'I Thought I Was In-Network': The Insurance Scheme That Could Leave New Yorkers With Mountains of Debt

This story originally appeared in New York Focus, a nonprofit news publication investigating power in New York. Sign up for their newsletter here.

Due to a rare genetic condition, Robyn Hodgson has had cancer twice and needs frequent surgeries to remove tumors. Plagued by migraines, chronic pain, and hand tremors, she stopped working as a journalist and writing teacher several years ago, and relies on extensive screenings to catch any potential cancers early.

So when her wife's employer, a central Pennsylvania nursing home, began offering a new health insurance plan two years ago, the couple was hopeful. The premium for the top plan on offer was expensive — $1,100 per month — but given Hodgson's health issues, it seemed worth the price.

There was a lot they didn't know.

They didn't know that the company managing her insurance plan, Leading Edge Administrators, has been repeatedly accused of not paying doctors and leaving patients with the bills. They didn't know that its founder, Jerry Weissman, was found guilty of health insurance-related crimes in 1997 and sentenced to 18 months in prison. And they didn't know the plan would leave them in five-figure debt by frequently refusing to pay for her treatments and surgeries, even though she receives them at in-network hospitals and clinics.

"I have to live on credit cards," Hodgson told New York Focus. "I have 70 cents in the bank."

Hodgson's massive bills aren't a freak accident. Rather, they're the natural result of Leading Edge's unorthodox business practices, which systematically underpay doctors and shift the costs of care to patients.

Her experience may soon be the norm for thousands of New Yorkers.

On May 1, Leading Edge — which also goes by the name Omni Advantage — became the health insurance provider for hundreds of thousands of New York's home health care aides. This low-wage workforce, made up overwhelmingly of women and mostly of immigrants, cares for disabled and elderly New Yorkers through the state's taxpayer-funded Medicaid program.

Leading Edge now offers those care workers an insurance package similar to Hodgson's in partnership with insurance company Anthem Blue Cross Blue Shield.

The company's strategy is simple: It promises doctors a certain price, pays only a part of it, and puts the remainder on the patient's bill.

Six former Leading Edge employees spoke to New York Focus on the condition of anonymity and described the strategy as a "shitty situation," "very disheartening," and a "cash cow" for Leading Edge and its corporate clients. They said they frequently saw cases like Hodgson's.

Hodgson can't afford to pay for care that insurance won't cover, so she suffers. Her migraines used to be limited to about half-a-dozen a month, thanks to regular injections she received through her previous insurance. Now, because Leading Edge refuses to cover the shots, she said she gets as many as 18 — sometimes leaving her in the emergency room.

Meanwhile, her unpaid bills have mounted to more than $20,000 — far more than she can afford, even with her wife picking up extra shifts at work.

New York's home care workers and state legislators are deeply concerned about the transition — and Hodgson's experience suggests that they're right to be.

"I think it's shocking that the Hochul administration would allow taxpayer money to be spent on these scam artists," said Assemblymember Phara Souffrant Forrest, a Democrat who serves on the health and insurance committees. "The state needs to protect home care workers during this transition and not throw them under the bus."

Leading Edge, Blue Cross Blue Shield, and Anthem either did not respond to requests for comment, or referred questions to Public Partnerships, LLC, the company that runs New York's home care program and hired Leading Edge. A PPL spokesperson said the company would not permit many of the practices New York Focus found that Leading Edge has historically employed, but did not say whether those restrictions are in Leading Edge's contract or how the ban would be enforced.

Borrowed Network

This is how Leading Edge makes money while leaving patients on the hook:

Unlike a major insurer such as Aetna, Leading Edge doesn't have a network of doctors that have agreed to accept the rates it pays. So, when it offers a new insurance plan, it "rents" a network from one of the major insurance companies — often Blue Cross Blue Shield.

That means people with Leading Edge insurance can access the extensive Blue Cross Blue Shield network of doctors and hospitals, which includes the vast majority of medical providers in the country.

Leading Edge then issues insurance cards with the Blue Cross Blue Shield logo. This signals to doctors that when they treat patients with Leading Edge insurance, they will get paid the same amount that Blue Cross Blue Shield pays.

At least, that's what's supposed to happen. But the former Leading Edge employees that New York Focus interviewed said that that's not how the company operates.

In practice, Leading Edge often intentionally pays doctors far less than the Blue Cross Blue Shield rates, and leaves patients to cover the difference, former employees said.

To get out of paying, Leading Edge frequently claims that a patient's bill has exceeded the "maximum benefit" allowed for that treatment — which is generally determined using a controversial health care pricing software from the company MultiPlan, former employees said.

Since 2006, insurance companies have used MultiPlan when they feel that they are being overcharged by doctors and hospitals. The company makes a software program that generates new prices for medical treatments, which are almost always lower than what the doctors originally charged. The insurance company pays the new, lower price, and leaves the patient to pay the rest.

Unsurprisingly, doctors and patients are not fans of this method. MultiPlan, which recently rebranded as Claritev, has been the target of a deluge of lawsuits alleging that it is part of a "price-fixing conspiracy" to underpay doctors and raise costs for patients. Documents from one suit say the company behaves like a "mafia enforcer." Its stock price has plunged more than 90 percent in the past five years.

MultiPlan's software is meant to be used to adjust bills for out-of-network treatment, where there is no pre-existing arrangement between a doctor and an insurance company on prices. But Leading Edge uses it to reprice in-network services, where doctors and insurers have already agreed on a fee.

It's not clear that MultiPlan considered this use of its product. In a recent report filed with government regulators, MultiPlan says that it provides "out-of-network cost management" and doesn't mention the possibility of its software being used on in-network bills. The company declined to answer questions from New York Focus for this story.

Christopher Garmon, a health economist at the University of Missouri, said that he's never heard of MultiPlan being used for in-network claims, and that doing so could leave Leading Edge open to legal action from frustrated doctors.

"If it's not in the contract that they can do this, then the providers can sue them," Garmon said.

Leading Edge would use the MultiPlan estimates as often as possible in order to lower the amount the company had to pay out, according to a former employee who worked in the claims department — leaving the patient responsible for paying the remainder.

That's likely how Hodgson ended up with a $17,106 bill for a surgery to remove tumors from her biceps last October. Her medical providers were in the Blue Cross Blue Shield network that Leading Edge was using, so the procedure should have been covered by her insurance. But Leading Edge said that the surgery's cost exceeded the maximum benefit they were willing to pay, and only contributed $4,029 of the $21,135 total — leaving Hodgson to pay the rest.

"Why an employer would choose this plan is an open question," said Loren Adler, who studies health policy at the Brookings Institute think tank. "You have to really not care much about your employees being upset at you."

'Providers Can't Appeal'

Leading Edge's cost adjustments often came as a rude surprise to doctors who were expecting to get the usual, higher rates paid by Blue Cross Blue Shield.

"Providers would call and say, 'What the heck is this?'" said one former employee.

Tammie Farkas is the manager of a New York City-area neurology practice that sued Leading Edge in 2021 for paying only $5,955 of a $144,375 bill.

"You would see that they were the payer, and you would think, 'This patient basically has no insurance,'" she told New York Focus. Her practice's 2021 lawsuit against Leading Edge settled for a confidential amount that year.

According to former employees who worked in claims and customer service, doctors would often appeal the low reimbursement rates, but Leading Edge would reject all appeals from doctors by default.

"We would just send a standard template saying providers can't appeal," the customer service employee said.

Adler from the Brookings Institute said that he'd never heard of such a policy. "There always should be some level of appeal," he said, in case "someone made a mistake processing the claim."

If doctors called to complain, Leading Edge would often offer to compromise, but wouldn't make it easy. "Doctors would negotiate for weeks at a time," one former employee said.

Frequently, a doctor or hospital would decide that negotiations were a waste of time and try to collect the rest of the bill from the patient. Or patients would simply pay in order to protect their credit score.

"Patients would call in and say, 'I thought I was in-network,'" one former employee said. "But they would absolutely just pay the bill if they didn't know what their rights were."

Sometimes patients would try to appeal. Yet, despite a federal law that requires insurers to respond to appeals within 60 days, Leading Edge could take months or even years to make a decision on whether it was going to pay.

"You have this individual calling back, calling back, calling back," the former customer service employee said. "And the appeal is just sitting there."

However, if patients were high up in their companies, their appeals would get preferential treatment, according to another former employee, who worked in operations.

"A CEO's claim would be paid in full, but an employee who had the same services and the same claim could get denied," they said. "I would feel really, really bad. I don't think it's fair."

If patients were insistent enough, they could generally get Leading Edge to pay up, former employees said. But every patient who gave up along the way meant profit for Leading Edge.

Across the American health care system, patients only appeal a tiny fraction of claims.

Pushing bills onto patients and doctors weighed on the consciences of some employees.

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

"I would have to sit there and be like, 'You're here for the dollar. Don't worry about it. You're not going to be here long anyway,'" they said. "I had to take anxiety medication."

The former employee who worked in claims feared they were getting caught up in fraudulent business practices. "Every day, I worried that federal police were going to come in and arrest us."

Revised Bill — After a Reporter Called

Hodgson's repeated efforts to get her bills reduced yielded little progress — until May 21, when New York Focus reached out to Leading Edge with questions about its refusal to cover her care.

Shortly thereafter, Leading Edge sent Hodgson more than a dozen new statements showing that the company had paid for numerous procedures that it had previously refused to cover, dating back to 2023.

For example, the $17,106 that Leading Edge charged Hodgson for the tumor removal surgery in October was changed to $0.

"It's a huge relief. It takes such a weight off my shoulder," Hodgson said. "We're not rescued yet, but at least we have something to float on for now."

This leniency isn't how Leading Edge has typically treated Hodgson. Beyond refusing to pay her bills, it has often failed to pay her doctors even after promising to do so.

"They'll say, 'Oh yes, under your plan, that's supposed to be paid, that should have been paid,'" Hodgson said. "And then I don't hear anything."

Multiple calls to Leading Edge have ended suddenly. "They're like, 'Okay, I need to check something.' And then they hang up," Hodgson said.

A former employee remembered seeing a similar scene when they first arrived at Leading Edge's call center, where agents fielded calls from distressed patients.

"Agents were just out there chitchatting, hanging up on providers, telling providers and patients wrong information, and nothing was happening to them" in terms of consequences or discipline, the former employee said. "It was the wild, wild west."

A Pact With Employers

Limiting payouts to doctors was an explicit part of Leading Edge's pitch to businesses, according to former employees.

Employers use their own money to pay patients' bills for many of the Leading Edge plans, rather than paying premiums to a traditional insurance company. So the less money Leading Edge pays, the more money stays with the employer. Delivering savings also benefited Leading Edge, since it charged clients a fee for every dollar that it passed on to patients, according to two former employees.

Why does Blue Cross Blue Shield allow Leading Edge to use its network, issue insurance cards in its name, and then pay doctors less than the standard rate? None of the former employees could say.

"I don't understand why they would want to do this. To me, it just creates unhappy providers," said a former leadership employee.

The question also stumped Garmon, the health economist. "Unless it's in the contract — and I've never seen anything like that — I don't know why anyone would allow it," he said.

The two companies' ties go back decades: When Jerry Weissman, Leading Edge's founder, was convicted of lying to Congress in 1997, it was due to work he had done as CFO of Empire Blue Cross Blue Shield.

This business model appears to have been profitable for Leading Edge. From humble beginnings in 2010, it has grown to a headcount of over 300, former employees said. And its top brass has been handsomely rewarded.

"They have these new cars, or they're buying a new house. Meanwhile I'm still trying to afford my first house," said the former employee who worked in operations.

'Tell Them That You're Going to Sue'

Along the way, the company has run into significant legal trouble.

In 2021, Empire Blue Cross Blue Shield was sued for pervasive and deliberate underpayment related to its work with Leading Edge.

The hospital chain Northwell Health, New York's largest healthcare provider, claimed that their doctors had provided nearly $10 million worth of care to members of a Leading Edge insurance plan that was using the Empire Blue Cross Blue Shield network, but the companies had paid only a fraction of that cost.

"On many occasions, Northwell does not receive any response" to its payment requests, its lawyers wrote. When Leading Edge and Empire Blue Cross Blue Shield did respond, their excuses for not paying were frequently late or easily falsifiable, Northwell claimed.

At one point, Empire Blue Cross Blue Shield proposed a solution: Instead of pursuing the insurers for payment, Northwell could sue its patients for the costs that the insurance company had refused to pay.

No Response From Hochul

The Hochul administration and state health department, which have vigorously defended the transition process, did not respond to detailed questions for this story. But several legislators who are members of the health or insurance committees expressed concern.

Senator Chris Ryan, a Democrat who sits on the health committee, said that he is "concerned by the issues raised regarding Leading Edge Administrators."

Home care workers "deserve fair, reliable, and affordable health coverage, not systems and practices that put them at risk of crushing medical debt or loss of care," Ryan said.

Senator Patrick Gallivan, the top Republican on the health committee, said that Public Partnerships, LLC, the company that hired Leading Edge, "has an obligation to ensure reliable insurance coverage to those who care for our most vulnerable residents."

"I would hope the Department of Health as well as the Department of Financial Services properly exercise their oversight role to ensure this happens, taking appropriate action if it does not," he added.

New York Focus also sent detailed questions to PPL about Leading Edge's past practices.

In response, PPL spokesperson Lacey Hautzinger said that the company would not permit Leading Edge to underpay doctors and leave patients with the bills, hang up on patients who call for help, leave patient appeals pending for months, or use MultiPlan to adjust prices for in-network treatments.

When asked if these prohibitions were part of PPL's contract with Leading Edge, or how they would be enforced, Hautzinger did not respond.

Under the new plan, Hautzinger said, home care workers "will now have access to the robust Anthem/Blue Cross Blue Shield network, which provides strong choice and a large volume of in-network providers across the state."

"Also, in selecting a health insurance plan, PPL had to balance ensuring that [home care workers'] healthcare needs were met along with driving value for the New York taxpayer and ensuring the fiscal sustainability of the Medicaid program," she added.

Losing 'Essential Plan' Coverage

If full-time home health aides decide they don't want to use the Leading Edge insurance, they may be out of luck, since the company's plan for them could cause them to lose the insurance they now have.

Many home health aides use the Essential Plan, a cheap and comprehensive public insurance program for low-income New Yorkers who make too much money to qualify for Medicaid, which serves the poorest New Yorkers.

But anyone whose employer offers health insurance becomes ineligible for the Essential Plan, even if they don't sign up for the employer's offer. That would leave full-time home care workers with two options: the Leading Edge plan, or Affordable Care Act plans that generally cost at least $7,200 per year and thus are essentially impossible for a low-paid health care worker to afford.

Nicole Demme, who works as a home health aide caring for her disabled son outside of Buffalo, told New York Focus that she has cut back her hours to avoid being a full-time worker and risk getting kicked off the Essential Plan.

"I would never go full-time with PPL in this situation, with that coverage," she said. "If you have something like cancer, that could easily bankrupt your family."

Other home health aides may exit the industry entirely and seek work that comes with better health insurance.

That might not be of much concern to Leading Edge, whose executives can sometimes be explicit about their priorities.

"We are not in the business of paying bills," the former customer service employee remembered being told by a senior manager during their training, shortly after joining Leading Edge. "We are in the business of saving our clients money."

As Hodgson's medical bills mounted, she and her wife maxed out five credit cards and relied on support from a local food pantry and a church that they've started attending. They stopped their amateur photography hobby, to save money on gas and gear. They don't go out to eat.

When they went to see "Wicked" a few months ago, it was the first time Hodgson had been to a movie theater in years, she said.

She's relieved that Leading Edge paid more of her bills recently, but is worried it won't last.

"I feel it's temporary, and I'm just gonna go through this again next year," she said.

She's putting off medical care, too. While speaking with New York Focus last week, Hodgson remembered that she needed to cancel an MRI that had been scheduled after doctors discovered a tumor in her brain. She didn't have money to pay for the procedure, and she wasn't sure if Leading Edge would cover it.

Our nonprofit newsroom relies on donations from readers to sustain our local reporting and keep it free for all New Yorkers. Donate to THE CITY today.

The post 'I Thought I Was In-Network': The Insurance Scheme That Could Leave New Yorkers With Mountains of Debt appeared first on THE CITY - NYC News.