House Health Care Committee. The Numbers showed that Cigna, the state’s only for profit insurer, had the highest claims denial rate at 21% followed by MVP (16.3%), Blue Cross Blue Shield of Vermont (7.6%), and the Vermont Health Plan (5.3%). To see VPIRG’s initial analysis click here.

According to former insurance company spokesman turned whistle blower Wendell Potter, Cigna’s for profit status is likely the reason that their denial rates were higher than all other insurers.

“The longer you can delay paying a claim, the more investment income you can make on the premiums you take in from your policyholders. And investment income is especially important to for-profit insurance companies because it contributes significantly to the bottom line. Shareholders and Wall Street financial analysts like that, even though much of the money on which the investment gains were made should have been paid to health care providers.”-For the full article click here.

The reports also showed much more than just high denial rates on the part of Cigna. After a careful reading of the information provided it was clear that Cigna’s numbers just didn’t add up.

The first area where Cigna failed to provide necessary information was in the area of denied claims. Denied claims are divided in to two categories, denials that have direct “member impact” and those that are “administrative” and don’t have an impact on what consumers have to pay.  Based on Cigna’s filing they denied a total of 42,139 claims in Vermont. Of these denials 30,130 were “administrative” and 6,461 were “member impact” leaving a total of more than 5,500 claims unaccounted for.

Further investigation also showed that Cigna had some glaring discrepancies between the amount of executive compensation they reported to Vermont and the federal government. The information filed with the state listed CEO David Cordani’s annual compensation at $3,970,833, while information reported to the SEC listed his compensation at $12,881,495, a difference of nearly $9 million dollars.  This trend was consistent across all of Cigna’s executives, adding up to tens of millions of unreported compensation. -To learn more about the discrepancies in Cigna’s filing click here.

After these discrepancies were reported to the Vermont Department of Financial Regulation Cigna was required to file an amended report. The new filing corrects the discrepancies in Cigna’s compensation reporting, but it still leaves 5,500 denied claims unaccounted for.

We know that this information like this will be critical as Vermonters get ready to enter the new health insurance exchange, so we will be crunching the numbers to give you an easy guide to health insurance in Vermont later this summer.

In the meantime if you want to see how insurers stacked up you can look at our initial analysis here, or check out the insurers filings for yourself.

BCBS VT

Cigna
-Original filing
-Amended filing

MVP

The Vermont Health Plan