(continued from page 1)
So, what do insurance companies agree to cover? Nearly all health insurance contracts state that they will only pay for services which are “medically necessary”. What does that mean? Here is a definition which is commonly used:
“The term “medically necessary” means any health care service or procedure that a prudent practitioner would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is (1) in accordance with generally accepted standards of care, (2) clinically appropriate in terms of type, frequency, extent, site and duration, (3) not primarily for the convenience of the patient or providers, (4) within the scope of practice of such practitioner.”
But what and who determines what is “generally accepted standards of care”? Who determines whether the treatment is appropriate in terms of “duration” or any of the other criteria? The simple answer is that, initially, the insurance company decides. For most services, the insurance company has an existing policy in place to determine medical necessity. Thus, an insurance company can further define medical necessity as meeting the four criteria above AND also abiding by their internal policy. Said another way, the insurance company has pre-applied this definition of medical necessity and codified it in a policy statement. To make things somewhat more complicated, some companies add an additional clause which states that any treatment must be safe, effective, and NOT more costly than an equally effective therapy. That is, all things equal, the lower cost test or treatment is medically necessary (and thus paid for), but the higher cost service will not be covered (or perhaps be covered only up to the cost of the lower cost option).
Let’s take an example. Many insurance companies have a policy which states that coverage for imaging studies such as CT scans and MRIs are medically necessary only if they follow guidelines set by a company called National Imaging Associates. The guidelines can be found here.
Suppose one of my patients has severe low back pain which started last week and I’m worried about a problem with the lumbar (lower) spine. Maybe I’m worried about cancer, or a slipped disk. So I order a lumbar MRI, which comes back normal. Whew, good for the patient. But will the patient’s insurance company pay for it? I hope so, because an MRI can cost thousands of dollars. My patient would NOT be happy paying for this test. The NIA guidelines list several indications for a lumbar spine MRI, including: back pain, evaluation of a known tumor, workup of an abnormal nerve conduction study, and evaluation for new neurologic deficits below the waist. But each of these indications comes with additional criteria. For new onset back pain, an MRI is indicated ONLY IF there has been an abnormal EMG, or “failure of conservative treatment, including physical therapy or physician supervised home exercise plan (HEP), for at least six (6) weeks.”
Oops. My patient had not tried conservative therapy for 6 weeks. In this case, in the absence of neurologic deficit, the coverage for the MRI will be denied as “not medically necessary” because the patient did not have 6 weeks of conservative therapy. Or, perhaps there was indeed a neurologic deficit, but I did not clearly describe that in my note. Either way, the insurance company may not outline exactly WHY the MRI is not medically necessary.
Needless to say, a denial based on medical necessity provokes significant anger and anxiety in a patient. Firstly, because the insurance company has denied a service which the patient received on the advice of a physician, and secondly, because of being required to pay for the full cost of that (expensive) service. [For the record, I feel that the NIA imaging guidelines for a lumbar spine MRI (and most other imaging tests) are appropriate, well-reasoned, and based on solid medical evidence. However, I have very strong opinions against many other commonly seen coverage policies. I’m not trying to take sides right now, my goal is merely trying to give general insights about insurance denials.]
Coverage for certain services don’t have a specific set of coverage criteria, but rather are excluded outright. For an example, here is a verbatim quote from one company, “surgery for gender reassignment [i.e. a “sex change”] is not considered medically necessary”. With such wording, a sex change is simply not covered, regardless of how “necessary” a patient or physician believes it to be. Incidentally, several states require insurance coverage of gender reassignment in some circumstances, and such an exclusion would be illegal in those states. See the recent New York Times article on this matter.
Another more common (and familiar to me, as a pediatric neurologist) exclusion is the treatment of “positional plagiocephaly” (i.e. a baby’s misshapen head which has resulted from lying on one side more than the other) with a “cranial molding orthosis” (basically a tight helmet used to reshape the head). Many insurance companies have a plan policy which states “The use of a cranial molding orthosis for the treatment of positional plagiocephaly is considered cosmetic, and not medically necessary”. This is primarily because there are no well-established medical complications which come from positional plagiocephaly, and thus it is considered a cosmetic condition. Not only that, there is no good evidence that the therapy is more effective than other cheaper (or free) methods. Thus, if your physician refers your child for helmet therapy, and you accept the service, you would be liable for the full cost, which can be many thousands of dollars.
On the other hand, some companies will cover helmet therapy, but only under a well-defined set of criteria. For example, see this actual plan policy for helmet therapy. They basically state that coverage will only be provided if the plagiocephaly arose from an illness or other medical condition, AND if the head is sufficiently asymmetric based on their specific measurement cutoffs. If your child does not meet these criteria, you would have to pay out of pocket for this service, regardless of how impassioned a letter you and or your doctor write in your appeal to the insurance company. I have written many such letters (fyi, NOT for positional plagiocephaly, but for other denied services), and eventually learned that in most cases I had wasted my time. Not because the appeal was denied (some were, some weren’t). But because without knowing precisely what set of coverage criteria applied to my patient, how could I know what issues or details to address in my appeal letter?
Which brings me (finally!) to a discussion of the appeal process, which you can read about in Part II of this post.