Medical history under the microscope

Throughout history, initials used to abbreviate words and phrases have aroused varying emotional responses from people: VD and HI, FBI and CSI, DDT and ADD.

But within the life risk industry, the abbreviation HIC is second only to the dreaded PMAR in the foreboding it strikes into the heart of advisers, and warrants a detailed explanation.

Prepared by the Health Insurance Commission (HIC), now under the banner of Medicare, it is a document compiled from computerised records dating back to 1984.

The records detail services that qualify for Medicare benefits and which claims have been lodged, but they do not include information about:

• services that may have been provided to public patients in hospitals;
• outpatients in public hospitals or in the emergency department of a hospital; or
• services for which a claim has not been made on Medicare.

To obtain an HIC report, an authority signed by an insured patient needs to be sent to Medicare.

When an insurance claim is lodged or being assessed, the insurer will often have an authority completed by the claimant or, in the event of a death claim, the executor. If a client wanted to obtain a copy of their own report, they would be at liberty to do so. Alternatively, Medicare has confirmed, the client should be able to obtain a copy of the report from the insurer.

There is currently no charge for providing the report but it can take from between a few weeks and three months to receive one after a request is lodged.

Within the HIC there are four different reports:

(i) details of the specialist, laboratory, etc, that has undertaken the examination or testing of the patient;

(ii) details of the doctor who referred the patient to the specialist, laboratory, etc;

(iii) details of how the Medicare account was reimbursed, eg, cash, cheque, bulk bill or by private health fund;

(iv) item number and description — a five to six alpha/numeric code that identifies the service provided, for example:

• 00005 — standard consultation;
• 1170H — ECG; and
• 65007 — full blood examination.

There are dozens of different codes. However, the codes applicable to a particular report are included with that document.

Because the specific reasons for consultations are not shown, the visual impression of the report may be misleading. Up to 10 entries may appear for a series of individual blood tests. This could give the impression of a large number of medical contacts when, in fact, the tests were for a routine annual check-up.

If the insurer obtains a copy of the HIC, it is worthwhile for the client to request a copy from the insurer so that, with the assistance of the adviser, the client can go through the consultations that occurred prior to the policy coming into force. They can then identify more accurately the reason for the consultation. If the insurer questions anything, the client is able to clarify the position.

There are various reasons an insurer will obtain an HIC report:

n if there are reasonable concerns about the validity of the claim, ie, a full compliance with the Duty of Disclosure when the application was completed;

n if the income protection claim duration is longer than would normally be expected for the particular sickness or injury. This may bring into question the overall validity of the claim, effectiveness of treatment and the claimant’s compliance or otherwise with the treatment;

• checking the client is under the regular care of a medical practitioner, and;
• obtaining a better understanding of unusual claims, ie, a 25-year-old suffering a stroke.

Sometimes reports are automatically requested if the benefit amount is large or when the policy duration is less than a certain period, ie, three years.

These claim requirements can cause significant delays to the assessment process. They essentially represent an exercise in fishing for problems by the insurer. There are no reasons for the insurer to suspect anything, but a search is undertaken just in case.

The easiest way to identify a fishing expedition is to ask the insurer why the HIC is being requested. If a logical reason, directly associated with the claim, cannot or will not be given, chances are there isn’t one.

Insurers need to be careful. If they are requesting unnecessary HIC reports, this may represent a privacy breach.

Similarly, if the insurer is obtaining an HIC authority just in case they need it in the future, the insurer should ensure they pay the client the courtesy of letting them know if the authority is lodged at some later date.

There is a view that because of the potential delays arising at the time of claim, HICs should be obtained either by the insurer or the insured at the time of application.

While this may appear logical, there are some issues, including:

• this would cause lengthy delays in the new business process, and in turn increase the risk of an insured becoming less insurable in the interim;
• the wait time for HICs would likely increase if they were requested for all, or even some, new business applications which would exacerbate the problems associated with the delays;
• the insured is required under their duty of disclosure to reveal only those consultations that are material to the assessment of the risk, rather than all consultations.

The obtaining of an HIC may lead to confusion and perhaps even longer delays if the information within the HIC required clarification.

Some advisers advocate obtaining the HIC after the application has been completed. While this may avoid several of the above issues, it will still create longer delays in obtaining HICs and also lead to additional work for the adviser if clarification with the insurer is needed after the HIC is obtained.

The other concern is HICs are currently provided without charge, but should the requested number increase, the health department may start charging.

Some advisers simply obtain a copy of the HIC and put it on the file without reviewing it. The risk is if there is information contained in the HIC that indicates there may have been non-disclosure and the matter is not addressed immediately, the adviser may complicate matters and compromise their own situation if it is subsequently discovered.

But perhaps there is some merit in obtaining an HIC and holding it on file for larger benefit amount cases. The completed claims process can be expedited without impacting the number of HICs being requested.

The bottom line is the HIC can impact the risk insurance process in many ways and it is important for the adviser to at least have a working knowledge of it and how best to use it to assist the client.

Col Fullagar is the national manager of risk insurance at RetireInvest.