Structure of Employee Benefit Plans:
Today, most employer-sponsored plans are established under and governed by the federal ERISA Act. The structure of these plans can be very convoluted. In general, the plans are either "insured" or "self-funded". An "insured" plan is underwritten by an insurance company. But even a "self-funded" plan may be indirectly "insured", through excess coverage or "stop-loss" policies issued to the employer or the plan. (See: The "Stop-Loss Shuffle"). In either instance, you will typically find an insurance company lurking about, providing "administrative" services to the plan (e.g. claims processing, managed care, etc.) Even the "self-funded" plans are quite often put together by insurance companies. The greater the number of enrollees in the plan, the greater the insurance company’s profit.
Since this is an extremely competitive field, in order to "sell" the plans to employers and/or employees, plans often promise more than they deliver. Among the many medical benefits promised by insurance and employee benefit plans are benefits for the inpatient rehabilitative treatment of psychiatric problems, alcoholism and/or other substance abuse problems. However, these benefits tend to be quite vulnerable, because the "medical necessity" of such treatment is often more difficult to establish that it is for other types of medical treatment.
Coverage of Inpatient Rehabilitative Care:
Although the patient’s benefit plan may specifically cover inpatient rehabilitative care, difficulties frequently arise when the time comes for the plan to actually pay a claim. Problems can be expected at both the "certification" stage and the "claims review" stage. This is especially true, where treatment is rendered by a Residential Treatment Facility (RTF). Assuming that state licensing and JCAHO accreditation standards are met, many of these problems can be overcome.
A persistent problem, however, concerns not whether inpatient treatment will be covered, but rather to what extent will it be covered. The need for inpatient care may be clear and not even in dispute, but insurance and other benefit plans are notorious for raising issues, concerning such things as the type and duration of inpatient care that will be covered. For example, insurance and benefit plans often try to limit payment of inpatient benefits to acute care detoxification services, contending that any further rehabilitative treatment should occur on a strictly outpatient basis. This notion is clearly contradicted by statistical information, medical evidence, and common sense. (See article: Acute Care vs. Rehabilitation in the Treatment of Substance Abuse).
Often, these issues are raised early on, when "pre-certification" for the treatment plan is first sought by the patient or Medical Provider. Managed Care Companies or Organizations (MCC) frequently refuse certification for all inpatient rehabilitative care, based upon the MCC's determination that such inpatient treatment is not "medically necessary". The MCC will usually recite criteria used in reaching its determination, which do not appear in any plan document and which no one (other than the MCC) ever heard of before. One of my favorites, that I see frequently, is a denial of certification for inpatient rehabilitative care on grounds that: "The patient is not imminently suicidal, homicidal or psychotic." OK, so what? The patient is not a bird, a fish or a Democrat either. How do any of those things relate to the stated plan criteria for determining "medical necessity" or to any other objective criteria for determining "medical necessity"? They don't. In fact, usually they relate to nothing. They are mystery criteria. Actually, they are nothing more than the MCC’s internal "certification" criteria. (i.e. they are "non-plan" criteria, which are not published anywhere and which are irrelevant under ERISA). Where the Plan steps way over the line, however, is when it later denies a claim (during an ERISA-mandated claims review) reciting these very same mystery criteria in support of its final denial. That is a practice which is clearly impermissible under ERISA.
Even assuming that a MCC (or Insurer or Claims Administrator or Plan Administrator) concedes that some inpatient rehabilitative is necessary, a further debate is likely to ensue over the appropriate duration of inpatient rehabilitative care. I have even seen instances, where the Medical Provider wins the debate with the MCC only to have to fight the battle all over again at the claims review stage. I have had cases where pre-certification for inpatient rehabilitative care was obtained and the entire duration of treatment was case managed, only to have a Claims Administrator later deny part of the claim on "medical necessity" grounds.
But the fact that a claim has been denied does not mean that the entire course of inpatient treatment is not covered or that benefits are not owed. If the medical provider has obtained an assignment of benefits from the patient, it will usually have standing to pursue the claim through all levels of administrative review and in court, if necessary.
Postscript: The federal regulations have now been amended to address the denial of claims based on such undisclosed criteria. Today, any such adverse benefit determination must contain the internal rules, guidelines, protocols, standards or other similar criteria of the plan that were relied upon in denying the claim (or a statement that such criteria do not exist).
COVERAGE OF INPATIENT REHABILITATIVE
For psychiatric care, eating disorders, or
By: Michael A. McKuin
ERISA Disability Lawyer