Three Experts Outline Strategies to Counteract Insurance Denials
Highlights From the National Eating Disorders Association Meeting
For most clinicians, eating disorders patients, and families, insurance is a confusing game for which few have any training, according to members of a panel discussion at the NEDA meeting in Los Angeles in October. The panelists included attorney Lisa S. Kantor, Esq., of Kantor & Kantor LLP, Northridge, CA; Stacey Brown, Director of Nursing and Utilization Review and Dr. David Christian, Clinical Psychologist and Consultant, Avalon Hills Eating Disorders Treatment program, Logan, UT. Lisa Kantor litigates insurance coverage issues for eating disorders across the country. At Avalon Hills, Stacey Brown oversees all cases of insurance pre-certification, appeals and reviews, and David Christian trains therapists to document patient care in ways that maximize insurance authorizations.
Panel members told the audience, “How you play the game can help or hurt you and the outcome, and the more clinicians know about the insurance game, the more effectively they can play it.” In fully funded plans, the insurer has complete governing power until a claim goes to an external review. A state-funded plan is often governed by different state laws, and fighting a rejected claim often requires litigation, said panel members. Self-funded plans, which operate under ERISA (the Employee Retirement Income Security Act) often do not have an external appeal option. ERISA also imposes higher-than-marketplace standards on insurers. For example, it sets forth a special standard of care upon a plan administrator, namely that the administrator “discharge” his or her duties in respect to discretionary claims processing “solely in the interests of the participants and beneficiaries” of the plan. This factor underscores the importance of accurate claims processing, and demands that administrators “provide a full and fair review” of claim denials.”
Common Reasons Claims Are Denied
The panel outlined out three common reasons insurance claims are denied. The first reason involves the question of medical necessity. Parity laws require that mental health coverage be provided commensurate with medical health coverage. Second, medical stability will occur long before psychological stability. State definitions trump an insurer’s definition of medical necessity. Finally, clinicians should look for loopholes.
A second reason is exhaustion of benefits. To counteract this, clinicians, family, and patient should be very familiar with the individual policy because the company may deny benefits that are clearly included. It is also helpful to know the state’s degree of involvement with mental health parity laws, because the state may or may not participate in parity. A third reason for denial is rigidity about what the insurer thinks treatment be; for example, telephonic family treatment or partial treatment with boarding (one can legally bill for a lower level of care than what is being delivered). And, some companies attempt to selectively exclude eating disorder patients.
Seven Deadly Fallacies
The panel described what they termed “The seven deadly fallacies” of health insurance, which include conflict of interest, the rubber ruler, a straw man argument, false authority, red herring, non sequitur, and post hoc fallacy. Conflict of interest is like a two-headed snake, said panel members. That is, the company sets up the insurance policy so it can play both prosecution and judge. A good example is when the company writes and interprets the policy, or allows an external appeal that is not truly independent. To respond to this, it is important to confront capricious interpretations of the policy and make sure external appeals truly are independent, said the panel members. The next fallacy is “The Rubber Ruler,” or “bad standard,” which involves using poor measures of recovery, or measures that are not American Psychiatric Association (APA) standards. For example, the company may state, “Your patient does not meet our standards for residential care, so we are denying it.” A good counterattack is to point out where their standards are not consistent with best practice, for example, APA standards.
The “Straw Man Argument” involves emphasizing an irrelevant issue and ignoring more pertinent issues. An example might be stating that a patient is now in her ideal weight range so she is ready for partial hospitalization. A counterattack would be pointing out that the company is ignoring the larger psychological, social, and environmental factors in the case. “False Authority” occurs when the company appeals to a false authority, such as Dr. Jones, the company’s clinical director. A counterattack is to check his credentials, to determine if Dr. Jones is a true authority in eating disorders through training and experience. Is he biased because of previous decisions in this case? If so, the clinician can request review by another professional who has the proper credentials.
Another tactic the trio pointed to was what they call “The Red Herring,” or “distraction trick.” In such a case, an irrelevant issue is raised to divert the clinician and family. For example, the insurance company may complain about something that is clinically insignificant, such as authorization not being obtained in a timely fashion, to distract attention from their ethical and clinical obligations. To counter this, clinicians should bring the attention back to the ethical and clinical issues most pertinent to the patient’s care. The “Non-Sequitur,’ or “circular reasoning,” occurs when the company’s conclusions don’t follow the premises for care. For example, the insurer may state that the patient is not improving very much and therefore she needs to be stepped-down to intensive outpatient treatment. A good counter procedure is to try a reversal—that is, to assert that the patient who is not improving needs more intensive residential treatment or possibly hospitalization.
“Hypocrisy,” or “the double standard,” is defined when the company applies one standard to a patient and another to themselves. For example, one insurance company’s medical director denied residential treatment because it involved telephonic family therapy. He said phone therapy cannot be as good as live therapy—however, the denial was based completely on data that the insurance company itself obtained by telephone. The panel urged pointing out the inconsistency of the company’s logic.
The final fallacy, “Post Hoc Fallacy,” or “After it, therefore because of it,” is defined as setting up a denial explanation based on the false premise that A is the cause of B because B follows A. An example would be claiming that because relapse followed treatment, treatment was inadequate or was the cause of relapse. An effective response to this is to point out that correlation does not mean causation—instead, it is often effective to point out the other plausible causes of the event.
Panel members also urged clinicians to use APA-consistent documentation, which includes such elements as motivation to recover, co-occurring disorders, and ability of control compulsive exercising.
When Should a Denial be Challenged?
According to the panel, claim denials should be challenged when: (1) the denial is clinically inappropriate (by APA guidelines); (2) there are inherent conflicts with the insurer; (3) the insurer has logical fallacies in its reasoning; (4) the company violates the policy or plan terms; and (5) the company violates the law. The panel of experts then discussed the obligation to communicate, noting that under federal law and ERISA guidelines, the insurance company must provide to every claimant who is denied a claim written notice setting forth their reasons and the insured party’s rights and options. This must be provided in a way that is understandable to the claimant. Thus, the insurance company must give the specific reason or reasons for the denial, specific reference to pertinent plan provisions on which the denial is based, a description of any additional material or information necessary for the claimant to perfect the claim, and an explanation of why such material or information is necessary. In addition, the company must provide appropriate information about the steps needed to be taken if the claim is to be submitted for review. And, if benefits are denied in whole or in part, the reason for the denial must be given in reasonably clear language, with specific references to the plan provisions that form the basis for the denial. If the plan administrators believe more information is required, they must ask for it.
Two critical things to know about ERISA appeals are that the insured is entitled to a copy of the claim file before the appeal is decided and the insurer or plan may be entitled to discretion in deciding the appeal. (The claim file, also termed the administrative record, is any document, record, or other information that was relied upon in making the decision about the benefit, or is a statement of policy or guidance with respect to the plan concerning the denied treatment.) The insured is entitled, upon request, and without charge, to a copy of the claim file. In some cases, many plans or policies provide that the entity deciding whether to pay a claim has the “discretionary authority” to interpret the insurance plan and determine eligibility of benefits. Thus, a court will defer to the decision of the plan or insurer, and the decision does not have to be right, only reasonable. However, if the same entity is deciding whether to pay claims and is paying approved claims, the Supreme Court has ruled that there in an “inherent” or “structural” conflict. Conflict of interest may be shown when the reasons for the denial are inconsistent or insufficient, determining a material fact without supporting evidence, failing to follow plan procedures, failing to provide a full and fair review of the denial, and acting as an adversary bent on denying the claim.
The experts then gave an example of the contents of an appeal letter. Important elements of the letter included a summary of all prior letters and documents, demonstrating inconsistencies and irregularities, and omissions. They urged clinicians to enclose any new documents, such as treatment records, letters of support, journals, videos, and results of independent medical examinations. The letter should conclude with specific requests. It is also important to include all denial letters, to give the most accurate information for appeal.
The panel also urged the audience members to become familiar with their insurance policies, to be assertive, and not to give up when a claim is denied. If litigation is chosen, the panel advised audience members to seek out attorneys who specialize in insurance litigation. Finally, in line with viewing insurance denials as a game, the trio advised audience members to think of appealing a denied insurance claim as a marathon, rather than a sprint.