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Self-insurance: Millions of workers have health plans that their employers fund — and they may not know it

This article originally appeared in the Richmond Times-Dispatch

Mechanicsville resident Steve Plourde has trouble sleeping most nights.

The pain jolting across his lower back, between his hips, is too aggravating.

His situation isn’t much better during the day. He has not been able to work since late August, and most of the time he putters around his house, now dealing with depression on top of his physical discomfort.

He needs an operation on his sacroiliac, or SI, joint — which is in the pelvis and helps to support the spine — to relieve the pain. Two physicians have told him he needs a fusion in the joint, but his insurer has denied his request.

There is no end in sight for Plourde. He, like about 88 million other U.S. workers, has no recourse beyond the appeal process to fight the denial, because his insurer also is his employer.

Plourde and his wife, Brenda, work for Bon Secours Health System, which is a self-insured company — meaning it is responsible for paying medical claims and covering the health care costs of its employees rather than paying monthly premiums to an insurance company.

Thousands of companies, including dozens in the Richmond region, are self-insured. Of the 147 million employees in the U.S. with employer-sponsored health care, 60 percent were enrolled in self-insured plans in 2015, according to the Employee Benefit Research Institute.

Many employees do not know they have a self-insured medical plan. They mistake a third-party administrator — usually major insurers such as Anthem, Aetna or Cigna — as the health care provider.

But the third-party administrator does not pay claims — it only processes claims and handles employers’ provider networks. Self-insured health plans shift the risk of paying for medical claims from the insurer to the employer.

“They’re subject to less state regulation — or less regulation overall — but they still have an interest in making the employees happy,” said Peter Cunningham, a professor at Virginia Commonwealth University’s Department of Health Behavior and Policy.

Self-insured health plans allow companies to save money, but many employers still offer a wide variety of benefits to their employees and usually have the flexibility to develop plans that cater exactly to employees’ health needs.

Yet a fundamental difference between self- and fully-insured plans is that those covered under self-insured plans cannot get help from the state government in cases of claim disputes.

“I think most people are probably surprised to know the limited recourse they have if they have a dispute with their self-insured plan,” said Hunter W. Jamerson, a Richmond-based health care attorney with Macaulay & Jamerson.

Many workers have virtually no advocate to help them in their fight with their self-insured employer and the third-party administrator.
The human resources department ultimately is responsible for the plan’s management, and sometimes it can step in during claim disputes to help the employee. But there is no requirement that HR must help the employee and, sometimes, depending on how the employer’s plans are set up, HR cannot step in, experts say.

Plourde is stuck between his employer and the third-party administrator, Aetna, which has deemed his surgery experimental. Bon Secours’ summary plan description, which dictates what health benefits his plan covers, does not cover experimental procedures.
Plourde is struggling to convince Bon Secours and Aetna that his surgery is medically necessary. His first and second appeals of his claim denial were followed by second and third denial letters.

The Plourdes are preparing to sell their house early next year, after their two sons return home for a visit during the holidays. Brenda Plourde said they were not in a hurry to move until they spent all their savings on her husband’s pain management.

“Some people don’t have the money to do that, but thankfully we had” that money available, she said. “But now we’re out of money, and we’re out of options.”


Every insurance company that sells health coverage in Virginia must follow state regulations and answer to the State Corporation Commission’s Bureau of Insurance — except self-insured plans.

“It’s like comparing apples to oranges,” Jamerson said. “Because of the flexibility, the employer can offer a Cadillac plan, or the employer can offer the bare-bones plan — it’s ultimately up to the employer.”

Self-insured health plans follow guidelines put in place by the federal Employment Retirement Income Security Act — or ERISA — which excludes them from following state regulations.

The plans instead are regulated at the federal level through the U.S. Department of Labor, which does step in and help consumers if the plans are being mismanaged.

But the Labor Department is limited in what it can do, experts say. It cannot make a factual judgment as to whether a surgery or a procedure is truly considered experimental, for example. It focuses mostly on how plans are administered.

“(The Labor Department) doesn’t have the resources to investigate complaints about disputes,” said Carolyn Engelhard, the director of the University of Virginia School of Medicine’s health policy program. “There are no real consumer protections.”

For those with fully insured plans — meaning the employer pays premiums to an insurance company that is responsible for paying claims — the state’s Bureau of Insurance will help with appeals, complaints and grievances the employee has with the insurer.

“We help people through the internal appeal process with their managed-care plan, but it has to be a fully insured plan, and a lot of the large corporations that provide health insurance to their employees set up self-insured plans, and those fall outside of our regulatory jurisdiction,” said Tom Bridenstine, manager of the bureau’s life and health division.

Bridenstine said he has no idea how many people in Virginia are covered by a self-insured plan, because the companies do not report to Virginia’s Bureau of Insurance.

ERISA does not have any transparency requirements. Companies are not required to disclose to their employees that they are self-insured, or that employees will not get help from the government in cases of claim disputes.

While Virginia law has numerous required benefits a health plan operating in the state must cover, ERISA does not dictate what benefits self-insured plans must include.

Since ERISA was passed in 1974, other laws have added some regulation to self-insured plans, such as the Affordable Care Act and the Health Insurance Portability and Accountability Act, or HIPAA.

The Affordable Care Act implemented appeals regulations on self-insured plans, said Parker McKenna, an expert with the Society for Human Resources Management, a national HR group.

McKenna said that if an appeal process escalates far enough, for example, the employer must bring in medical experts as third-party reviewers. They then review whether the claim is medically necessary.

But the third-party reviewers are not required to meet with the employee, McKenna added, and usually make their decisions based on medical records.


A slew of large employers — with more than 100 employees — in the Richmond area and Virginia offer self-insured health plans, including VCU Health, HCA Virginia, Dominion Resources Inc., CarMax Inc. and Altria Group.
Many WestRock Co. employees are covered by a self-insured plan, but some remain fully insured as a result of various mergers and union agreements it has made.

Large employers are far more likely than small businesses to have self-insured health plans, because they depend on a large risk pool. Businesses can save the monthly premiums that otherwise would be paid to a health insurer. Premiums that employees pay go to the employer to cover the health costs.

Self-insured employers do have incentives to ensure their workers are satisfied with their health plans. They also have more flexibility, McKenna pointed out. “That flexibility is not afforded to fully insured health plans, and I think that’s a nice thing for a lot of employers, especially when you’re trying to address issues like employee engagement or turnover or recruit the most talented employees possible,” he said.

Before the Affordable Care Act was passed, U.Va.’s Engelhard said, 98 percent of companies with more than 200 employees already provided health insurance to their employees.

“They didn’t have to. It was voluntary,” she said. “Employers offer health insurance because it is the number one benefit employees want — they use it as a recruitment and retention benefit.”

Having a self-insured plan sometimes can act to the employee’s benefit, Bridenstine said, because they can turn to their human resources departments for help. But there are times when workers do not want to reach out to HR, he added.

If a person has a sensitive health issue, for example, the employee may be hesitant to disclose it to an HR representative out of embarrassment or fear that it will affect employment. In some cases, he said, he has seen HR respond to an employee and resolve the situation completely, telling the third-party administrator to pay the claim. Other times, HR is not at all helpful.

“(The employee) would tell us that when they talk to HR, it was either incredibly helpful or HR told the person to get lost,” Bridenstine said. “One extreme or the other.”


Plourde’s issue was not resolved after he reached out to his HR department. He has hired an attorney to help him with an external review of his case, which he is now pursuing, but so far the process has been slow and aggravating, he said.

He and his wife want him to get back to work. Plourde, who works in quality assurance at Bon Secours, is nearing the end of the 10 weeks he took off through the Family and Medical Leave Act. “If you’re healthy, the insurance is great, you don’t know any difference. We’re healthy, we’re young, our kids are grown — we just want to work and do what every other American wants to do,” Brenda Plourde said.

His pain is rooted in a 1991 incident when, while working for a printing company, he lifted paper and ruptured a disc in his spine. After that event, he underwent spinal surgery and, since then, he has dealt with several bouts of pain. Twice the pain was treated with spinal fusion — in which two discs in his spine were fused together.

His last spinal fusion was in 2011, and he has been dealing with the pain from his SI joint since 2013. He has tried numerous treatments to avoid surgery, including two rounds of physical therapy and platelet-rich plasma injections that were supposed to fix the problem. But the injections did not work and cost the Plourdes $1,000.

That’s not to mention the thousands of dollars spent on special shoes to support his back, a zero-gravity chair, and numerous belts that were supposed to mitigate the pain but provide little comfort.

“We’ve thrown thousands (of dollars) at this over the last two or three years,” Plourde said.

The only relief he has is through the drug Percocet, an opioid that he and his wife worry he will become addicted to.
Brenda Plourde said seeing her husband in this state has taken a mental toll on her as well. She has started going to the gym regularly to ward off depression.

Aetna, the third-party health care administrator, said Plourde’s SI joint fusion surgery is considered experimental because an MRI in September 2015 did not demonstrate any herniation, stenosis or hardware difficulties from his previous lumbar spinal fusion.

Aetna said Plourde’s second appeal was reviewed by an orthopedic medical director.

Plourde gave Aetna and Bon Secours permission to release details about his case.

Bon Secours declined to comment on his medical situation, citing patient confidentiality.


Spinal surgeries like the three Plourde has received have been contested for the past several years within the medical community for their efficacy — their frequency is not justified by their results.

Bridenstine with the state’s Bureau of Insurance said he sees spinal surgery claim disputes come to his office from people covered by both self- and fully insured plans.

While Plourde is convinced that his previous spinal fusions indeed have caused the pain in his SI joint, he does not necessarily want another surgery. He just wants to stop the pain.

But it is the only option he has been told will work.

For him, an SI joint fusion is the end of a long line of failed treatments and consistent pain. But he would take any other option, if only someone — his physicians, his employer, anyone — would give him one.

“It’s one thing if you don’t want to cover it, but tell me to do something else. Give me another option,” Plourde said. “Don’t say, ‘Have a nice life.’”

This article originally appeared in the Richmond Times-Dispatch