Health Insurance 101(Part II)-Authorizations/Denials/Appeals

If you are in a health plan that requires authorization to for tests, procedures and to see specialists, this is one area that can often seem like a black hole of luck.  “I hope I’m lucky and I get authorization”…..or “I hope I’m lucky and I get my procedure authorized this YEAR!”  Actually, health plan authorization processes are regulated and must follow certain guidelines.  That is not to say all of them do, but if they consistently are out of compliance with their process, they meet certain consequences from their oversight organization National Committee for Quality Assurance (NCQA) http://tiny.cc/FFt6X;  the most severe of those is losing accreditation.  Certain “turn-around times” must be met, which is the time from when a doctor makes a referral to when the insurance company reviews it and then processes the authorization or denial.   NCQA requires standard of care medical information to be used when reviewing the medical necessity of a referral, test or procedure.  They require medical necessity denials to be reviewed by a physician.  They also require certain language to be used in denial letters that give patients their rights of appeal of the denial.

What this means to you, is that the common myth that “bean counters” are sitting in an office somewhere arbitrarily approving or denying your medical requests, is just that, a myth.  There are RNs and MDs that review for medical necessity based upon community standard of care and like previously stated, all denials must be processed by a physician.  This doesn’t mean that everything always goes like it should.  Mistakes can be made, which is why it is important for you to somewhat understand the process, the review methods and your rights.

You should not be waiting weeks for a referral to be processed through your insurance.  The process should be complete within three days, if all medical information to justify medical necessity is provided by your doctor to your insurance provider, or fifteen days if more information was needed.  Let’s say a patient is being referred to an endocrinologist because their diabetes is hard to control.  In most cases, they primary care physician (PCP) must provide medical information to the insurance company showing that the referral is medically necessary.  This might include PCP  office visit notes, lab results, list of medications, etc.  Sometimes hold ups occur because PCPs do not provide this information.  Additionally, sometimes denials occur because PCPs do not provide the adequate medical information.  If you have been denied a service, and you think clearly there is medical necessity there, ask your PCP what information was given to the  insurance company when they made their determination.  You may have to speak with the doctor’s medical assistant or referral’s coordinator, to ge this information too.

This takes us to denials and appeals.  Denials may be issued for a number of reasons:

1.  The requested provider may be out of the insurance plan’s network of contracted providers.

2.  The requested service may not be a covered benefit under your health plan.

3.  The insurance company’s  Medical Management Team may have determined that based upon the information provided by your PCP, the requested service is not medically necessary.

With the high cost of medical services currently, an insurance company must negotiate contracts with the providers to keep prices reasonable.  Most insurance companies pay an approximate 33% of billed charges for procedures, tests, and doctor services.  That translates into if you didn’t have insurance and had to pay cash for an MRI, lets say, you would pay $3,000 for that test, whereas your insurance company would pay approximately $1,000 for the same test.  So, it is clear to see why insurance companies do not allow their members to seek services from non-contracted providers.

Each health insurance company usually has a number of different plans with different levels of coverage.  When you sign up for a plan, remember to not only read the booklet of covered benefits they send to you, but keep it in a safe place for future reference.  Often interpreting covered benefits can be a bit tricky.  One example is that many plans have exclusions for “cosmetic surgery”.  However, if it is related to a medical diagnosis, some may cover that cosmetic surgery, such as, work on a cleft lip or palate, breast reconstruction after a mastectomy, etc.

Medical necessity can sometimes be the area of authorization/denial that can cause the most controversy and many times requires the most information received by the insurance company to make an informed decision.  Like previously stated, there are standard of care guidelines available to the insurance company nurses and doctors that assist them in making their decisions.  You or your PCP however, may disagree with the decision.  When you disagree and want the insurance company to reconsider their decision, that is called an appeal.  There are different processes for filing a physician appeal vs a patient appeal.  If the PCP does want to appeal the decision, I often advise the patient to appeal as well.

NCQA requires HMO’s to provide specific appeal information on their denial letters to patients.  There should be a phone number as well as an address.  There are also two types of appeals, an “expedited” appeal and a routine appeal.  An expedited appeal is when there is imminent danger of loss of life or serious injury to the patient.  These types of appeals must be handled within 72 hours, or less if the situation dictates.  Routine appeals must be resolved within 30 calendar days.  I recommend that for routine appeals, patients write a letter.  In this letter, carefully address your issue and reason for disagreement of the denial.  If you have medical information/medical records to add, send them with the letter as well.  Many patients feel that there is no use to going to the bother of writing an appeal.  My experience leads me to disagree.  I have seen a number of denials that are actually overturned on appeal.  Not the ridiculous ones, like a request to put in a swimming pool in the back yard for exercise needs, or the requests for a facelift to assist with mental health, but most serious appeals are overturned.  If you aren’t a good letter writer, maybe solicit the assistance of a family member who is.  Don’t threaten or be abusive in the letter.  State your case factually and emphatically.

If you are interested in the NCQA guidelines that are used to accredit insurance companies, you can find them at this link.  http://tiny.cc/NeO9e For information specific to this article, scroll down to the category named, Utilization Management (UM).

In this article I have discussed the process of authorizations/denials/appeals for most HMO insurance plans.  These  exclude Medi-caid and Medicare, who have their own processes.  I will discuss these in a future article.

Knowledge is Power!!!