U.S. GAO- Government Accounting Office- uncovers secrecy on medical device prices

LINK HERE to full story by Star Tribune reporter James Walsh

Secrecy on medical-device prices hurts buyers, GAO says

•                Article by: JAMES WALSH

•                Star Tribune

•                February 11, 2012 - 2:40 PM

Hospitals are paying widely varying prices for the same implantable medical devices, according to a new study that suggests that secretive sales agreements prevent many buyers from getting the best deals.

The report from the U.S. General Accounting Office -- which turned up a difference of more than $8,000 for one cardiac device alone -- found that confidentiality clauses in sales contracts keep even the physicians who decide which devices to use in the dark about prices.

The study, which was requested by U.S. Sen. Max Baucus, a Montana Democrat who chairs the Senate Finance Committee, could add fuel to a push to lift the price veil.

"The real problem is that, on the local level, there are these gag clauses that prohibit the sharing of pricing information," said Curtis Rooney, president of the Healthcare Supply Chain Association (HSCA). "I do think [the GAO report] lays the groundwork for more questions to be asked."

Don May, vice president of policy for the American Hospital Association, said the study "highlighted some of the real concerns about devices."

Device pricing is an issue of critical importance locally. Minnesota is a primary medical technology hub, home to industry giants Medtronic and St. Jude Medical and hundreds of other smaller companies employing thousands of people.

Officials with top local device companies declined to comment on the GAO's findings, referring calls to the Advanced Medical Technology Association (AdvaMed), a medical device trade association.

David Nexon, a senior executive vice president for AdvaMed, said the industry is extremely competitive and that pricing involves many factors. Overall, however, he said that medical technology prices "have risen far more slowly than price increases for other medical goods and services and substantially less than even general price increases in the economy as a whole."

Nexon did not specifically address confidentiality clauses. But he said prices reflect "the number of competitors in the marketplace, a particular hospital's volume of business in a particular procedure and the volume of other products sold to that hospital by a manufacturer."

As the GAO report noted, hospitals typically negotiate device prices with manufacturers directly or through group purchasing organizations (GPOs). But device manufacturers often require hospitals to sign confidentiality clauses that forbid them from revealing to third parties the price they paid. Those third parties often include physicians, whose device preferences influence hospital purchasing decisions.

"It really is this relationship between the manufacturer and the physician," Rooney said. "The physician orders the product but can't know what the price is. The hospital becomes the third-party payer."

The GAO sought information for its study from more than five dozen medical centers and others involved in the health care system. It received detailed information on cardiac device prices from 31 hospitals, one GPO and one Department of Defense medical center. Only 14 hospitals and two Department of Defense facilities gave detailed information on orthopedic devices.

Those responses showed huge price differences. For example, the difference between what the lowest- and highest-price hospitals paid for a particular model of automated implantable cardioverter defibrillator (AICD) was $6,844. For another, the price difference was $8,723. Median prices for four AICD models ranged from $16,445 to $19,007.

The cost to the government alone could be substantial. Considering that Medicare spent nearly $20 billion on implantable medical device hospital procedures in 2009, a rate equal to what Medicare spent for all other hospital procedures, "excess or unnecessary IMD costs that hospitals incur may be passed on to the Medicare program," the GAO report said.

'Armed for battle'

There are hospitals that go in with their eyes open.

Minneapolis-based Allina Health won't accept gag clauses in its contracts, according to Cheryl Harelstad, vice president for supply chain management. Years ago, she said, such clauses weren't really questioned.

"A lot of health care providers are working hard, saying, 'Wait a minute. This doesn't put us in a very good position,'" she said.

Allina belongs to a GPO, Novation, that strikes agreements with suppliers and establishes multiple price tiers for devices, Harelstad said. GPO members pay a fee for that information and sharing it is critical, she said. Allina, which has some buying clout because of its size, will then go to manufacturers to adjust prices further.

"We go in armed for battle," Harelstad said of the importance of pricing information.

"To be fair," she said, "our suppliers work well with us on this."

Rooney said confidentially clauses in device contracts are not new. "This has been going on quite a while -- at least a decade," he said. Legislation requiring more price transparency was introduced in Congress in 2007, but was not enacted.

Now, as more Americans age and health care costs become an even bigger issue, Rooney said the issue of device costs is heating up again.

"This begins the conversation that needs to occur in Congress," he said. "In the era of cost containment, people should know they are getting the value they deserve in terms of health care costs. People are getting older and grayer, and more of these devices will be implanted."

James Walsh • 612-673-7428

 

explanthisFeb. 12, 128:07 AM

http://fida-advocate.blogspot.com/ FDA MedWatch Adverse Event #5009052 was not investigated and according to Freedom of Information, the record was "lost". Mayo Clinic and the surgeon/designer are legally able to abandon the patient. The entitlement of the medical device industry will cripple not only our elders, but our nation. Medical and legal purgatory is not an "innovation" that patients demand but if a device fails, that is the result. No pre-market clinical testing, mass production and no registry for devices and an uninformed consumer is the recipe for disaster. Is the GAO report "shrill" or accurate? I vote for accurate!

"It is just not right."

(LINK) Barry Meier NYT 12/27/11 "The High Cost of Failing Artificial Hips"

The most widespread medical implant failure in decades — involving thousands of all-metal artificial hips that need to be replaced prematurely — has entered the money phase.

Medical and legal experts estimate the hip failures may cost taxpayers, insurers, employers and others billions of dollars in coming years, contributing to the soaring cost of health care. The financial fallout is expected to be unusually large and complex because the episode involves a class of products, not a single device or just one company.
The case of Thomas Dougherty represents one particularly costly example. He spent five months this year without a left hip, largely stuck on a recliner watching his medical bills soar.
In August, Mr. Dougherty underwent an operation to replace a failed artificial hip, but his pelvis fractured soon afterward. The replacement hip was abandoned and then a serious infection set in. Some of the bills: $400,776 in charges related to hospitalizations, and $28,081 in doctors’ bills.
“I’m sitting here on a La-Z-Boy meant for someone who is 80 and I’m 55,” said Mr. Dougherty, who lives in Groveland, Ill., and works at Caterpillar, the heavy equipment manufacturer. His bills are “five times as much” as he paid for his home.
The so-called metal-on-metal hips like Mr. Dougherty’s, ones in which a device’s ball and joint are made of metal, are failing at high rates within a few years instead of lasting 15 years or more, as artificial joints normally do. The wear of metal parts against each other is generating debris that is damaging tissue and, in some cases, crippling patients.
The incidents have set off a financial scramble. Recently, lawsuits and complaints against makers of all-metal replacement hips passed the 5,000 mark. Insurers are alerting patients that they plan to recover their expenses from any settlement money that patients receive. Medicare is also expected to try to recover its costs.
While his insurer has covered his bills so far, Mr. Dougherty said he was preparing to sue his surgeon, who may have implanted the device incorrectly, and Johnson & Johnson, which produced his artificial hip, to help recoup some of the insurer’s money.
“All these payers want to be paid back,” said Matt Garretson, the founding partner of the Garretson Resolution Group, a firm in Cincinnati that manages product liability cases.
Until a recent sharp decline, all-metal implants accounted for nearly one-third of the estimated 250,000 hip replacements performed each year in the United States. Some 500,000 patients have received an all-metal replacement hip, according to one estimate. A new study found that no new artificial hip or knee introduced during a recent five-year period — implants that included some of the all-metal hips — were more durable than older devices, and 30 percent were worse.
One troubled all-metal model, implanted in 40,000 patients in the United States, was recalled last year by the DePuy division of Johnson & Johnson. As of October, some 3,500 patients had filed a lawsuit involving that device.
There is no data on the number of all-metal hips that have failed prematurely in this country because the outcomes of orthopedic procedures are not formally tracked by the government or private companies.
But extrapolating from overseas data and the estimate of metal hip use here, tens of thousands of patients in the United States may have to undergo operations over the next decade to replace the implants, said Dr. Art Sedrakyan, a researcher at Weill Cornell Medical College of Cornell University, who is studying the hip problem.
A decade ago, Sulzer Orthopedics paid a record $1 billion to settle claims by 6,800 patients who received artificial hips and knees that were contaminated with industrial oil during the manufacturing process. “We have been dwarfed by this,” said Teresa Ford, a lawyer who worked at Sulzer at the time and is now in private practice.
Device producers have taken differing stances to covering patient expenses. Zimmer Holdings, which says its all-metal implants are safe, has settled hundreds of patient claims, lawyers involved in those cases say. Also, DePuy is covering costs related to the device it recalled last year, the A.S.R., or Articular Surface Replacement.
DePuy would not comment on how much it had paid in recall-related costs. But a spokeswoman, Mindy Tinsley, said in a statement that DePuy was working with patients and insurers.
Things have not gone smoothly for everyone who has taken DePuy’s payment offer. One patient, Paula Laverty, received a hospital bill for $41,578 and a call from the facility warning her that the bill would be turned over soon to a collection agency.
Ms. Laverty, of Cape Elizabeth, Me., said she spent weeks calling the firm handling claims related to DePuy’s A.S.R. She said she eventually learned that the implant maker had paid the hospital $18,000 for her replacement procedure and that the $41,578 represented the remaining charges.
This month, DePuy made an additional payment to the hospital, according to Ms. Tinsley, the company spokeswoman.
Along with A.S.R.-related cases, DePuy also faces over 560 lawsuits in connection with the all-metal version of another hip model, called the Pinnacle, the device that Mr. Dougherty received. Because the company says that the model is performing well, costs for its replacement are being borne by Medicare, insurers or patients themselves.
To recoup their expenses, insurers typically notify patients through lawyers that they expect to be reimbursed from any settlement money that patients receive, rather than pursue their own lawsuits with the device makers. Also, Medicare is expected to enforce new laws next year that will make it easier for the agency to recover taxpayer dollars spent treating patients injured by problem drugs and medical devices, legal experts said.
Still, some patients are weathering some of the financial impacts on their own. While Charmin McCune, a teacher in Wylie, Tex., is recuperating well from a recent replacement operation, she said that she and her husband, also a teacher, have had more than $12,000 in expenses that have not been covered by insurance.
Mr. Dougherty, the Illinois patient, underwent a procedure this month to get a new hip implant. All went well, he said, so he hopes to spend next year back on his feet and at work.
“You can’t do anything,” he said of his current situation. “You see your wife doing everything for you. It is just not right.”

Health Leaders article: Docs Need to Blow the Whistle on Fraud

Doctors need to blow the whistle on fraud. (Link to Health Leaders/Joe Cantalupe article)

Docs Need to Blow the Whistle on Fraud

Joe Cantlupe, for HealthLeaders Media , December 15, 2011

Without skipping a beat, a huge medical device manufacturer allegedly found an easy way to influence physicians to use that company's brand of defibrillators and pacemakers.

How? By giving doctors kickbacks, the Justice Department says.

In a settlement agreement reached this week, Medtronic Inc. of Fridley, MN, agreed to pay $23.5 million to resolve allegations that it used physician payments as kickbacks to "induce doctors" to implant the company's products.

Daniel R. Levinson, inspector general of the U.S. Department of Health and Human Services, noted in a statement, "Patients trust that decisions to implant certain pacemakers or other medical devices are based on their own health interests and not influenced by kickbacks."

This kind of news can certainly erode patients' trust in doctors. And there's more.

The Justice Department's announcement about the Medtronic settlement was barely 24 hours old when, in a separate, unrelated case, several dozen federal and state investigators swooped into a radiology and diagnostic facility in Orange, NJ, arresting 13 doctors and a nurse practitioner in a cash-for-tests referral scheme.

"When physicians take kickbacks that influence how they practice medicine, it has the potential to taint the medical advice and care that is provided to their patients," Office of Inspector General Special Agent Tom O'Donnell said in an official statement.

Bribes and kickbacks are only part of the problem in healthcare fraud, which includes identity theft, illegal prescription drug sales, and countless other areas of wrongdoing. These transgressions do occasionally involve doctors.
The wrongdoing at Medtronic unraveled after two whistleblowers sued the company and alerted authorities to the problem, according to the Justice Department.

Because of their role, the do-gooders will receive a tidy sum of more than $3.96 million. Neither whistleblower was a physician. Justice Department officials declined to comment when I asked how many physicians may have been involved in the Medtronic case.

That's too bad. Physicians need to step up to ferret out fraud, not be a part of it. Most are honest, upholding the profession's reputation. The actions of a few can cast a long, foreboding shadow on the legions of honorable practitioners.

Shortly after he resigned as head of CMS, Don Berwick, MD, touched on the fraud issue in a conversation with journalists. In his 18-month tenure, Berwick said he found that fraud, waste, and abuse were more significant problems than he previously thought. Apparently, Berwick didn't realize how widespread the problem really is.

That's surprising. There were plenty of clues before Berwick stepped into his office in April 2011 that fraud was a big and burgeoning trouble spot in healthcare. Now that he has left, CMS appears to be struggling still with how to uncover fraud, as the behemoth agency tries to raise quality standards under healthcare reform, while also dealing with inadequate data systems that would improve its watchdog functions (more on that in a moment).

As for Berwick, one federal official who is knowledgeable about these decisions told me the CMS leader "was concentrating on other things," such as forming Accountable Care Organizations.

It seems that fraud in Medicare and Medicaid will be a major challenge for Berwick's successor to overcome. Federal officials want physicians to play an instrumental role in helping to stop fraud, and they're backing up that desire with the power of the dollar. Healthcare reform provides fiscal incentives to do so. Berwick had estimated that fraud, waste, and abuse total about $30 billion a year for the whole healthcare system, including up to $10 billion just within CMS.

The week Berwick talked about fraud with journalists, Gary Cantrell, assistant inspector general for the Office of Inspector General (OIG) at HHS, addressed the extent of Medicaid fraud in Congressional testimony. His comments didn't make headlines, but they were revealing nevertheless, as he described the widespread scope of Medicaid fraud, including prescription drug abuse and problems in the home health care services arena.

"We are now seeing more Medicaid fraud cases involving home health services than any other single program area," Cantrell told two House subcommittees. One investigation of a leading home health services company, Maxim Healthcare Services, led to a $150 million settlement of fraud charges.

Fraud in home health services is not a new problem. There have been repeated warnings that CMS needs to address the issue.

"Auditors have been concerned about fraud in home health care for years, but the problem never seems to get solved," according to a 2009 report from the Cato Institute, a think tank in Washington, D.C.

As in Medicare, Cantrell identified "persistent fraud trends" involving misuse of prescription drugs in Medicaid. He referred to a case in Washington state in which a physician established connections with local heroin users and wrote medically unnecessary prescriptions for narcotics, including Oxycodone and Vicodin.

Cantrell also revealed that the OIG has a list of the 10 "most wanted" healthcare fugitives. Among them: an Illinois physician, Gautam Gupta, MD, sought for allegedly defrauding Medicaid and private insurance companies of more than $24 million, through weight loss clinics.

Whether it's improper billing procedures or weight loss fraud, Medicaid investigations are hampered by a lack of "national-level, timely Medicaid data," he says. While the Medicare databases are efficient, Medicaid's Medicaid Statistical Information System (MSIS) is the only source of nationwide Medicaid claims, but it is typically 1½ years old when released by CMS to users for data analysis purposes, which renders it ineffective for investigative purposes. "In law enforcement, a 1½-year time lag is an eternity," Cantrell says.

Essentially, the OIG is waiting for CMS to get its act together.

In the meantime, Cantrell says he's hoping that providers and patients get more involved in thwarting fraud. The OIG's website offers a tip line for fraud cases. And the OIG recently published a white paper, A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.

This roadmap offers a journey worth taking, because the integrity of the profession is at a crossroads.

---

Joe Cantlupe is a senior editor with HealthLeaders Media Online. He can be reached atjcantlupe@healthleadersmedia.com.

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Back

Insurance decision delayed is treatment denied for patients . . . profit for industry.

Link to Huffington Post story about insurance shenanigans that hurt patients/consumers.
Tom Wilson, CEO of Allstate, earned $9.3 million in 2010.

Insurance Claim Delays Deliver Massive Profits To Industry By Shorting Customers

First Posted: 12/13/11 05:24 PM ET Updated: 12/13/11 05:52 PM ET

WASHINGTON -- Unlike many other businesses, the insurance industry is bound by law to act in good faith with its customers. Because of their protective role in the lives of ordinary citizens, insurers have long operated as semi-public trusts. But since the mid-1990s, a new profit-hungry model, combined with weak regulation, has upended that ancient social contract.

"Claims has been converted into a money-making process," said Russ Roberts, a New Mexico-based management consultant and former business professor at Northwestern University who has studied the insurance industry's evolution from a service business to a profit-driven machine.

The change started when consulting giant McKinsey & Company sold Allstate and other leading insurance companies on a new system to boost the bottom line: Rather than adjusting claims the traditional way, which gave claims managers wide latitude to serve customers, insurers embraced a computer-driven method that produced purposefully low offers to claimants.

Those who took the low-ball offers received prompt service, while those who didn't had their claims delayed and potentially were reduced to bringing expensive lawsuits to fight for their benefits. As former Allstate agent Shannon Kmatz told the American Association for Justice, the trial lawyers' lobby, the strategy was to make claims "so expensive and so time-consuming that lawyers would start refusing to help clients." The strategy was dubbed "Good Hands or Boxing Gloves" by the consultants, riffing on Allstate's advertising slogan.

McKinsey, which was reportedly hired by Allstate in 1992, prepared about 12,500 PowerPoint slides to present its plan. The slides were introduced in litigation in 2005, when the insurer turned them over under a temporary protective order. David Berardinelli, a New Mexico-based trial lawyer who was working on the case, detailed the slides in his 2008 book, "From Good Hands to Boxing Gloves: The Dark Side of Insurance."

McKinsey's strategy put profits above all. One slide in the McKinsey presentation illustrated this philosophy by painting the insurance business as a zero-sum game: "Improving Allstate's casualty economics will have a negative economic impact on some medical providers, plaintiff attorneys, and claimants. ... Allstate gains -- others must lose."

Allstate has certainly gained: It made $4.6 billion in profits in 2007, double its earnings in the 1990s. The stunning increase, said Russ Roberts, came through "driving down loss values to an average of 30 percent below the actual market cost" -- that is, paying dramatically less on claims.

"An insurance company can make a lot of money on the small claims," said Jay Feinman, a professor at Rutgers University School of Law, "because if you save a few dollars on a huge number of claims, it's worth more than saving a lot of dollars on a very small number of claims."

Allstate is the best-known user of the McKinsey model, topping the list of the "Ten Worst Insurance Companies in America" published by the American Association for Justice. But Allstate's rise in profits has led most of the industry to adopt the same approach. McKinsey has worked with State Farm, another insurance giant, and other companies in redesigning their claims systems. Feinman cautioned in his book "Delay, Deny, Defend" that the two major names "are just the largest players in the industry ... [the ones] whose involvement with McKinsey & Company in the transformation of claims is the best documented."

Roberts told HuffPost that, by his estimate, the companies that take in 70 percent of total insurance profits in the United States now abuse their obligations to their policyholders. When Allstate CEO Tom Wilson earned $9.3 million last year, he was not even on the top 10 list of best-paid insurance executives, compiled by New York Law School's Center for Justice and Democracy. (The top 10 list was led by William R. Berkley of W.R. Berkley, who made $24.6 million in 2010.)

Yolande Daeninck, spokeswoman for McKinsey & Company, said, "In line with our firm's longstanding policy to not discuss our client work, we decline to comment."

A HOUSE BURNS DOWN

According to an unpublished Harris Interactive Poll conducted in September, 16 percent of surveyed adults have experienced financial hardship while waiting for an insurance claim to be settled or know someone who has. The same poll found that 59 percent of adults believe that most insurers intentionally delay claims -- and those with an income of $35,000 or less were more likely to agree.

With 15.3 percent of Americans -- about 46.2 million people -- living in poverty, close to 10 percent unemployment, and roughly 2 million people who've been looking for work for more than two years, Allstate's business model is profiting off many consumers at their most vulnerable. A claim delayed by even a month can spell financial disaster for a family. As a National Bureau of Economic Research study found, about 25 percent of Americans could not come up with $2,000 in a 30-day period.

Madeleine Burdette, a retiree, is an Allstate customer who reported her experience on the popular website AllstateInsuranceSucks.com. When her Georgia home burned in November 2010, Burdette was in Ohio, where she lives most of the year. She said the fire marshal in Georgia told her that her house would have to be torn down. "The entire middle of the house was gone," Burdette said. "It took out everything. Just the outside walls were left untouched."

The next day, she said, Burdette's Allstate adjuster told her the house could be repaired. Allstate also said it would have to do a thorough investigation to determine if the fire was caused by arson. If it was arson, the adjuster told Burdette, Allstate would not pay for any damages. According to former employees, such investigations are a common practice at Allstate and are encouraged by supervisors as a way to avoid paying claims quickly.

Burdette, who lives on her Social Security checks, flew from Ohio to survey the damage herself. While in Georgia, she contacted public adjuster Anita Taff. Public adjusters serve as advocates for individuals who feel they need another set of eyes on a claim. Taff met with Burdette at the house, Burdette said, and discussed the damage with the contractor Burdette had hired. Upon returning to Ohio, Burdette spoke with Taff over the phone to find out what her impression was. Burdette said Taff warned her that the contractor might go along with Allstate's insistence that the house could be repaired.

"I believe [delaying claims] is an effort to put the squeeze on policyholders," Taff told HuffPost. She explained that while a claim is being held up, the insurance company may stop paying the policyholder's additional living expenses, forcing the policyholder to cover mortgage and rent entirely out of pocket. "That's something that many people cannot afford to do, so they're forced to take a lower settlement," Taff said.

Burdette said she immediately called the contractor and told him not to go near her house. According to Burdette, she received a phone call within 10 minutes from her Allstate adjuster asking her not to hire Taff or any other public adjuster. "He said, 'If you hire a public adjuster, I'm going to deny and delay this claim for as long as possible,'" Burdette told HuffPost. Taken aback, she then asked if it wasn't in his best interest to settle the claim. "Not really," he replied, according to Burdette.

Although the Allstate adjuster eventually agreed to work with Taff on Burdette's claim, her troubles did not end. The contractor who had been banned from her property nevertheless worked on the house and billed Allstate for $22,000. Burdette had explicitly told Allstate not to pay the contractor a dime, she said, but the company paid him under her policy anyway. The contractor couldn't be reached for comment.

More than a year later, Burdette's home is still being repaired and Allstate refuses to reimburse the $22,000. She consulted four different lawyers to see if she had a legal case. While she said they all agreed that she was entitled to reimbursement, she said they also agreed that she lacked the funds to fight the insurance giant. "They told me, 'You'll run out of money,'" she said.

NO FLUKES

Roberts, the management consultant, said that companies like Allstate attempt to pass off claims delays as fluke occurrences. But, he said, they are actually routine and intentional products of the McKinsey system: "The Allstate/McKinsey system for 'lowballing' claims payments ... is driven by the claims performance management and pay systems from the top to the bottom of the organization."

Feinman, the Rutgers law professor, also suggested the deck is stacked against individuals who make claims. "You have an accident or a fire in your house. You call up the insurance company. You describe the circumstances. Maybe they send an adjuster out, and they say it's not covered, or it's covered but here's the dollar amount that we're obligated to pay you," he said. Most people, Feinman said, do not have the expertise "to know whether or not that's right."

Allstate spokeswoman Laura Strykowski said the company can't comment on specific cases because of privacy requirements, but considers its claims process both legal and effective. "Our customers and claimants receive prompt and courteous claim service and our goal is to settle each claim fairly and efficiently," she wrote to HuffPost. "As a regulated company, Allstate's claim practices are available to and regularly reviewed by state departments of insurance."

But experts like Feinman argue that insurance regulation has become little more than a fig leaf. State insurance departments are usually understaffed and overwhelmed. And even if they had the legal firepower to contend with giant insurance companies, Feinman said, "the regulators are closer to the industry than they are consumers." Eleven of the past 15 presidents of the National Association of Insurance Commissioners (NAIC) went on to work for the insurance industry after leaving office, while a 17-year study from two Georgia State University professors found that around half of state-level insurance commissioners did so as well.

When combined with penalties that Feinman described as "laughably low" in many states, this close relationship means that regulation does not provide an effective check on insurance companies. And state governments themselves have incentive to place consumers on the backburner. Because insurance taxes are a major source of revenue for the states, said Roberts, insurance oversight commissions are usually more concerned with keeping companies solvent than resolving the problems of policyholders.

With the exception of the federal Affordable Care Act, insurance is regulated on a state-by-state basis. Although most states set a specific timeline for how quickly an insurance company must initially respond to claims, there is much more leeway when it comes to settling those claims. For example, in Missouri, an insurer must acknowledge receipt of a claim within 10 days and either pay or deny it within 15 days of receiving all necessary documentation. However, if the insurer decides it needs more time to investigate, it may keep delaying as long as it updates the policyholder every 45 days. In Georgia, where Burdette's house burned down, the insurer must notify the policyholder if it will affirm or deny a claim within 60 days. However, the insurer does not have to settle the amount it will pay within that period. Many states have similar provisions that allow insurers to put off paying claims indefinitely.

According to NAIC data, claim delays have long been the most frequent cause of policyholder complaint. As of Nov. 28, 2011, the NAIC had received 11,053 delay-related complaints this year alone, comprising almost a quarter of the year's total complaints. These data only reflect confirmed complaints -- the ones that the state insurance commission has investigated -- so the actual number of delayed claims is likely much higher.

Complaining to state regulators about the insurer's delay is always an option, but its effectiveness is questionable at best. "I have not seen it be successful," said Taff.