After Olathe couple’s run-in with insurance ‘birthday rule,’ Davids proposes change

When Mikkel and Kayla Kjelshus’ daughter, Charlie, was born in the Kansas City area with complications that required intensive care, it was obvious the medical bills would be expensive.

They were prepared. Both parents had insurance and planned to use Kayla’s, with its better rates, for Charlie’s primary coverage.

But the Kjelshuses quickly ran into the “birthday rule” — a little-known practice that makes the insurance of the parent whose birthday is earliest in the calendar year the primary coverage for the child. Because Mikkel’s birthday is two weeks before Kayla’s, his higher deductible plan would cover Charlie first.

The Olathe couple said they didn’t know about the rule when Charlie was born in February 2019, leading them to list Kayla’s insurer, a mistake that kicked off confusion over who would pay bills totaling more than $270,000.

“It gives just another loophole for insurance providers to put the patient in the middle of outstanding balances,” Mikkel said.

The Kjelshuses’ ordeal has now drawn the attention of Rep. Sharice Davids, a Democrat representing Kansas’ 3rd congressional district. On Thursday, Davids will introduce legislation that would allow parents to opt out of the birthday rule, which many insurance companies follow.

Under the measure, parents would have 60 days after the birth of a child to choose which parent’s insurance plan will provide primary coverage for the infant. If no decision is made, the birthday rule would still apply. Federal agencies would have the authority to determine how parents will notify insurance companies of their selection.

In a statement, Davids said she’s offering the bill for “the Kjelshus family and countless others” and that it will be called the Empowering Parents’ Healthcare Choices Act.

“Welcoming a child into your family should be a joyful event, free from undue stress and financial surprises at the hands of insurance companies,” said Davids. “This is a simple fix that gives parents the power over their baby’s healthcare coverage, so they can make an informed choice about their family’s future.”

The birthday rule

The birthday rule isn’t a federal law, but rather a common practice based on model regulations developed by the National Association of Insurance Commissioners, or NAIC. At their most basic level, the model regulations coordinate coverage between multiple insurance plans to ensure health care providers aren’t overpaid for services.

In theory, the birthday rule offers a seemingly random way to select a child’s primary coverage when both parents have insurance. In practice, parents with a preference over whose insurance should provide primary coverage for their child may find they have few options other than consolidating their whole family onto one plan.

It’s difficult to tell how many parents encounter trouble with the birthday rule. For couples with similar insurance plans, the rule may have little or no effect on what they pay. The rule may also not make much of a difference in cases of normal births with normal costs. And for couples on the same health plan, or where only one parent has insurance, the rule isn’t applicable.

But if extraordinary, expensive care is needed, the ability to choose the plan that provides primary coverage could prove attractive for parents.

‘Flood of invoices’

Charlie, who is healthy today, was born with complications that lowered her oxygen levels and required more than a week in the Neonatal Intensive Care Unit (NICU) at HCA Overland Park Regional Medical Center to ensure her brain wasn’t damaged.

Mikkel and Kayla decided to provide Kayla’s insurance information to the hospital. To them, it just made sense.

Kayla had insurance from Blue Cross Blue Shield of Kansas City, or Blue KC. Mikkel had an out-of-state plan with a higher deductible.

In the weeks that followed, the family started receiving invoices. Mikkel said Blue KC had discovered he had a job with insurance and that his wife’s calendar birthday came before his.

“They canceled all the checks after they already wrote them, so all these health care providers got bounced checks, essentially,” Mikkel said. “And that’s when the flood of invoices came coming our way.”

The providers then invoiced Mikkel’s insurance, CommunityCare of Oklahoma. The insurer paid about $38,000, Mikkel said, leaving Blue KC as the secondary provider to pay the remainder. Blue KC paid the remaining balance except for about $7,500 related to the NICU stay, he said.

The balance followed the couple for more than a year before going to collections. They said they received conflicting explanations about why, exactly, the bill was sent.

Eventually in October 2020, Mikkel said he was able to connect Blue KC with HCA Overland Park Regional Medical Center and the balance was removed.

‘Sorry for the stress’

Blue KC didn’t respond to questions on Wednesday. Kaiser Health News, which first reported on the family’s situation, previously reported that Blue KC acknowledged that coordination of benefits can be confusing and that the company follows rules of state and federal regulators.

HCA Midwest Health Spokeswoman Christine Hamele said in a statement Wednesday that Overland Park Regional Medical Center provides financial counselors to guide patients and their family on insurance coverage, benefits and available resources as part of its admissions process.

“This includes confirming with the patient or their family their insurance policy, hospital benefits, co-payments, etc.,” Hamele said.

Hamele said the hospital wasn’t initially made aware that the patient had two insurance plans but that once the information was made available the facility filed with each insurance carriers as required.

“It is up to those carriers to coordinate coverage and reimbursement,” Hamele said. “This process resulted in a longer period of time than anticipated.”

Hamele acknowledged the hospital “made an administrative error and an automated billing call system for payment occurred, causing the family undue frustration during an already stressful time, and we apologized.”

Once the issue was identified and resolved, the Kjelshuses ultimately paid $2,340.94 to the hospital, Hamele said, adding that there is now a zero balance on the account.

“Again, we are sorry for the stress and inconvenience and wish them well,” she said.

The hospital’s administrative error may have occurred anyway, regardless of the birthday rule. But allowing the couple to choose Kayla’s insurance as Charlie’s primary coverage may have prevented the early confusion that resulted in large invoices being sent to their home.

“This whole thing goes on and at the end of the day, you just want to help the kid,” Mikkel said.