It was a difficult decision, and a bittersweet one. I dearly love my patients and my co-workers, and feel I was a decent enough doc such that I was making a positive contributions to peoples’ lives and the field of medicine. But while medicine is a joy and a privilege, it’s also very challenging in many ways and substantial portions of my day (e.g. the times when I was not directly interacting with a child and family, or time not spent teaching) were not as enjoyable as they once were.

So I decided to pursue, full-time, my other passion: providing financial advice and education. I have been doing this in some capacity for over 20 years, as a part of my financial planning firm for 10 years, and also on behalf of a non-for-profit for the past 5 or so years. I’m expanding the number of financial planning and tax-prep clients I accept, and also filling up my calendar with lectures and workshops to medical colleges, residency programs, and hospital/university faculty/physician groups. I literally enjoy every minute of it, and look forward to each day I work and I expect that to continue.

I’m getting paid to educate people and help improve their financial situation and by extension increase their job satisfaction (for those who work). And because half of my clients are medical professionals, it feels that I’m still contributing to “medicine” and that I’m still a part of the field.

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Just about every textbook or atlas I’ve consulted (with a couple exceptions) and everyone who has ever taught me how to read an EEG, explains that the pattern seen on the EEG is due to “Bell’s Phenomenon“, which describes how our eyes move when our eyes are closed under certain circumstances. However, Bell’s phenomenon does NOT occur during eyeblinks.

Here is a short video which shows what eyeblinks and some eye movements look like on EEG, explains Bell’s phenomenon, and explains why Bell’s phenomenon is not responsible for eyeblinks on EEG.

I’d very much appreciate it if anyone can help me find a single reference which shows otherwise. 🙂

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No one knows what will happen to the public service loan forgiveness program (PSLF). Regardless, you should absolutely select the best income-driven repayment plan for you, from among PAYE/REPAYE/IBR and keep making the smallest possible payments (thus maximizing the forgiveness potential) on loans which are eligible for forgiveness AS IF PSLF will be around.

Yes, minimizing your payments will increase the length of your loan and result in more overall interest due if PSLF goes away. But that’s not a problem, if you take the extra cash flow from the reduced loan payments and save or invest the difference, such as using the extra cash to pay down private loans or other loans which do not qualify for PSLF, or perhaps contribute to your 401k or Roth IRA. But if you use the extra cash from the reduced loan payments to increase your spending, you risk a substantial future financial shock should PSLF be reduced or disappear.

Don’t forget that there are benefits from using a PSLF qualifying plan which do not depend on PSLF. For example, there is the possibility for immediate “forgiveness” (for example, via an ongoing subsidy using REPAYE) on at least a portion of the interest. That’s essentially money you get to bank today, regardless of what happens to PSLF.

[Note, I am not going to describe the PSLF, what loans are eligible, etc. A future post (hopefully) will briefly summarize the pros and cons of the 3 income-driven plans you should consider using under PSLF. For details on PSLF, the Department of Education’s website on this is excellent. And everything you need to know is compiled here.]

Full Post

[DISCLAIMER: The details of the various repayment plans can get quite involved. Despite the time I’ve put into researching these, I would not yet call myself an expert. I have talked with self-proclaimed experts who disagree on the some of the details. Please don’t make any decisions based on the information below without independent verification!]

I often get asked my opinion about whether the PSLF will be available to those who recently started making qualifying payments and work for an eligible institution, as is the case with most medical residents. The short answer is “I have no idea”, and neither does anyone else. The law which sets the rules for PSLF can be changed at any time. People currently eligible for PSLF may get grandfathered into the current rules, or they may not.

The PSLF program is very expensive, and the people who will benefit most are those with the largest loans, which include physicians. Loan forgiveness for “rich” doctors does not enjoy broad-based public and bipartisan political support. In fact, many of the Obama administration’s previous budgets had proposed capping PSLF to about $60,000, but these budget proposals were not enacted by congress. PSLF remains a ripe target for termination or substantial modification.

So how should you plan your finances given this uncertainty?

If you are contemplating taking out new student loans, you should certainly not make any borrowing or career decisions based on PSLF. If you are currently a medical or other professional student, I urge you to consider your career options with the assumption that PSLF will be gone. That is, you absolutely need to assume none of your loans will be forgiven. PSLF should certainly not be used as a method to borrow more than you (or your future you) can afford. I know medical residents with over $500,000 in student loans who are pursuing relatively low paying academic jobs in, for example, general academic pediatrics or neurology. If they don’t get substantial loan forgiveness, their financial success is tenuous. An analogy I often use is this: you would never borrow a million dollars to open a cozy corner coffee shop and have any hope of paying off the debt. Unfortunately for most medical students, the debt is “on the books” long before they have any idea what kind of job they may want and the resultant salary.

If you are a medical resident who has already taken out large loans and are about to start repayment or are currently in repayment, what should you do? There are two main possibilities: 1) choose a standard 10-year repayment plan and/or pay off the loans as aggressively as possible or 2) choose an income-driven repayment plan where the “underpayments” below the 10-year repayment amount will (potentially) qualify for forgiveness.

Let’s take a hypothetical borrower, who is a first year medical resident, single, with $200,000 in qualifying loans at a 6% interest rate, and who has an income of $60,000. Then at the end of residency, assume he/she will accept a job making $200,000. Over half the residents at the programs I am affiliated with have $200,000 or more in debt, so this is certainly not an atypical situation.

For this resident, paying back the loan under a standard 10-year plan will cost $2,200/month or (rounding) $26,000 per year. That’s a huge monthly payment with a salary of $60,000. I would say that few residents can afford these payments at all. So there may not be a choice of whether to use income-driven repayment. But assuming it’s possible, after 10 years the loan will be paid off and you will have paid a total of $66,000 in interest, and the loan is not eligible for PSLF (due to no remaining balance to forgive).

Suppose instead the resident chooses one of the three income-driven plans which qualify for PSLF: Pay As You Earn (PAYE); Revised Pay As You Earn (REPAYE), or Income-Based Repayment (IBR). [Note, there is a fourth, Income-Contingent Repayment (ICR) but most of you should not select this option]. PAYE and REPAYE (and for recent borrowers, IBR) limit the payments to 10% of discretionary income. For this resident making $60,000, the payments under PAYE and REPAYE will be only $277/month or (rounded) $3000/year. Compared to a yearly payment of $26,000, this results in putting $23,000 less dollars towards the loan, which then makes $23,000 potentially “available” for loan forgiveness. Under the PAYE program, this $23,000 is guaranteed to be forgiven in 10 years regardless of future income. With the REPAYE however, loan forgiveness from early underpayment has the potential of being “undone” if income is very high later on, relative to the loan balance. PAYE would seem to be the best option to select if your loans qualify for PAYE. However, there is one big advantage of REPAYE which I describe later. [Also, it is usually possible to select REPAYE early on and then SWITCH to PAYE, which for many borrowers is the optimal plan.]

When salary jumps to $200,000 after a three-year residency, the loan payments under PAYE jump to about $1500/month, or $18,000/year. This is still less than the $26,000/year in payments under the standard 10-year plan. Thus, an additional $8000 per year is eligible for loan forgiveness. In total, the resident will have paid $135,000 in total (compared to $266,000 with the standard plan). That’s a “savings” of $131,000. Which is a LOT of money. Note that the savings is actually going to be much higher, because I’ve ignored the fact that in the first year of residency, the income used to calculate payments will be zero (and thus the payments zero) due to lack of income during medical school. Then the next year, the income is only half of $60,000, due to only having worked July-December of the PGY-1 year. Furthermore, there is a delay between the time of your raise and when your loan payments are re-calculated. Altogether, your total payments under an income-driven program are likely to be much less (and forgiveness much higher) than the estimates above.

So we finally get to the main question, WHAT IF this resident chooses an income-driven plan and then, just before getting forgiveness, PSLF completely disappears with no grandfathering?

The consequence of a vanished PSLF is that you will have essentially been paying 6% interest on every dollar not put towards the loan. Which means all of your spending during that time was similar to putting it on a credit card charging 6% (with perhaps some small tax deduction for the student loan interest). Would you borrow at 6% to pay the rent, go on vacation, eat out?

But what if you did not use the reduced payments to subsidize your everyday spending? If you used that extra money to pay back private loans, which can have interest rates of anywhere from say, 5% to 10%, then you are really no worse and have even come out ahead, regardless of PSLF. Alternately, the savings could have been used to contribute to a 401k, which reduces your taxes, or contributed to a Roth IRA. Either way, you may have “borrowed” at 6% to make those investments, but that money is still there. So while your loan balances may be higher, you have gotten a head start on retirement savings. And depending on how your investments do or have done, you may even come out ahead (not that I advocate intentionally borrowing in order to invest).

The summary is that PSLF represents a potentially massive benefit to you, so you should assume it’s going to be there for you. If PSLF is legislated away (which I don’t believe is even possible!), or if perhaps you do not end up with 10 years of payment in a qualifying job, it’s not a tragedy. The upsides are huge, and the downsides are minimal.

But it is important to note an important benefit of choosing among the PAYE or REPAYE plans which I have not yet mentioned. REPAYE, independent of PSLF, will likely result in some immediate loan forgiveness via an interest subsidy. This can be considered “money in your pocket”, which no one can take away. PAYE also has a subsidy of sorts which affects capitalized interest. These two plans are all slightly different when it comes to the interest subsidy, so I’ll go through them each.

(click on the “2” under the “share” button to read the next page)

The post The future of the Public Service Loan Forgiveness Program is uncertain. How to choose a student loan repayment plan. appeared first on Sotirios Keros, MD PhD EA.

“…a health plan which pays nothing except for preventive care until the deductible is met. If your plan meets IRS requirements and you have no other health insurance, you are allowed to invest in a health savings account (HSA), which allows you to deduct contributions to the account from your taxes, pay medical expenses from the account tax-free, and invest unused money for future medical expenses.”

An HSA is summarized as:

“…a special account which is used in conjunction with a high deductible health plan. Contributions to the account are tax-deductible on the federal and most state tax returns, and withdrawals are tax-free if they are used for medical expenses. Unlike a flexible spending account, unused money remains in the account and can be invested; most accounts offer either mutual funds or brokerage accounts for investing.”

By placing additional cost considerations on the consumer or patient, high deductible plans and health savings accounts were highly touted as a way to reduce health care costs by at least three proposed mechanisms: 1) increased comparison shopping for health care services, which would encourage providers to reduce their cost; 2) reduction in frivolous or unnecessary consumer spending; 3) encouragement to both the consumer and the insurer to support preventative care as a way to save on future costs.

I have long wondered (as have many) just what effect HDHP/HSA plans actually have on consumer behavior. In fact, there has been a lot of data that, yes, people who have an HDHP actually do spend less on health care. But good data is lacking on specifics. Obtaining detailed information is complicated by the fact that different people have very different plans available to them, and also different motivations for switching to an HDHP. For example, those who are younger, healthier and more affluent benefit disproportionately from an HDHP/HSA type insurance plan, and might be expected to preferentially choose such a plan if offered. Some may be forced to choose an HDHP because they can’t afford the up-front premiums of a traditional plan, while others may have only an HDHP option to choose from in the first place.

But we now have a fairly remarkable (in my opinion) research study which provides a good deal of insight into how people who have an HDHP/HSA behave relative to those with traditional insurance. The full study is titled “What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics”. A plain-language summary is available here, and the full study is available for free here.

What’s special about this study is that the authors discovered a large employer who switched everyone in their firm from traditional insurance over to the HDHP (as the only option). This allowed for a before-and-after comparison of essentially the same group of people, who had no choice but to all switch at the same time. But there were additional features of this changeover which made the comparison particularly useful. First, the original health plan had no copays, no out of pockets costs, and the premiums were entirely paid for by the employer. That is, all health related spending was paid for by the employer. Second, with the new plan, the employer contributed an amount equal to the deductible into the employee’s HSA. The net effect of these changes is that the employee, on average, would not be worse off under the new plan. However, they could potentially benefit by being able to keep any unspent money in the HSA account. Note, this is a simplification of the HDHP plan. For complete details, see the full paper.

The punch line of this study is that people do not appear to be rational spenders of health care dollars. Although spending was decreased overall, this was because people obtained less care of all kind including free preventative care such as mammograms and colonoscopies. In addition, there was no evidence of comparison shopping, even though they had been given tools assist in such comparisons of cost. This includes imaging studies such as MRIs and CT scans, which tend to be similar between facilities but for which there is considerable cost variation.

Furthermore, even those with chronic, expensive illnesses who had always exceeded their out-of-pocket maximum (and thus depleted their employer provided funds) delayed their spending each year as long as possible, even when there was no financial incentive to do so. In addition, this group with high annual health care spending did not learn. That is, in subsequent years they continued to delay health care utilization early in the year, only to accelerate it after the out-of-pocket maximum is met.

The authors of this study did not speculate about any underlying reasons behind these observations. But I, on the other hand, am happy to do so.

Let’s start with the group of people who are healthy, and in any given year would be expected to need little to no health care spending. Even though the employees in this category have their health spending essentially paid for, they get to keep any unspent funds. So psychologically, this money is “theirs”. This money is in their accounts, it appears in their balances, and likely gets figured into their perception of their net worth. If unspent in any given year, it can be spent in any subsequent year tax-free. If one reaches age 65, it can be withdrawn in the same way IRA funds can be withdrawn, with no requirement that it be used for health spending. In fact, given that HSA money can be invested in stocks and bonds, I assume many people consider their HSA accounts more like retirement accounts rather than an account to be used for health spending. I’ll admit, I’m basically in this category. This group might be expected to behave, from a sheer financial perspective, as if they had no insurance at all. This certainly would explain why people choose to avoid care.

On the other hand, the authors of this study found no evidence of comparison shopping. From a purely financial point of view, one would expect people to attempt to minimize their spending after having made a decision to seek care. But they didn’t. Personally, I find it’s very hard to comparison shop in medicine. Even as both a physician and personal financial planner, I find that I have little insight as to what any given office visit or procedure might cost. In fact, at one point in my career I asked my employer (a major academic medical center and university) what a patient might pay to see me for an office visit (just a few ballpark examples, such as the “cash price”, one or two contracted insurance rates, and Medicare/Medicaid prices). Despite the fact that I needed this information for a research study I was conducting, the administration refused to provide this cost information to me, saying that such information was “proprietary”. I was not given this info even though Medicaid and Medicare rates are public information, and I was eventually able to find the Medicaid and Medicare rates for an office visit with me online. But if even I can’t easily find out what my own patients are charged, how can a consumer hope to find out, in advance, what they might be charged? The people in the study were even given a comparison shopping tool. In my limited experience with such tools, however, I have found them to be clunky and frustrating. I wonder if others had the same experience and chose not to use them or did not find the tool helpful.

I believe most patients simply don’t bother to shop around, as this study shows implies. It is much easier to avoid an office visit or other non-emergent procedure altogether (and thus save 100% of the cost), than to spend hours and hours of (potentially futile) comparison shopping to save perhaps 2% to 20%. Alternately, once one has decided to obtain care, it might be that cost is not the main factor, but rather other factors drive the decision, such as appointment availability, choice of physician, location, etc.

But I’m not sure I can explain the fact that those who know they will exceed the deductible and out of pocket maximum each year still delay their health care spending as much as possible. It can’t be a cash flow issue, because the money for the deductibles have already been put in a dedicated account by the employer. I can only speculate that perhaps there is some HOPE that one won’t need to spend as much (despite past experience).

I think the most interesting take-home point from this study is that when folks have a financial incentive to delay or avoid care, they actually do so. We might assume that this is bad for their health. But we don’t really know. It may be that those who avoid care might actually have better health outcomes. There is data which shows that more interventions and more testing leads to worse care and worse outcomes. In fact, one study found that greater patient satisfaction was associated with greater medical spending and that those who were more satisfied with their health care were more likely to die. But that is a topic for another day.

I’m often helping financial planning clients and friends make decisions about their health insurance, and I typically approach it from a financial perspective. But I had always suspected (partially based on my own situation) that people alter their behavior (for better or for worse) depending on their choice of insurance plan, but perhaps in irresponsible or irrational ways. This new study provides substantial evidence for this. So when discussing health insurance options with my clients, I have begun to routinely point out the non-financial or psychological “pros and “cons” between various insurance options in addition to the standard cost projections and break-even points.

In my opinion, the number of people covered under high deductible health plans will continue to increase. It can only help to have as much information as possible about how people actually behave when insured under an HDHP, and this new study helps to fill in some big gaps in our understanding.

I’ve admitted that my health/medical behavior has changed now that I have an HSA. Previously, when I had traditional health insurance, I rarely hesitated to seek care when I thought I needed a physician visit. I had already committed to large premiums for the privilege of low co-pays and minimal out of pocket costs. Thus, the cost to me (for example) for an ophthalmology evaluation when I had blurry vision, or a perhaps dermatology visit for a suspicious mole, was a just small copay. In one sense, I had pre-paid for medical services. Thus the biggest “cost” to me was the inconvenience of the appointment itself. But now that I have an HSA, a routine office visit might result in a payment of as much as $400. If any labs or procedures are performed, the cost might end up being several hundred dollars more than that. So I am very reluctant to visit a physician when I’m under the deductible, because I perceive the cost to me of any doctor’s visit to be “higher” when compared to traditional insurance, due to the fact that I’m going to get a big bill in the mail which is triggered with each “touch” I have with medical care. This is despite the fact that I have had a huge upfront savings on premiums.

Delaying or avoiding care may be medically unwise, and this is not what I expected my behavior to be when I chose the HDPH/HSA plan. I had performed a detailed cost summary analysis comparing my high-deductible plan to a traditional insurance plan. I had calculated that with an HDHP/HSA I could spend up to $4000 per year out-of-pocket and yet still come out ahead compared to my other options. Because I’m otherwise healthy and it would be very unlikely to spend much in any given year, I figured I would continue to obtain all the routine care I needed and still come out ahead. And yet here I am, making justifications and rationalizations to avoid spending $100-$400 on a routine office visit, despite having “baked-in” those costs in my decision. As with the participants in the study, it seems I am also a “non-rational consumer of health care”.

In my case, I suppose it’s because I feel that the money I saved in health insurance premiums and the HSA contributions (some of which is paid by my employer) are mine (which technically, they are). So even though I come out way ahead by having selected the HSA, I naturally want to come out further ahead by limiting my health spending whenever possible. For me, the easiest and most direct way to limit spending (in the short run?!) is simply to avoid care.

Few people want to go to the doctor in the first place due to the time involved, potentially unpleasant experiences, missed work, etc. But HDHP plans add in an increased, direct financial incentive to avoid care. For better or for worse, I’m not surprised that people do so.

The post The Psychology of High Deductible Health Plans and Health Savings Accounts: Are You a “Rational” Consumer of Health Care? appeared first on Sotirios Keros, MD PhD EA.

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.

The post “Medically Necessary” Health Care. The Appeals Process. Part II (of two) appeared first on Sotirios Keros, MD PhD EA.

Summary: Many insurance claims are denied as being “not medically necessary” and the patient is thus forced to pay for this service out of pocket, or forgo it entirely. I describe how an insurer defines medically necessary. Fortunately, the the Affordable Care Act newly mandates an appeals process. Historically, half of all denied claims get reversed on appeal. I describe the basic reason for most denials, and describe the appeal process, in hope that surprises can be avoided and help you maximize the chances of reimbursement for appropriate services.

If you have ever had a health insurance claim denied (whether your own claim, or if you are physician, a patient’s claim), it’s likely you found the reason for the denial to be unclear. There are many reasons a claim can be denied, either in advance (in the case of a denial of a pre-authorization) or after the service has been provided. Sometimes the denial is administrative, such as when a piece of information is not communicated properly from a provider to the insurer. But many claims are denied when the service is not deemed to be appropriate, in that the service is considered not to be “medically necessary” or that the service is “experimental or investigational”. In some states, up to 24 percent of claims are initially denied (see this easy to read GAO report for good information on insurance denials). Yes, it’s true, insurers are allowed to decide (with limits) what is medically necessary. Or more specifically, insurers are not obligated to pay for any and all treatments simply because an MD recommends it.

But what does it mean to be “medically necessary” and who gets to define it? In short, the insurance company gets to define it initially, and that definition is listed in the insurance plan and policy documents. Although (based on a series of state and federal lawsuits) a more-or-less uniform definition has been established. As you will see below, however, there is significant room for interpretation in determining what is medically necessary, and by extension, what is reimbursable by an insurance company.

As a physician, I routinely make decisions about diagnostic and treatment options for my patients without being fully certain that such treatments are covered by their insurance. It is simply not possible for me and/or my patients to know with certainty what is covered. There are many reasons for this. Most relevant is the fact that most physicians accept many dozens of insurance types, and cannot be expected to know all the coverage policies of each plan.

Insurance companies, including public insurance such as Medicare and Medicaid, all have various policies which must be followed in order for a test or procedure to be considered eligible for reimbursement. I am acutely aware that if I suggest a service which is not covered by insurance, the patient may be liable for the cost. Each insurance contract typically has language such as (paraphrase) “simply because your physician determines a test or treatment is necessary does not necessarily mean we will cover the costs of that service”. In addition, there is language in my employer’s contract with the patient that neither I (nor my employer) is financially liable for any test or treatment we order which is not covered by their insurance. Thus, the patient is always potentially on the hook for accepting or agreeing to any treatment suggested by their physician. This is a huge responsibility, which I do not take lightly. That said, I’m certain I will (or probably already have) suggest a service which will be denied and for which my patient will bear the full cost. [Full disclosure, I had to use google to make sure I used the right “bear” in this case]

There is one particularly unfortunate situation I feel obligated to warn about. It’s that a “pre-authorized” procedure does NOT automatically mean that an insurance company has agreed to pay for it. This is stated somewhere in the fine print of each insurance policy contract. There are times when pre-authorization is required in order to even be eligible for payment. Also, pre-authorization can be initiated by the patient or provider in advance of a service to ensure it will be covered. But such a pre-authorization does NOT obligate an insurance company to pay for the service, if upon later review it is found to not be medically necessary. So even though I can tell you that you that the insurance company has “pre-authorized” your video EEG admission, or your brain MRI, or your genetic testing, it does not mean that I can say with certainty that they will indeed pay for it. I know of more than one case in which the cost of a very expensive test, initially “pre-authorized” and even reimbursed by the insurance company, was later denied and a payment owed BACK to the insurance company by the patient. I do not know how such situations are treated by the new appeals process mandated by the Affordable Care Act (which I describe later). But I assume this type of situation lies outside of medical law, and falls instead under contract law (to the extent that such things are separate). Have I mentioned that I am not a lawyer?

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The post Is Your Health Care “Medically Necessary”? Part I (of two) appeared first on Sotirios Keros, MD PhD EA.

We are all familiar with optical illusions which fool our visual pathway into thinking it is seeing one thing, when the reality is actually quite different. Similarly, cognitive biases can be thought of as inherent brain processes which “fool” our abilities to make decisions under various circumstances. While no one is immune from cognitive biases, it has been demonstrated that the ill effects of these biases can be mitigated with education. That is, if we are taught about the various cognitive biases, we are less likely to be affected by them, and many medical schools and residency programs integrate this education into the curriculum.

Despite my interest and (presumably) above-average knowledge about cognitive bias, I know that I am not immune. I have an example. Early in my neurology training I received a consult request from the Emergency Department about an otherwise healthy young woman with vision loss in one eye. In neurology this is a “classic” presentation for optic neuritis. In order to facilitate the work-up for optic neuritis I suggested to the ED to go ahead and order an MRI of the brain and optic nerves, because it would likely take many hours to obtain the MRI and the order would “start the clock”. But when I finally had a chance to examine her, it was instantly clear she did not have optic neuritis, and that the MRI would be normal. On my exam, she described complete 100% vision loss in only one eye, but her pupils were both briskly and equally reactive to light. That is, she did not have an “afferent pupillary defect” which should have accompanied optic neuritis of this severity. In fact, monocular vision loss with an intact pupil can essentially be only one thing, conversion disorder. I performed several other bedside tests, all of which confirmed relatively good vision in the “blind” eye, despite the patient claiming she could not see anything at all. The rest of her neurologic exam was entirely normal.

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