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Ian Sigalow

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The Health Insurance Trap

Posted: 10/05/09 04:54 PM ET

At the center of the health care debate is a belief among many Americans that our private health insurance system isn't working. If you had asked me a year ago, I would have said that the government shouldn't intervene in health insurance. Fast forward to today, after a cancer diagnosis and four months of chemotherapy, and I have a very different opinion on private health care. This is my story.

I was diagnosed with Seminoma in August of 2008 at the age of 29. Seminoma is a type of testicular cancer that affects one percent of all men, and it is the most common type of cancer among men aged 20 to 35. It is often cured by surgery alone, but advanced disease requires either radiation therapy or chemotherapy in addition. I was unfortunate. By the time I was diagnosed, the cancer had spread to my lymph nodes, so I had to undergo chemotherapy.

My insurance provider was Oxford Healthcare, a subsidiary of UnitedHealth, the largest private health insurer in the United States. When it comes to testicular cancer, the Centers of Excellence are Indiana University, which treated Lance Armstrong, and Memorial Sloan Kettering Cancer Center (MSK) in New York. Not only is MSK a great hospital, but it is also three blocks from my apartment. Chemotherapy patients have suppressed immune systems, so the usual ways of getting around New York, such as riding the subway, are not recommended. Like most New Yorkers I also don't have a car. It was comforting to know that I could get to the hospital without an ambulance in case of emergency, which actually happened twice during treatment. Unfortunately MSK was out of network with my health plan.

I was rushed into chemotherapy because of my staging, so I had ten days to find a way to get MSK in network, either by upgrading plans or switching coverage. After a week I realized that neither option would work. There wasn't enough time to switch plans because the paperwork takes weeks. I also couldn't upgrade my plan because I work for a small business, and Oxford's better plans are reserved for large employers. I was willing to pay any amount to get in-network access but there were no options. However, I learned that Oxford offers an "in-network exception", where in-network privileges are granted to out-of-network hospitals based on doctor referral. I was told that if three Oxford oncologists referred me to Memorial Sloan Kettering, an in-network exception would be granted.

Oxford supplied me with a list of 300 doctors to call. Many of the doctors on Oxford's list were no longer practicing, or had specialties outside of oncology. I found two databases online (one of which, Vitals.com, my firm later invested in) and spent the next few days researching and calling doctors with the help of a health advocate. After a lot of work I reached ten oncologists. On consultation all ten told me that I should go to Memorial Sloan Kettering based on the advanced state of my disease.

When I relayed my findings to Oxford they reneged on the offer they initially gave me and the health advocate. In addition to my calls, Oxford was going to call another set of doctors to see if they could find someone in-network to treat me. I asked the woman from Oxford why I was told to make the calls if Oxford was planning on doing it themselves. Her response was, "We were hoping you wouldn't bother."

A few days later Oxford called with their feedback. I saved the voicemail at home -- partially because I was so infuriated and partially because the timing was so prescient. Oxford waited until late Friday August 22 to call, knowing that I was scheduled for chemotherapy at MSK the following Monday morning. Oxford was very careful with their explanation, "We cannot tell you not to go to Memorial Sloan Kettering, and we cannot tell you to delay treatment. However, we found three doctors in New York who agreed to meet with you. It will require a new consultation..." In order to get Oxford's full coverage I had to delay treatment. I made the decision to go out-of-network.

I tried to quantify in advance the costs of out-of-network versus in-network, but it was impossible. I had all the procedure and drug codes, and I had the reimbursement rates from Oxford based on my out-of-network benefits. The best estimate of my out-of-pocket expenses at MSK was somewhere between $5,000 and $7,000.

The final bill for treatment came to $68,000. My share of this bill, after Oxford paid their usual and customary, was $35,000. I later called the three doctors that Oxford had recommended, and based on more complete information they said that I made the right decision to go to MSK. I also found out from a former Oxford executive that patients with out-of-network benefits are almost never granted an in-network exception, so that battle was lost before it began.

What surprises many people is that the largest part of the bill was not doctor's fees -- those were only $3,000. The big piece was the medicine. Because I was out-of-network, Oxford's negotiated rates on medicine with the hospital didn't apply. This means that Memorial Sloan Kettering can charge whatever they want and a patient has no recourse. One example of how this adds up: I was prescribed three shots of Neulasta, which is a white blood cell booster. At drugstore.com, a single shot of Neulasta costs $3,500. At Memorial Sloan Kettering, it was $5,600. Oxford's usual and customary reimbursement was $2,600. I didn't have a choice, I was left with $9,000 out of pocket for three shots. It is remarkable that three shots can cost as much as a down payment on a house.

As I sit here a year later and write this I can't help but think I am one of the lucky ones. I survived cancer, which 30 years ago would have been a death sentence. I also had health insurance, which means I am better off than 40 million Americans. However, I was astounded at how little health insurance actually covers when you get sick. And one final addendum to this story: As of June 30, 2009, Oxford added Memorial Sloan Kettering to their network, although they refuse to make it retroactive for my treatment nine months earlier. I am still fighting with both the insurance company and the hospital, and may never find a way out of the health insurance trap.