Insurance Scheme Leaves Patients Facing Crushing Debt

A new health insurance plan is saddling patients with crippling medical debt by refusing to pay for necessary care. The company behind the plan has a troubling history, and the situation could become more widespread, impacting thousands of New Yorkers.

A Patient’s Plight

For Robyn Hodgson, a rare genetic condition necessitates frequent surgeries to remove tumors and ongoing treatment for chronic pain and migraines. After her wife’s employer offered a new health plan, they hoped for relief. Despite the high premium of $1,100 monthly, it seemed worthwhile given Hodgson’s health issues.

The couple soon discovered that the insurer, Leading Edge Administrators (also known as Omni Advantage), has a history of not paying doctors, leaving patients responsible for the bills. Hodgson now faces thousands in debt, even though she seeks care at in-network facilities.

The Insurer’s Tactics

Leading Edge employs a strategy of underpaying doctors and transferring care costs to patients. Former employees described it as a “cash cow” for the company and its clients. They also reported that they frequently witnessed situations like Hodgson’s.

The plan is set to expand, with Leading Edge now providing health insurance to hundreds of thousands of New York’s home health care aides. This workforce, comprised mainly of women and immigrants, provides care through a state Medicaid program.

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How It Works

Unlike major insurers with established doctor networks, Leading Edge “rents” networks from companies like Blue Cross Blue Shield. This allows patients to access a wide range of providers.

Leading Edge then issues insurance cards displaying the Blue Cross Blue Shield logo. This is meant to signal to providers that they will be paid at the same rate as Blue Cross Blue Shield. However, according to former employees, this is not how the company operates.

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In practice, Leading Edge often pays doctors less than the agreed-upon Blue Cross Blue Shield rates. It then holds patients accountable for covering the difference, often citing that a patient’s bill has exceeded the “maximum benefit,” a figure determined using a controversial healthcare pricing software. About 1 in 10 Americans have medical debt, according to a recent study (Source 2024).

Consequences and Concerns

Hodgson’s inability to afford care has led to increased pain and suffering. Her migraine frequency increased because Leading Edge would not cover necessary injections. Her unpaid bills have surpassed $20,000.

New York’s home care workers and state legislators are worried about this transition. The state legislature is concerned that the plan is “shocking” and may not be protecting home care workers adequately. They want to ensure taxpayer funds are not being used to support this arrangement.

Lack of Oversight

Leading Edge’s approach has sparked legal challenges. Doctors are often surprised by the lower reimbursement rates. They also cannot appeal these rates, and the company rejects all appeals by default.

If doctors attempt to negotiate, the process often drags on. As a result, physicians and hospitals may attempt to collect the remaining balance from patients. Patients will then pay to protect their credit scores.

Unexpected Relief

Following inquiries from the press, Leading Edge sent Hodgson new statements. The company reversed previous decisions and paid for many procedures. For example, the $17,106 bill for tumor removal surgery was changed to $0.

Despite this change, Hodgson worries about the future, and she is concerned this situation could recur.

The former customer service employee said they hyped themself up with pep talks in the parking lot before walking into the office.