Big companies prune health insurance rolls

Corporations pare costs by targeting grown children, divorced spouses and others getting insurance coverage improperly.

By Robert Kazel — Posted Oct. 18, 2004

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A growing number of large companies grappling with rising health care costs are putting their insurance plan membership under scrutiny to find plan members claimed by employees as dependents who aren't entitled to coverage.

Some corporations, including Ford Motor and DaimlerChryler AG, are saving millions of dollars in company-paid premiums by bumping these "independent" dependents off the insurance rolls.

Although it isn't yet clear if any of these companies or their insurers will seek to recover past medical reimbursements paid to doctors in connection with these ineligible patients, at least one company -- Ford, which has trimmed 60,000 plan members using dependent audits since 2000 -- said it is requiring employees to pay back that money, but is not requiring physicians to do so.

Dearborn, Mich.-based Ford, which said it had $3.2 billion in U.S. health care expenses in 2003 and sponsors health insurance for 560,000 workers, dependents and retirees, has been especially aggressive at trying to pinpoint plan members who don't meet the company's dependent eligibility requirements anymore. In the case of children, they could be too old to qualify, not living with the parent anymore, out of college or no longer financially dependent. Ford also has looked to find ex-spouses of employees still getting insurance, said Marcey Evans, a company spokeswoman.

At Ford, all employees periodically are asked to verify that relatives claimed as dependents remain eligible. Workers have been granted "amnesty" if they identify family members or ex-spouses getting insurance outside of the rules. Those doing so have not had to repay Ford anything.

But in those cases where employees have not taken advantage of the offer, Ford eventually has tried to remove the ineligible plan members, and employees have been required to repay the company for past premiums and medical payments, Evans said.

Typically, employees have had to pay back Ford $100 a week by payroll deduction, she said. Ford has not contacted any doctors to ask for repayment of reimbursements for these patients, she said.

In the case of DaimlerChrysler, whose U.S. operations are based in Auburn Hills, Mich., about 27,000 employees came forward to identify ineligible family members getting insurance, said spokeswoman Angela Spencer Ford. DaimlerChrysler made its employees an amnesty offer similar to that of Ford and also is in the process of requiring some employees to make good on past medical payments from the company. Neither Ford nor DaimlerChrysler would say how much money the company had saved because of the insurance audits.

Other large companies that have made these cuts include Cincinnati-based Proctor & Gamble, Detroit-based General Motors and Atlanta-based Delta Air Lines.

If doctors are contacted by a plan sponsor or insurer about past payments for ineligible dependents, they should check their managed care contract to see if it gives the payer the right to audit past claims and get back money mistakenly paid out for ineligible patients, said Dan Schulte, general counsel for the Michigan State Medical Society.

Such a provision is common, he said. If the contract does not have that provision, doctors might wish to consult a lawyer because "the physicians have an excellent argument that they relied on what the payer told them," he said.

"The payer is in the best position to know who its enrollees are, not the physician," Schulte said.

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