There’s No Such Thing As A Million Dollar Claim

By Bill Rusteberg

A few years ago we were having a few late afternoon beers, as was customary on most business days, at the CEO’s private office in West Texas. Although I was not a “regular” since I lived many miles away, when I had occasion to visit I always looked forward with keen anticipation to the late afternoon “business meeting” that would invariably take place. It was always an enjoyable time, with much banter back and forth, with an occasional visitor or two dropping by to add to the atmosphere.

I always came away from these “meetings” a little smarter, learning something new and interesting. This meeting proved no different.

The CEO’s office was large, decorated in West Texas style, complete with a well stocked bar. The fridge housed coldest beer in Texas, and there was always plenty of it. John was there along with the other usual suspects.

John was a former city manager who survived local politics in the twenty plus years he was city manager. Early on he wondered why the city was purchasing health insurance from a third party vendor, paying someone else for work they could do themselves.

“We are big enough to self-fund, and we can process claims right here in our offices. This is not rocket science. We don’t need a TPA or a BUCA and we certainly don’t need stop loss insurance. And, we don’t need a network either” was the message to staff.

So the city did just that.

The city’s self-funded plan operated efficiently for many years and continues to do so to this day.

“John, with no stop loss, how did you handle large claims, that million dollar claim or two that invariably will happen?” I asked. “Wasn’t that kind of risky?”

John: “There is no such thing as a million dollar claim Bill! We’ve never paid one in all those years! Several years ago my HR director came in my office and said John, we have a problem. One of our retirees in Pittsburgh has a hospital claim and we just got the bill today. It’s $1 million! How do we handle this!” So I told her to tell them we ain’t gonna pay it!

Bill: So what happened next?

John: HR came back the following day and said “The hospital agrees to give us a 10% discount but we have to pay the claim this week or we won’t get the discount. What do I tell them? So I said ‘tell them we ain’t gonna pay it!’

Bill: Damn John, you’re hard core.

John: Well, I had a female acquaintance in Austin who happened to be a nurse. I called her and said, ‘I can’t promise you the city will pay you anything for your services, but I can pay for your airfare to Pittsburgh if you will do me a favor and fly up there to find out why this damn bill is so high. She agreed.

Bill: Wow. Did she have experience in negotiating hospital bills?

John: Nope

Bill: Amazing, what happened?

John: The day she got there she called me. “John, can you write a check for $117,000? So I said sure I can, but what’s it for? She replied ‘the hospital has agreed it will be for payment in full John.” SO YOU SEE BILL, THERE IS NO SUCH THING AS A MILLION CLAIM!

Bill: Wow, she did a hell of a job. Did the city end up paying her?

John: Yep, paid her $40,000.

So there you have it, there is no such thing as a million dollar claim. That is, as long as you have a John in your corner and a nurse from Austin in the other. And by the way, if you don’t have a million dollars in the first place, then there ain’t never gonna be a million dollar claim. Never, never, ever………