Health insurance claim denials, what is going to change under the Patient Protection and Affordable Care Act

 

The reality and expectations of claim denial and review may be wide apart.

The health care reform law adds these requirements:

Insured plans will have to satisfy external review requirements mandated by the state, which will be binding, or by the Secretary, but only if the state doesn’t have procedures 

Self-funded group health plans must implement an external review process in accordance minimum standards to be created by the Secretary of HHS

The above is effective the first plan year after six months following enactment of the law, generally January 1, for most plans.

Self-funded plans routinely use independent medical evaluations to settle many disputed claims when it comes to medical necessity or clinical questions.  We won’t know the full impact of all this on cost, or administrative complexity until regulations are issued but there is a good bet it will mean more cost and work for employers.

In my experience insurance companies do create problems at times.  A customer service representative gives out wrong information, or incorrectly approves or denies a pre-certification.  Perhaps the administrator drops the ball and it takes far too long for a decision to be made. Maybe a claim is denied and it turns out the physician used the wrong code causing the denial of what was a legitimate eligible service.  It happens, errors are made because like all organizations including government, insurance companies are made up of people and let’s face it, on occasion people do dumb things.

But there is another side of the story.

The Wall Street Journal today contains an article about the provision of the new health care reform law that prohibits insurance companies from denying coverage to children with a pre-existing conditions, a rare occurrence by the way.  There was a picture of a women and her daughter who was denied coverage by a Blue Shield plan.  The child has multiple sclerosis and was denied payment for a drug that costs $1,000 a month.  Pretty bad stuff, right?  After all why do you have insurance anyway?

However, it turns out that the drug in question has not been approved by the FDA for use by children.  Now who is right?

For over forty five years I listened to employee complaints and heard claim appeals and in all that time I learned one thing.  Never accept what you hear on face value especially when it involves a health care claim.  People are prone to leaving out bits of the story, outright lying, or basing their case on the perceptions that (1) the doctor is always right and (2) their insurance should pay for anything and everything.

I once had the wife of an employee tell me she was going to hold me responsible for the death of her children because our plan did not cover vaccinations for Lyme Disease.  Her children were eight and ten, but the vaccine even if we did cover it could not be given to children under thirteen.  Besides, it cost $60.00 hardly a financial hardship, especially if you felt your child was at risk.  When I pointed that out, she said, ” You expect me to pay for it?”

I recall the case of a child who was being treated for months on end with IV medication for Lyme Disease, treatment after treatment did no good we were told and the plan should keep paying the $3,000 per treatment.  We sent the case out for an independent medical review and the report came back indicating there was no clinical evidence that the child actually had Lyme Disease.  The was an additional comment to the effect that what they were doing to this child bordered on child abuse.

Time after time when we obtained an independent medical review there would be questions as to the legitimacy of the treatment or the diagnosis.  Serious back surgery was denied because there were no indications it was necessary, but the patient wanted it anyway.  Many claims were related to high fees. The patient went to a non-participating doctor which generally means the fee is going to be high, the plan paid it’s normal liability based on reasonable and customary allowances and the patient wanted more paid when the doctor billed for thousands of dollars above the 90% range of other doctors for the same service.

One employee filed a claim appeal and later legal action because the plan denied a procedure to reverse a voluntary vasectomy.  All this despite the fact the plan clearly stated that this service was not covered and the employee admitted he knew that before having the procedure.  One can only wonder why the fully voluntary original vasectomy was a covered expense. The insurer who administered this plan was not acting as an insurance company because this was a self-insured plan and yet the perception would be that Blue Shield was denying claims to save money.

The point is don’t believe every horror story you see on television or read in the paper, there is always more to the story.  In addition, don’t expect much to change under the new law because the assumption that health insurance plans randomly and frequently deny claims in violation of legitimate criteria is false.  In addition, there will be an ongoing need for valid claim review because if there is not, health care costs will become even more unaffordable as benefits are expanded to millions more Americans.

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