Kim B. ( Self-funded plan, administered by CorpHealth)
Kim B. was a 28 year old single mother, employed as a Registered Nurse. She was admitted to the hospital for treatment of Major Depression and Bulimia Nervosa. Upon admission, her illnesses were determined to be life-threatening. The admitting physician noted that she was "acutely depressed and having suicidal ideation in the context of out of control bulimia nervosa." She reported a long history of bulimic behaviors, but began losing control over eating behaviors approximately one year prior, following an abortion. She restricted food intake during the day and would binge on fatty foods at night and purge by self-induced vomiting. She had also begun using laxatives. She reported multiple health-related consequences including extreme fatigue, dizziness, shortness of breath, palpitations and esophageal reflux. The doctor noted: "In the context of this increasingly severe eating disorder, the patient is progressively depressed with hopelessness, anhedonia, self-loathing, insomnia, mood instability with tearfulness and irritability, poor concentration, poor memory, and indecision as well as recent onset of suicidal ideation.”"
Kim B. remained hospitalized for approximately three weeks. At the time of her discharge it was noted that she had responded well to treatment of her depression and her bulimia nervosa. Therefore, her treatment was life-saving.
Prior to her admission her benefits verified and the hospital obtained all necessary certifications for treatment from the plan’s claims administrator, CorpHealth, Inc. The hospital also verified that under her plan, inpatient benefits were payable at 50% of "usual, reasonable and customary" ( URC) charges, less a $1000 deductible.
Total inpatient charges were approximately $37,000; therefore the claim amount was about $18,000. When a claim was submitted, Corphealth only paid about $8,700. The remainder of charges was denied, but the Explanation of Benefit (EOB) forms that accompanied the payment made no sense at all. It appeared that CorpHealth made some kind of a determination that the hospital's charges exceeded URC. But that wasn’t clear, since none of the EBOs stated any specific reason for the denial. But even if that was the case, there was absolutely no basis for any such determination. There was also some vague reference made to a "contracted rate". However, the hospital was not a contract provider, so that reference made no sense either.
The hospital appealed the benefit determination. CorpHealth issued a letter denying the appeal and upholding the initial payment, but the letter made no more sense than the EOB forms. The letter summarily said that the claim had been "paid in accordance with this member's certificate of insurance and no additional payment will be reimbursed for the service". Enclosed with the letter was an additional letter from a reviewing doctor, but it shed no light on the benefit determination whatsoever. In the final analysis, it seemed to boil down to an unstated position that like it or not, that is what we’ve paid you and that is all we intend to pay you, Therefore, the underpayment of the claim was baseless and without foundation.
The case was referred to me. I submitted an administrative appeal, which explained CorpHealth’s fiduciary duties under ERISA and which pointed out that the forms and correspondence originating from the plan disclosed an absolute failure to observe the requirements of ERISA and the Federal Regulations. Given the vague reasons for the denial, it was impossible to figure out exactly why any part of the claim was not paid. I pointed out that the correspondence originating from the plan told the reader absolutely nothing. Not a single item of correspondence set forth any rational basis for the benefit determination, nor is there any explanation given as to why the treatment rendered was found to be not covered. Accordingly, the denial of the claim was arbitrary, capricious, an abuse of discretion, not supported by substantial evidence in the administrative record, and would not be upheld by any federal court under any recognized standard of review. Therefore, I demanded immediate payment.
Result: The case was resolved satisfactorily without litigation.