Claims are often denied by administrators or managed-care entities, on grounds such as "lack of medical necessity". Amazingly, this can happen even if an inpatient admission was "pre-certified" and the entire course of treatment "case-managed". But the fact that a claim has been denied does not mean that benefits are not owed. The claim may indeed be covered under the precise terms and conditions of the patient's benefit plan. It's just that in this age of Managed Care insurance companies and administrators are reluctant to let go of a dollar without a fight.
Although the need for inpatient care may be clear and not even in dispute, benefit plans are notorious for raising issues, after the fact, concerning the appropriate duration of inpatient care. This is particularly true in the area of psychiatric and substance abuse treatment claims. Frequently, benefit plans will engage in a retroactive review of a claim; and then apply their own "certification criteria", to deny the claim. The application of such "certification criteria" is usually inappropriate, unless those criteria are set forth in the plan itself. Not only are such "certification criteria" seldom found in the plan, but they frequently contradict the express provisions of the plan. In those instances, any reliance upon such criteria to deny a claim is highly inappropriate and impermissible under ERISA. (Unless you happen to live in the 10th Circuit, where even unpublished "medical necessity" criteria are considered "a part of the language of the plan". See: Into The Abyss ). For example, in the area of substance abuse treatment, such "certification criteria" are frequently recited, which relate only to acute care procedures (such as detoxification), but these are erroneously applied to rehabilitative treatment. (See: Acute Care vs. Rehabilitation).
Whenever a plan refuses to pay for the entire duration of treatment rendered, it puts the medical provider, in a difficult position. Basically, the provider has three options: (1) Pursue the patient for payment, by filing a lawsuit or handing the account over to a collection agency, which does not make for good provider-patient relations and may even undermine the patient’s treatment; (2) Write off the account as uncollectable, which could jeopardize the provider's financial ability to provide treatment to other patients in the future; or (3) Pursue the patient’s claim against his or her insurance company or employee benefit plan. Depending upon what the Plan documents say, the third option may be the best one. This can often be done with very little effort, expense or inconvenience on the provider's part. If the provider has obtained an "Assignment of Benefits" from the patient, the provider 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).
MEDICAL NECESSITY CLAIM DENIALS
By: Michael A. McKuin
ERISA Disability Lawyer