Effectiveness and Influence of Insurance Statutes and Policies on Reimbursement for Emergency Care

Larry M. Gentilello, MD, FACS, Visiting Associate Professor, Harvard Medical School, Boston, Massachusetts

Each year over 20.5 million adults in the United States sustain injuries requiring ED care.i The weighted average of currently published studies indicates that approximately 7.4 percent of these patients are intoxicated by alcohol. An additional 19.6 percent of patients who present to the ED for trauma care screen positive on an alcohol screening questionnaire, even though they are not intoxicated at that time.ii,iii,iv Overall, 25 percent of injured adult patients treated in the ED, or over five million patients, screen positive for alcohol and are potential candidates for an intervention aimed at reducing the risk of injury recurrence.

The percentage of patients with alcohol intoxication who are injured severely enough to require admission to the trauma center is even higher. Pooled data from six regional trauma centers involving 4,063 patients indicate that 40 percent of patients have a positive BAC on admission.v If drug use is included, up to 70 percent of patients test positive for one or more,vii

Trauma patients who are diagnosed as having an alcohol problem are at high risk of re-injuring themselves (and others) if the underlying problem is not addressed. A large number of federal, expert, and consensus group panels have recommended routine screening of all injured patients who present to the ED, and the provision of brief interventions to those who screen positive. viii,ix,x,xi,xii,xiii,xiv,xv

This article describes the history of insurance statutes that have an inhibiting effect on the provision of alcohol screening and intervention programs in emergency centers.

Uniform Individual Accident and Sickness Policy Provision Law

Intoxicants and Narcotics: The insurer shall not be liable for any loss sustained or contracted in consequence of the insured’s being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.”
(National Association of Insurance Commissioners, 1947)

The above law, the UPPL, permits the exclusion of insurance coverage for injuries sustained by insured persons if they are found to be under the influence of alcohol or drugs.

The UPPL originated as a model law. Insurance is a form of interstate commerce, and it is easier to do business if insurance laws do not vary significantly from state to state. The NAIC is a meeting of state insurance commissioners that provides a forum for the development of uniform policy. One of its primary instruments for maintaining uniformity is the development of model laws that are put forth for adoption by states. The UPPL was drafted as a “Model Law” in 1947 and adopted as policy by 38 states, and provisionally by 4 others (e.g., narcotics only).

The number of states with insurance laws that allow this provision is shown below.

U.S. map - click [d] for long description[d]

(National Conference of State Legislators/Health Policy Tracking Service)xvi

Impact of the UPPL on Screening
Given the extraordinary prevalence of alcohol problems in injured patients, physicians are reluctant to measure BAC because of the potential financial impact on patients, hospitals, and health care providers. A recent survey of ED BAC screening practices for injured patients was conducted to evaluate specific barriers to implementation of intervention programs. The majority of respondents (83percent) agreed that a trauma center is an appropriate setting to address a pattern of harmful alcohol consumption. However, most did not provide this service at their center. Of those who did not, 41 percent cited the threatened impact of screening on reimbursement as a key factor. The threat of insurance denials was a greater concern than cost, time, confidentiality, or the potential for offending patients.xvii,xviii

The effect of the UPPL on alcohol and drug testing may also affect clinical care. Guidelines for clearance of the cervical spine and for abdominal assessment require that patients not be under the influence of alcohol or drugs that might affect the reliability of clinical examination. The inability to exclude intoxication may increase the use of more expensive objective tests such as radiographs, CT scans, and peritoneal lavage.xix,xx

An elevated BAC may also help to explain an abnormal response to resuscitation, or to anesthetics during an operation. Acute intoxication is also a risk factor for post-operative infections in trauma patients, and is associated with a nearly three-fold increase in nosocomial pneumonia, respiratory failure, acute respiratory distress syndrome (ARDS), and aspiration.xxi,xxii,xxiii Finally, an elevated BAC or abnormal toxicology screen may identify patients who have an abnormal response to pain medications, and help to identify patients at risk for withdrawal syndromes.

The UPPL applies not only to patients who have an alcohol or drug problem, but also has an adverse financial impact on those who safely and legally use alcohol. These individuals may be injured as a result of the actions of others, or as a result of factors not under their control. An example would be a patient who sustains an ankle fracture after tripping on a wet street curb on a rainy day after having a few glasses of wine in a restaurant. These individuals may be left with large medical bills at a time when their income is reduced by the need to take time to convalesce from their injury. Physicians often cite the potential impact on these patients as a reason not to screen. This was mentioned in a recent major newspaper article on BAC testing in EDs.

“XX, a 44-year-old XX who lives in XX, XX., suffered a ruptured duodenum and other internal injuries in a 1997 car accident. Because there was alcohol in her blood, she says, her insurer didn’t cover the nearly $200,000 cost of her treatment at XX hospital, in XX. She filed for personal bankruptcy; the hospital wrote off the costs. The lesson? “Given the option, I don’t order blood-alcohol tests,” says XX, the surgeon who treated her. “And I ask the ER docs not to order them.”xxiv

In addition to the impact of the UPPL on screening, intervention, and acute management, it also has an adverse impact on public safety. Trauma centers provide a “safe haven” for intoxicated drivers who are injured in crashes that result in injuries. The likelihood of receiving a DUI citation from a police officer after involvement in a crash while under the influence of alcohol is over 90 percent. If the patient complains of an injury requiring transport to a trauma center, the DUI citation rate drops to less than 15 percent because law enforcement officers are often unable to follow the patient to the hospital to initiate an investigation.xxv While a BAC obtained for medical reasons is not admissible in court, it may establish probable cause and prompt law officers to obtain more information.

The UPPL also affects injury control initiatives in a variety of ways. Collection and analysis of data on alcohol use in patients injured in motor vehicle crashes, domestic violence, and other mechanisms is important for developing public policy, motivating legislative reform, and evaluating the effectiveness of countermeasures.

Drunk driving is also a crime in every state, and all states have victim compensation funds available to those who are injured, and to the families of those who are killed by drunk driving. The majority of individuals involved in an alcohol-related crash are never tested for BAC if they are transported to an ED, which forfeits the right of victims to seek and receive compensation.

The UPPL also sends the wrong message to physicians since 40 states currently require mandatory blood alcohol testing of all drivers involved in serious crashes who survive, yet, nearly all of these states also adopted the UPPL, which makes it in the best interest of the hospital to not know which patients are under the influence of alcohol.

The UPPL is not always enforced. However, clinicians in the ED almost never have information about the type of coverage carried by the patient, the exclusionary language contained in the policy, or whether or not the patient even has insurance. Since physicians do not have this information, they often treat all patients as if the UPPL applies to them, and adopt a blanket “no routine testing” policy, and reserve testing for cases when it is clinically necessary for managing the patient.

The Effect of the UPPL on Insurance Costs
The intention of the UPPL was to decrease insurance costs by penalizing drunk drivers, thereby reducing the costs of insurance for those who do not drink in a hazardous way. The statute is based on the principle that those who drink place themselves in harm’s way, and any injuries that occur are classified as being a form of self-inflicted trauma.xxvi

Regardless of the intent, the UPPL does not appear to have reduced insurance costs. Clinicians working in jurisdictions where it is present and enforced do not continue to measure BAC in the face of denials. Instead, they simply stop testing. Thus, insurance companies wind up paying for the treatment of alcohol related injuries because in the absence of a BAC or other documentation of intoxication, they have no way of determining which medical bills they can deny.

For example, the state of Texas has one of the highest drunk driving fatality rates in the nation, and one of the lowest BAC testing rates. Evidence suggests that the low testing rate is attributable to the UPPL, as reported in a recent press release by the Texas Transportation Institute.

“Texas Transportation Institute researchers Becky Davies and David Willis report that an estimated 43 percent of all fatal traffic crashes in Texas during 2001 involved at least one driver, pedestrian, or bicyclist who was legally drunk. Nationwide, that number is only 35 percent.

The researchers state that lack of adequate reporting procedures is compounding the drunk driving problem in Texas. Often, drivers involved in fatal crashes who are taken to hospitals are not tested to determine their blood alcohol concentrations (BACs), and the problem is getting worse. In 2001, there were 5,138 drivers involved in fatal crashes in Texas. Some 2,263 (or, 44 percent) of those drivers were taken to a hospital. The Accident Records Bureau in the Texas Department of Public Safety (DPS) received the alcohol test results (BACs) for only 459 (or, 20 percent) of the drivers who were taken to hospitals.

In her interviews with emergency medical personnel, Research Scientist Becky Davies found that hospitals may be reluctant to conduct alcohol testing because the Texas Insurance Code allows insurance providers to invoke a so-called “Intoxicants Clause” in their policies. The clause allows insurance companies to deny payment of claims for treating a person who was under the influence of alcohol or other drugs at the time of an accident. “From the hospital’s perspective, it may be better if they don’t know whether the person is under the influence of alcohol. If the driver tests positive for alcohol, the hospital may not be reimbursed for the cost of treating the person” Davies said. “Frequently, those injured drinking drivers who are not tested for alcohol are also never charged with DWI, and they don’t receive treatment or intervention for a potential drinking problem. Consequently, they may continue to drink and drive.”

Insurance Industry Argument for the UPPL
The insurance industry has opposed repealing the UPPL for several reasons. They have indicated that physicians should treat the patient according to their needs first, without regard to insurance, which is a separate contract between the patient and a third party. In addition, they believe repeal of the UPPL will increase insurance rates by causing non-drinkers to pay for injuries caused by alcohol and drug use. This position was presented in written and oral testimony to the NAIC at recent hearings to consider repeal of the UPPL.

“If proponents of interventions believe they are warranted in a given situation, they are free – perhaps even obligated – to provide them. A more fundamental concern is the notion that medical judgment is clouded by the availability or lack of third-party reimbursement. Regardless of uncertainty about third-party reimbursement, health care providers will always have to rely on their medical judgment in treating patients. The threat of “maybe no coverage means absolutely no treatment” is not only insufficient justification for restricting the use of a legitimate policy exclusion, it is a shocking abdication of responsibility. Surely trauma care providers are not engaging in legal analysis of insurance contracts before deciding whether and how to treat their patients. Insurers currently have – and should retain – the right to exclude coverage for losses caused by alcohol and drug abuse. The alternative is to punish individuals who do not abuse alcohol and drugs by causing them to pay for losses caused by abusers and to shield abusers from the consequences of their actions. In the insurance context, the actual abuse of alcohol and drugs, such as driving when intoxicated, present a substantially increased risk of loss. It is only fair to permit insurers to take that increased risk into account.”xxvii

In a recent newspaper article, the insurance industry reiterated this position.

“Quite frankly, I’m a little disheartened that physicians would base their treatment decisions on whether or not they might be reimbursed by an insurance policy,” says Larry Akey, spokesman for the Health Insurance Association of America (HIAA), a 300-member trade group. The HIAA has argued that doctors who won’t order tests and counseling for alcoholics and drug abusers because of financial concerns are guilty of a “shocking abdication of responsibility.”xxviii

Medical Argument for Repeal of the UPPL
Insurance companies are already paying for the treatment of alcohol-related injuries because once a physician or hospital experiences a denial, they are unlikely to continue testing.

At a hearing to consider revising the UPPL, the Chair of the Regulatory Task Force of the NAIC asked insurers to provide claims data to prove that revising the model would result in increased claims.

Mr. XX stated that the task force would like to receive some data to support Ms. XX’s statement that the exclusion provision was a cost issue and that insurers need to be able to take the increased risk of claims losses due to alcohol and drug abuse into account when setting premiums. Ms. XX supported Mr. XX.xxix

When the hearing was reconvened in three months, the insurance lobby was unable to provide this information. The task force unanimously approved a resolution to revise the model, and forwarded the motion to the Health Insurance Committee.

The belief that physicians should test regardless of insurance and financial consequences, does not take into account the obligation to consider cost-effectiveness when providing care. There is a finite amount of capital available to hospitals, and allocation of resources must take into account the needs of every program. Therefore, when ordering a diagnostic test, physicians must weigh the costs against the potential benefit.

The direct cost of measuring a blood alcohol concentration is $15 based upon the current Medicare allowable fee schedule in the year 2000. However, if it results in denial of reimbursement for a $200,000 medical claim, it becomes the most expensive diagnostic test in the field of medicine. Spending this amount of money to measure BAC costs more than the amount of money that would be needed to immunize all of the patients who present to the pediatric clinic against measles, mumps and rubella, as well as the cost of salary for a nurse to administer the vaccine, for more than a year. It would also pay the salary of several nurses to provide prenatal care and counseling.

Physicians spare no effort or expense in attempting to save the patient’s life or limb, even when there is no realistic expectation of reimbursement. Approximately 35 percent to 60 percent of trauma center charges are already written off as bad debt by the hospital and by the clinician providing care. However, in these days of cost-constraints in health care, it is difficult to justify a BAC that might cost more than $100,000 to obtain.

Proponents of the UPPL believe that repealing it would “shield patients from the consequences of their actions in abusing alcohol or drugs.” However, it is clear that the UPPL provides a legal shield for intoxicated patients by inhibiting testing and identification of drunk drivers. For this reason, repeal of the UPPL is one of the high priority legislative agenda items of MADD. As stated in their Rating the States 2002 report, the UPPL should be modified so that, “State laws do not allow exclusionary coverage provisions in health insurance policies that would exclude payment of benefits of trauma patients for alcohol screening including BAC testing and alcohol treatment.”xxx

The National Commission Against Drunk Driving report, Drunk Drivers Escaping Detection Through the Emergency Department, also advocates repeal of the UPPL because it reduces the likelihood that law enforcement personnel will identify drunk drivers.xxxi

In June 2001, the NAIC unanimously revised the UPPL. The new model prevents the exclusion cause in medical expense policies, while retaining it for auto, life, and long-term disability insurance. It is up to individual states to adopt this revision.

Confidentiality Laws
Fear of stigmatization prevents many patients with alcohol or drug problems from seeking or accepting treatment.xxxii This gave rise to Federal regulations designed to encourage individuals to seek treatment by reducing the risk that they would be stigmatized or experience discrimination. The Federal Regulations are contained in the Code of Federal Regulations Part 2 (42 C.F.R. Part 2), Confidentiality of Alcohol and Drug Abuse Patient Records.

Amendments to the regulation were approved in 1987 that specifically clarified which medical records must be protected. In the general hospital setting the regulations apply only to specialized programs that have either an identified unit that provides substance abuse treatment, or that have medical personnel whose primary function is the provision of alcohol and other drug abuse diagnosis, treatment, or referral for treatment (CFR Part 2 2.11).

In congressional testimony about the amended regulations (52 Fed. Reg. 21796, 21797, 1990), the Department of Health and Human Services (DHHS) made clear that records generated by general medical and trauma physicians were not covered by the regulations, because the primary function of those individuals was not to provide counseling for drug or alcohol problems. The congressional testimony states “We do not foresee that the elimination of hospital emergency rooms or surgical wards from coverage will act as a significant deterrent to patients seeking assistance for alcohol and drug abuse.” The DHHS went on to explain that this change would not harm the congressional intent of ensuring confidentiality to attract people to alcohol and other drug abuse treatment because trauma patients are not coming to the hospital with the intention of receiving alcohol or drug treatment.

Therefore, a BAC obtained during routine ED or trauma center care is under no special protection. By signing a general medical consent form in the ED a patient gives consent to receive diagnostic and screening tests deemed necessary by the physician. These general hospital consent forms authorize release of medical information to insurers and certain other parties. If the patient is unable to provide consent due to the seriousness of their injuries, consent is implied.

However, if an ED or trauma center obtains a BAC specifically for the purposes of providing alcohol screening, counseling and treatment, and have specialized staff (psychologists, etc.) whose primary function is to provide counseling or a referral to counseling, information about the BAC is federally protected. Release of information requires written permission from the patient using a specialized CFR 42 “Consent for the Release of Confidential Information” form. A general medical consent form is not sufficient.

Thus, the reason why a BAC is obtained determines how it must be treated. If it is obtained for purposes of managing the patient’s injuries, it is not protected. If it is obtained to screen for alcohol use, it falls under 42 CFR, and can only be seen by individuals whose responsibilities include screening and the provision of counseling. If it is placed in the medical record the entire record is covered by privacy, and cannot be used by the emergency, trauma clinician, or other acute care providers. It is therefore important to keep such information segregated from the medical record.

It is possible for an insurer to withhold reimbursement when billed for a BAC that is protected by 42 CFR. However, if an insurer insists on seeing the result, they may be asking for more information than they have a right to receive. Insurance contracts typically require the insured to provide all health information to the insurer as a condition of reimbursement. Whether this provision requires them to sign away their federal right to privacy about information related to alcohol and drug use has not been legally challenged. However, one potential strategy for BAC testing in hospitals that provide counseling services is to classify such information as being obtained for screening purposes, and for the hospital to withhold release as a matter of routine privacy under CFR 42.

Although routine alcohol and drug screening, and the provision of counseling or a referral have been widely recommended, this service is currently not routinely provided in EDs and trauma centers. Although there are a number of potential obstacles, the inhibitory effect of insurance practices that penalize screening has been widely documented.

These statutes were developed in 1947, prior to the development of trauma centers and emergency medicine programs, and at a time when there were few treatment opportunities available to patients with alcohol and drug problems.

The original intent of exclusionary provisions was to decrease the costs of insurance. However, since physicians have a choice of whether or not to measure BAC, this objective has not been fulfilled. It is not realistic to expect clinicians to perform BAC testing in clinical environments where intoxication is prevalent, and denial of claims is the local practice.

While clinicians often perform BAC testing when it is in the best interest of the patient, regardless of the impact on reimbursement, routine testing is not cost-effective, as the actual cost of the measurement may be several hundred thousand dollars or more for a single positive test.

There are multiple stakeholders in favor of repealing the UPPL, including trauma and emergency medicine clinicians, alcohol and drug treatment providers, public safety officials, law enforcement groups, and anti-drunk driving advocacy groups. The NAIC, the originators of model legislation upon which the UPPL is based, have revised the model, and now recommend excluding medical coverage from exclusionary provisions. Whether the revision of the model is adopted by states will depend on the interest and activities of these multiple stakeholders.