Cover America: Denied insurance because of a medical coding error

Consumer Reports News: August 25, 2008 05:13 PM

With all manner of high costs, limited protections, and confusing fine print, it’s tough going it alone in the health-insurance market. It’s all the more intimidating for those whose health history is being quietly tracked by a little-known insurance-industry group called MIB.

Few people realize MIB, formerly known as the Medical Information Bureau, has a file on them. Like a credit-reporting agency, MIB monitors virtually every aspect of a person’s health care. When someone applies for individual health-care coverage, the application is routinely run through MIB's huge database of health and medical information. Insurers effectively use the MIB data for health-insurance applicants like they use motor-vehicle administration records for auto-insurance applicants, adjusting premiums or even denying coverage based wholly or in part on what is in a person's MIB file.

Consumer Reports Health's Cover America Tour realized the impact of MIB when we visited Sheila (above) in Gulfport, Miss., the day after her 50th birthday. She and her granddaughters welcomed us in and shared some leftover lemon cake from the previous day's celebration.

Sheila was surprised when she was rejected for an individual health-insurance policy by three different companies. She was even more shocked when she learned why: Her record with MIB listed her as having a history of Chronic Obstructive Pulmonary Disease (COPD). Sheila does suffer from asthma, but COPD is supposed to be used to indicate more severe diseases of the lungs, such as emphysema or severe bronchitis. No company would insure her with this damaging mark on her record.

Sheila eventually traced the problem to a coding disparity at her doctor's office. She says letters and phone calls to both her doctor and MIB have been to no avail, and the problem remains uncorrected on her record, effectively blocking her from obtaining individual health coverage.

So just who is behind MIB? Well. That would be the nation's insurance companies. The more than 470 insurance companies that are members of the group provide the medical information that MIB plugs into its huge database.

MIB in turn uses the information to protect the insurance companies "from proposed insureds who knowingly or unknowingly omit information about their insurability on their applications," according to its own Web site. MIB says it saves insurance companies $1 billion a year from fraudulent applications and claims.

That's nice protection for insurers—an exotic form of self-insurance for them, really—but what about people such as Sheila, who through no fault of their own are being denied health coverage in whole or in part because of faulty MIB information?

Sheila now spends most of her time looking for a job and watching over her granddaughters. She realizes perhaps her only shot at getting decent medical coverage is by finding a job that comes with health insurance. But the job prospects in this Hurricane Katrina-battered community are not good.

"I am not even close to retirement age, so my future looks grim at best," she told us.

—Meagen Bohne, campaign organizer

Visit Cover America Tour to see more videos of the people we're talking to across America, and to share your own health care story.

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