The lack of real-time electronic verification of and authorization for health insurance coverage in the Cayman Islands is driving up costs and “the frustration level” for everyone involved, lawmakers heard Monday afternoon.
Superintendent of Health Insurance Mervyn Conolly told the Legislative Assembly’s Public Accounts Committee that the need for a real-time electronic verification system for healthcare claims has been recognized for years, but never successfully implemented.
“Unfortunately, we know what happened with that particular initiative,” Mr. Conolly said. “It’s really unfortunate. I can’t stress how much we need such a system.
“It would reduce the number of complaints we receive from healthcare practitioners from 60-70 percent … and it certainly would help the insured persons.”
What “happened” between 2014 and last year was the arrest, trial and corruption conviction of former Health Services Authority board chairman Canover Watson in connection with an elaborate scheme to funnel money from the public hospital’s patient swipe-card system, known as CarePay.
Although the CarePay cards were never used outside of the public hospitals, the former United Democratic Party government had intended at one point to expand the system to the islands’ nine private sector insurance companies. However, the system was abandoned prior to Mr. Watson’s conviction in early 2016 on fraud and corruption charges.
The Cayman Islands healthcare system currently depends on what Mr. Conolly referred to as a “fairly complex” arrangement between the nine private sector health insurance providers, the public system (Health Services Authority), the insurance companies and the patients.
Mr. Conolly said that while the government maintains stringent requirements for insurers to operate in Cayman, the insurers’ objective is to ensure the healthcare premiums they charge aren’t “outstripped” by the claims they receive from the healthcare providers.
“I don’t think we can fault them for that” Mr. Conolly said. “Where I have a problem as superintendent of health insurance is where an insured person has a plan of benefits which clearly meets the particular … episode of illness and where those claims are denied with little or no justification.”
In those instances, the Health Insurance Commission, which Mr. Conolly heads, pursues the insurer to accept the claims.
However, many insurers in Cayman and elsewhere use a process called pre-certification, or “pre-cert,” which ends up delaying payment of healthcare claims, particularly for elective surgeries and non-emergency procedures, Mr. Conolly said. The use of pre-certification is not regulated in Cayman Islands law.
“The way it operates now is that a healthcare provider can submit a claim and the insurance company can say ‘we need pre-cert on that’” he told the committee. “There are varying standards that are applied to this pre-cert.
“This really frustrates the healthcare providers, meaning that a health insurance company can use the pre-cert process, not really to deny the claim, but to delay the claim. When they do that it means that they’re questioning the attending physician as to whether the care is necessary or not. So you have a non-physician, who is questioning a physician as to whether a treatment or service is medically necessary.”
Mr. Conolly said the Health Insurance Commission was looking into the practice and would issue regulations on it if the market “could not resolve itself.”
The current method used by insurance companies to reimburse doctors, referred to as the standard health insurance fees, is there to establish “some level of reasonableness” regarding fees paid on behalf of insured patients for services, according to Mr. Conolly.
Mr. Conolly said the standard health insurance fees, or SHIFs, which have not been changed since 2005, are still being used by about 45 percent of local doctors when charging patients and their insurers for services. The doctors may charge more to patients if they wish, he said.
“Obviously, [the doctors] would prefer to have fees that are higher than the current level,” Mr. Conolly said. “But the feedback I get is ‘we can work with these fees, the problem is we need to be paid in a timely manner.’”
The cash flow issue was expressed by Public Accounts Committee chairman, North Side MLA Ezzard Miller: “When they can no longer deny, they delay, and then when they can no longer delay, they write a check … that takes two months to clear”
Mr. Conolly said implementing an electronic claims verification system would essentially solve the reimbursement lag.
“We recognize the need for an electronic verification system,” he said. “The technology is there.”
Mr. Conolly acknowledged there is some complexity involved in doing that with a system of nine different approved private sector insurers who are selling a “myriad” of plans.
Mr. Miller suggested having the Health Services Authority charge a service fee for insurance companies for the implementation of a nationwide payment verification system.
“We have to make it a requirement for each individual licensed insurer,” Mr. Miller said. “How they provide it is up to them to go and negotiate it.”