(Note, this is “Part II” of a 2-part post, which focuses on the medical insurance appeal process. Part I, focusing on how insurance companies decide what will be covered, can be found here.)
In the past, (depending on the type of insurance and the state) some medical insurance payment rejections or adverse determinations were not subject to appeal, and one had to file a lawsuit in an attempt to receive coverage for a disputed service. With the adoption of the Affordable Care Act in 2010, an appeals process was mandated by federal law. Originally, the law required a binding external review process with several specific criteria designed to ensure impartiality and other consumer protection provisions. The original rules were weakened in a series of administrative decisions after intense opposition from insurance providers and related parties. That said, the law still provides significant rights for patients which did not previously exist. [Whether one feels those rights are necessary, or justify any potential increases to the cost of insurance coverage is a topic for another time.]
There are generally two appeals allowed in the process leading up to a binding decision. I’ll walk you through some of the steps, starting with an initial denial. I stick with a case of medical necessity, rather than denials based on administrative issues such as “you didn’t pay your premiums” or “your doctor’s office billed the wrong procedure code”.
Note, although there is one set of federal standards, each state is allowed to have stricter requirements or, alternately, a set of “parallel” standards if they are sufficiently equivalent to the federal standards. Thus the actual process can (and does) vary in each state. So please keep in mind that I’m merely highlighting some general features of the appeals process, rather than attempt to describe an exhaustive step-by-step process. If you would like some additional nitty-gritty details, check out this link to the most recent version of the law.
Step 1 – The Initial Denial. Coverage for a service is denied (either in advance or after the service is provided) because the treatment or test is not “medically necessary”. This is officially known as an “adverse benefit determination”. This decision must be provided to the patient in writing, within 30 days if the service has not yet been performed, or within 60 days if the service has already been rendered. But a key point to consider is that while an insurance company must give you the reason for the denial (i.e. medical necessity) the insurance company may or may not explain in enough detail for you to know exactly why the service isn’t medically necessary. They will simply cite the lack of medical necessity, and direct you to their definition of such online. But if their definition includes any mention of “plan policy”, they might not direct you to a copy of the plan policy with their denial. And it is usually the specific plan policy which provides these coverage criteria. You sometimes have to ask in writing for a copy of the plan policy, which must be given to you upon request. [See page two of “Part I” of the Medical Necessity post for examples of plan policy.]
Step 2 – The Internal Review. The patient (legally referred to as a “claimant”) must be given specific information about their right to appeal the denial, with detailed information about how to do it. This requirement is new. It used to be (again with the disclaimer, “depending on the state”) that the patient had to know if/when/where/how one could file an appeal. To initiate a (free!) appeal after the first denial, the patient and/or physician must request an appeal in writing. Additional information about the case can be submitted by the patient, physician, or both.
This first appeal is only an internal review, legally referred to as an “internal review”. This review is typically performed by an RN or MD who is an employee of the insurance company. In most cases, this review is to ensure that company policy or guidelines were correctly applied. This is usually NOT the time where any “exception” will be made. Exceptions to medically necessary policies might be due to a request for an unproven yet promising therapy, treatment for a very rare disease where it is impossible to obtain strong evidence of the benefit of most treatments, etc.
A decision must be made within 15 days for prior authorizations, and 30 days for services already rendered. One may ask for an expedited/urgent review (where a decision must be made within 3-4 days). In special cases, an emergency review (24 hours) can be requested if there is a legitimate urgent need for a determination. Remember, you must file the appeal within 6 months of notice of the initial denial.
To use an example from “Part I” (positional plagiocephaly, i.e. a flat infant head shape), an internal review may ask, “do the records indeed show that the patient has positional plagiocephaly” (as opposed to other forms of plagiocephaly)? Yes. “Is the request for treatment via helmet?” Yes. “Do we have a policy excluding helmet therapy for plagiocephaly?” Yes. Thus, coverage will be denied, and the internal review is over. It really doesn’t matter what other information is included in the appeal, or how “medically necessary” the patient or the physician (or helmet manufacturer!) thinks the therapy is, or how stupid one thinks the policy is.
Occasionally, the company will call the provider at this stage to get more information. I would caution, this is not a time for the physician to argue, yell, pout, beg, etc. Whether in your initial appeal letter or on the phone, simply give the relevant facts: the patient’s diagnosis, what the test or treatment is for, and provide the best available data for requesting that a particular service is appropriate for the specific condition. It can be helpful to include high quality references with your appeal (with the understanding that they won’t be read until the NEXT appeal).
There are times when an insurance company will request that that an external or independent reviewer actually conduct the internal review. That is, they farm out this first appeal to an external, independent review organization even though they are not required to. I assume that this is done in cases where there is no existing plan policy, or when it might be a special case, or when the company does not have the administrative tools in place to handle the specific review required. In this case, the external reviewer (defined in Step 3) will actually help the insurance company decide if their initial denial was appropriate based on their own policies.
The question which is asked is typically “Is this service considered medically necessary based on our definition of medically necessary and our related plan policy”. That is, the reviewer is basically only being asked if the policy was applied correctly, but NOT if that policy is appropriate. It is important to note that the insurance company is not required to accept the opinion or decision of any external reviewer who is asked to help with an internal review stage.
If re-denied at the internal appeal stage, the patient gets written notice of the denial of the internal appeal, called the “final internal adverse benefit determination”.
Step 3 – The external review. There is another level of appeal, and this is where things get interesting or infuriating, depending on your point of view. That’s because after the initial appeal, state law says that subsequent appeals have to go to someone independent from the insurance company, and undergo an “external review”. The insurance company can charge the patient no more than $25 for this appeal, and there is no minimum coverage amount necessary. E.g. one can appeal a $50 denied charge. FYI, an external appeal can cost the insurance company many hundreds of dollars (in the simplest of cases).
There is a giant industry of firms which has, by necessity, arisen to handle these appeals. Such firms are referred to as “Independent Review Organizations” (IROs), and act as intermediaries between the insurance companies and panels of contracted. Thus, the patient and doctor can submit another appeal, and this gets sent to an IRO of the insurance company’s choosing (for the most part). The IRO then selects an appropriate physician to review the case. The reviewer is required to be an actively practicing, board certified MD with at least 5 years’ experience, who has knowledge about the service under consideration, and has no ties to the insurance company, the patient, or the patient’s treatment providers.
By law, this is the appeal where the insurance company cannot rely upon plan policy or their own internal definition of medical necessity. Instead, reviewers are asked to give their own opinion of whether a service was “necessary” and should be covered, based on the best medical evidence. In this case, the reviewer is asked to act as an expert witness of sorts, and to make a case for or against the safety, efficacy, and cost-effectiveness, of the service under consideration. At this stage, it’s common for this level of appeal to go to three (or more) independent reviewers, with a “majority rules” framework. This level of appeal is legally binding, and no further appeal is permitted.
The specific rules for how exactly the reviewer is supposed to make a determination is ill defined. But here is how New York State describes external reviews:
“For medical necessity appeals, the external appeal agent will make a determination as to whether a health plan acted reasonably, with sound medical judgment, in the best interest of the patient.
For experimental / investigational treatment appeals, the external appeal agent will make a determination as to whether the proposed health service is likely to be more beneficial than any standard treatment or treatments for a patient’s life-threatening or disabling condition or disease.
For clinical trial appeals, the external appeal agent will make a determination as to whether the clinical trial is likely to benefit the patient in the treatment of the patient’s condition or disease.
For rare disease treatment appeals, the external appeal agent will make a determination as to whether the requested health service is likely to benefit the patient in the treatment of the patient’s rare disease and that such benefit to the patient outweighs the risks of such health service.”
As you can likely predict, many appeals will be based on grey areas, of which there are many in medicine. For example, there are some rare diseases for which there will never be very good evidence on what is “likely to benefit the patient”. And there are many cases where a good case could be make for either side. Taking helmet therapy for positional plagiocephaly as an example, some physicians feel strongly that it works, or works well enough over other therapies to consider it medically necessary, despite the very high cost. Others feel strongly that there is insufficient data to support the effectiveness. Thus, when such a case goes to the final level of an appeal, the final determination may come down to the “luck of the draw” based on which reviewers get assigned the case.
[For the record, I believe that there is insufficient evidence that helmet therapy is effective for the treatment of positional plagiocephaly when compared to other cheaper alternatives. Note, I’m not saying that it definitely does NOT work, but only that it is certainly not clear that it definitely works. In addition, there is little evidence that plagiocephaly leads to any real medical problems. Thus I (and most others) have the opinion that it’s a cosmetic issue, and not a medical issue. But I have well-respected colleagues who have a different opinion. Given this controversy, and the cost of helmet therapy, I’m not surprised that helmets are usually not covered by insurance. I could never say that a health plan was not being “reasonable” (one of the appeal criteria) in denying coverage for treatment with a helmet.]
So, how is this information useful to a patient, or to a physician who is asked by the patient to help them through the appeal process? First, and foremost, do not fight with the insurance company on the definition of medically necessary in the first level of the appeal process, without consulting the insurance plan language. You are wasting your keystrokes by writing a 10 page letter on why you feel a service might be “most definitely, certainly, slam-dunk medically necessary!” Also, find out the laws which apply in your state regarding insurance coverage appeals, and what type of language is used to determine the final appeal.
My advice is to submit the relevant records, state your case about why you feel service should be covered, and be sure to cite the BEST references available (and provide a copy with the appeal), so that the independent reviewer has all the information close at hand. Also, don’t overstate the case, and certainly don’t misread or stretch the literature. For example, I’ve seen letters regarding positional plagiocephaly which have cited dozens of research papers which supposedly claimed that “plagiocephaly leads to developmental delays”. However, no medical professional believes this to be true (at least I hope not). While it is true that almost all studies note the association between developmental delays and plagiocephaly, it is the delays which are responsible for the plagiocephaly, and not vice versa. Fixing the head shape certainly does not improve the delay, or prevent any future cognitive or motor delays.
If you have any experience with the appeals process (especially corrections or clarifications), feel free to share them in the comments section below.