CONSUMERS : Crossing Swords With Insurance Firms

Question: I enrolled with my family in the Blue Cross Prudent Buyer health plan a few years ago. About two years ago I gave birth to a premature baby who needs physical therapy to learn how to walk. The treatment is two or three times a week, and 80% was paid by Blue Cross. The cost is $125 for a 50-minute session, provided I use approved facilities, which are at Cedars-Sinai Medical Center.

As of Aug. 1, 1988, however, Blue Cross Prudent Buyer has limited all physical therapy they will pay for up to 12 sessions per year at $25 per session, again at Cedars-Sinai--which means that I must pay the rest of the charge myself. As my son needs therapy two or three times a week, this is a great hardship on me.

Blue Cross claims that they are legally correct because there is a sentence in the contract that allows them to change any, or all, rules, providing they give 30-day notification to the consumer. This is fine if a new subscriber is given the opportunity to decide if he wants an insurance company without physical therapy benefits. But what about a subscriber, like me, who could not change policies because the child would be determined to have a “pre-existing condition”?

Is it fair? Is it legal? Can the insurance companies put a sentence in their contract that exempts them from honoring the contract if they choose to? Could they decide tomorrow that dialysis or chemotherapy is no longer covered, even though the patient depends on it, and contracted for it?


What can I do regarding this issue? --Z.A.

Answer: It’s a tough one, all right, and the questions of “is it fair?” and “is it legal?” get caught in the realities of today’s escalating medical costs.

Yes, of course, it is legal for a health insurance company to change its rules covering benefits as long as both the subscribers and the California Department of Insurance are notified of those changes on a quarterly basis. Downward scaling of benefits, according to Charles Coleman, the public relations spokesman for Blue Cross of California, isn’t done lightly, frivolously or selectively.

It can’t be done at all, in fact, unless the change in the benefits is applied to all subscribers--not just those immediately impacted by the changes.


In the case of physical therapy, Coleman adds, Blue Cross got hit by the double-whammy of “very high utilization and sharply escalating costs.” As a result, the company “felt it necessary to either put restrictions on physical therapy or increase the premiums through the roof for everyone.”

A good part of the problem with physical therapy, according to Judy Penman, the underwriting services bureau supervisor for the California Department of Insurance in San Francisco, is that--because of the large number of chiropractic patients using it--"there has been a lot of overusage, and the insurance companies have come to regard this more as maintenance rather than as therapy and have sharply cut back the number of treatments covered.

“Blue Cross,” she continues, “changed their guidelines on physical therapy some time ago to restrict it to short-term therapy after an injury or surgery and, even then, found that the utilization far exceeded premiums and that if they were to increase the premiums to cover unlimited therapy it would be exorbitant. They’ve got several different plans--one limits the subscriber to 12 visits a year, another limits him to 25.”

The Department of Insurance’s Penman wonders, however, if your son’s use of physical therapy as a corrective treatment was taken into account under Blue Cross’ own guidelines, or whether someone, arbitrarily, simply decided that it was being used for maintenance. In her discussions with Blue Cross representatives about your case, however, she did discover a few cases that were considered by Blue Cross to be exceptional--one involved a child with multiple sclerosis--and a compromise physical therapy regimen, and premium structure, was worked out.

In the meantime, Penman assured us that she is writing to you for more information--you neglected to give me your policy number for instance, or your phone number, or she would have contacted you by now. She promises to investigate your case thoroughly.

Both Penman and Blue Cross’ Coleman suggest that you write to Blue Cross yourself, requesting a “Medical Review Board hearing.” This in-house review will look into it and make sure that Blue Cross’ own guidelines were followed, that you weren’t the victim of someone’s arbitrary action, and will see if you qualify for any sort of compromise arrangement.

“If she gets turned down there,” Penman adds, “there’s one last option open to her. She can request a ‘Medical Society Review’ from Blue Cross. This will bring in outside doctors to investigate the whole thing.”

We still can’t hold out a big, beaming ray of sunshine for you. Blue Cross--and it’s a position in which the state’s Judy Penman agrees--is leery of making exceptions in matters like this. But you still have a couple of doors to open first.


Ask for the Medical Review Board hearing by writing to Rebecca Kapustay, vice president, operations, Individual and Small Group Division, Blue Cross of California, P.O. Box 70000, Van Nuys, Calif. 91470.

Good luck, but don’t build your hopes up too much, yet.

Q: I was interested in your recent column about the elderly gentleman who was pressured into taking additional life insurance that he neither needed nor wanted. It certainly is a complex field, and I’m wondering if there are any guidelines for someone who suspects that he does need more insurance.--B.J.

A: There’s some pretty good literature on the subject you might study. One is an 11-page booklet that is available without charge right here in the state. Write to the California Department of Insurance, 600 S. Commonwealth Ave., Los Angeles, Calif. 90005, and request a copy of “The Buyer’s Guide to Life Insurance.” The department also has a toll-free hot line number for consumers with insurance questions: (800) 233-9045.

A more comprehensive look at the life insurance industry is also available from Consumer Reports Books, “Life Insurance: How to Buy the Right Policy From the Right Company at the Right Price” (290 pp, $12, Consumer Reports Books, 110 E. 42nd St., New York, N.Y. 10017).

Campbell cannot answer mail personally but will respond in this column to consumer questions of general interest. Write to Consumer VIEWS, You section, The Times, Times Mirror Square, Los Angeles 90053.