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I. FDA Approval Is Not Enough for
Reimbursement by Insurers and health Plans, ERISA Controls and Regulates
Final Reimbursement;
When F.D.A. Says Yes, but Health Insurers Say No to Medical Devices
(The New York Times; one-time registration required)
Excerpt: "Medical device makers devote years and millions of
dollars to winning regulatory approval for new products. But all that
work does not necessarily produce the kind of data that persuades
insurers to pay for the products once they hit the market."
New back procedure a sore
spot for insurers:
Some patients denied
coverage for devices fresh on the market (FLORIDA
TODAY, October
11, 2005)
"According to industry officials, other sources.
Federal approval constitutes only a first step in payment-coverage
decisions, they said.
"In and of itself, it's not sufficient," said Dr.
Walter Hollinger, Blue Cross & Blue Shield of Florida's senior medical
director."
Getting an FDA approval for medical device makers for
their new medical devices is the beginning instead of final step of
reimbursement for their medical device related medical claims, after millions of dollars and
years of time in research, clinical trials and final FDA approval. Due
to national health care crisis and critics claim that new technology is
the core driver of rising health-care costs, insurers and health care
plans are increasingly scrutinizing new technologies and resisting rapid
adaptation of new technologies with significant costs to the plan.
While medical device makers assert that new
technology will eventually save health-care dollars in long-run, health
insurers and plans certainly do not feel the same way when they have to
pay the claims right now. Health-care providers and consumers are caught
in between. Plan sponsors and employers do not know who to believe.
So who is right?
That is a very expensive question, because if you are
right, you get paid as providers and device makers, or do not have to
pay as health plans; if you are wrong, you're in trouble. Bottom line is
if it costs nothing, no one cares who's right or wrong, if it costs
anything, it's important to find out as early as possible and as much as
possible on how to be on the right side instead of wrong side.
Medical device makers and health-care providers
thought an FDA approval is good enough for the burden of proof, the
health insurers and plans insisted on that's not quite yet, FDA approval is
useless if ERISA disapproves it.
II. An Unanimous
US Supreme Court: Regardless of FDA approval, ERISA controls and
regulates reimbursement.
FDA for reimbursement?
Not Quite Yet, What Does the Unanimous
US Supreme Court Say?
On June 21, 2004, an unanimous US Supreme
Court ruled that claim processing and denials of benefits under the
employer-sponsored health plans,
ERISA-regulated benefit
plans,
for
both self-insured and
fully-insured (through purchase of insurance) health plans,
are completely governed by federal law ERISA, that supersedes and
invalidates state laws.
ERISAclaim.com:
"employer-sponsored group health plans"
=
ERISA-"regulated benefit
plans",
both self-insured and fully-insured
(through purchase of insurance) health
plans,
(ERISA
- Title 29, Chapter 18.
Sec. 1002.)
|
ERISAclaim.com -
Supreme Court Managed Care ERISA
Watch
An
Unanimous U.S. Supreme Court Ruling in
Managed Care and Medical Malpractice
Aetna Health Inc. v. Davila
06/21/04
Opinion of the
Court
"Held:
Respondents’ state causes of action fall
within ERISA§502(a)(1)(B), and are therefore completely
pre-empted by ERISA §502 and removable to federal court.
Pp. 4–20."
"We hold that
respondents’ causes of action, brought to
remedy only the denial of benefits under
ERISA-regulated benefit
plans, fall within the scope of, and are completely pre-empted
by, ERISA §502(a)(1)(B), and thus removable to federal
district court. The judgment of the Court of Appeals is
reversed, and the cases are remanded for further proceedings
consistent with this opinion.7
It is so ordered."
|
III. Federal Court Of Appeals:
No Other Way
around ERISA, Regardless How Artfully and Creatively in Patient
Lawsuit, ERISA Preempts All State Laws If You Want Money from ERISA
Plans.
CLEGHORN V BLUE SHIELD OF
CALIFORNIA
9th Cir., 05/23/2005
OPINION
CANBY, Circuit Judge:
"We are presented once again with a question concerning the degree to which
the federal Employee Retirement Income Security Act (ERISA) preempts state
law. Douglas D. Cleghorn is a participant in his employers ERISA health plan
offered by Blue Shield of California (doing business as Care-America) (Blue
Shield). On one occasion he sought and received emergency medical services
and Blue Shield denied reimbursement. Cleghorn sued Blue Shield in
California state court,
asserting state-law causes of
action and alleging that Blue Shield had violated an emergency care
provision in section 1371.4(c) of the California Health and Safety Code.
Blue Shield removed the case to federal court and the district court held
that Cleghorns claims were preempted by ERISA. When Cleghorn declined
to amend his complaint to allege an ERISA claim, the district court
dismissed his complaint for failure to state a claim.
We affirm the judgment of the district court."
IV. Newly FDA Approved Medical Device Will Be
Denied under ERISA Regardless of FDA Approval
When F.D.A. Says Yes, but Health Insurers Say No to Medical Devices
(The New York Times; one-time registration required)
Excerpt: "Medical device makers devote years and millions of
dollars to winning regulatory approval for new products. But all that
work does not necessarily produce the kind of data that persuades
insurers to pay for the products once they hit the market."
In general, a health-care plan may deny a claim
involving new medical device, either based on specific policy exclusion
of experimental and investigational status of the medical device or lack of
medical necessity.
When F.D.A. Says Yes, but Health Insurers Say No to Medical Devices
(The New York Times; one-time registration required)
"Charité needs to show
substantial improvement in the patients' quality of life and clinical
outcomes," said Michael Chee, a spokesman for Blue Cross Blue
Shield of California, a unit of WellPoint that is one of many large Blue
Cross insurers that has denied coverage for Charité.
If a plan denies a claim based on policy specific
exclusion or investigational and experimental exclusion, the plan bears
burden of proof, to establish that specifically the relevant plan
provision has particularly identified such medical device as noncovered,
or FDA has not classified such device for general medical use. If this is the
case, claim dispute is determined solely based on policy exclusion and
FDA classification of medical device at issue, regardless of clinical
outcome or medical merits of the case, because the policy, the plan
provision has specific limitation or exclusion regardless of each
individual case scenario
In policy exclusion or specific limitation denial, the relevant plan
provision is controlling document, any external, outside or unofficial
document may not be acceptable by a court under ERISA.
In a medical necessity denial
involving specific medical condition and medical device, ERISA requires
the plan administrator to consult with an appropriate health care
professional, to make individual and specific medical necessity
determination based on specific fact he driven analysis and sounding
medical guidelines, in compliance with state laws in utilization review,
or if applicable, external review. More specifics from ERISA regulation
will be discussed in the next section and relevant pages of
ERISAclaim.com.
|
Schneider, Janet M. v. Sentry Group
7th Cir. 09/07/2005
Oral Argument
Opinion
"The notice that Sentry afforded Ms. Schneider was
indefensible as a matter of statute, regulation and case law."
Claim Denial Found Arbitrary
and Capricious for Utterly Failing to Consider Plan Language (EBIA)
Wheeler v Aetna
MEMORANDUM OPINION
ERISAclaim.com Comments:
-
Faulty Denial Notice:
Initial Denial Notice/EOB from an ERISA plan by an insurer, Aetna in this
case, must refer to specific and actual plan provisions (Summary Plan
Description, SPD), instead of Aetna online "Coverage
Policy Bulletin" on the web site, to include specific reasons for
claims denials, "rational connection between the issue to be decided, the
evidence in the case, the text under consideration, and the conclusion
reached".
In this case, a court found that Aetna's initial denial and
subsequent two level appeals inadequate because “they utterly fail to
consider the actual language to the plan at issue", "largely fail to
connect Aetna's denial benefits to the specific situation and Bryce’s
diagnoses. And Aetna's is cursory and simply states that claim/therapy is
not covered without explaining why.
-
"Necessary" and
"Appropriate" Treatment Must Be Individually and Actually Determined:
After reviewing the plan's definitions of "necessary" and "appropriate"
treatment from the Summary Plan Description, the Court concludes:
“It is clear from the
terms of the plan that the
necessary/appropriate determination will involve an individualized
determination, considering the particular circumstances,
medical condition, and health condition, of the
possible outcome of a certain treatment relative
to alternative treatments. No such determination was
made here with respect to Bryce.
Aetna does not state that
the sensory integration therapy was not as likely to produce a
significant positive outcome as and no more likely to produce a negative
outcome than any alternative treatments, nor does
Aetna state what the possible alternative
treatments are. Moreover, there was no
individualized determination of what was necessary or appropriate
treatment in light of Bryce's particular situation.
instead, Aetna refers (in its briefs, not
in its letters to the Wheelers) to its "Coverage Policy
Bulletin," which states that Aetna will not cover sensory integration
therapy.
-
Summary Plan Description (SPD), instead of Online "Coverage Policy
Bulletin", Controls Coverage and Exclusion, Necessary and Appropriate
Definitions:
The court finds that the specific and actual plan's language must be
referenced in benefits determination and be included in initial claim
denial notice/EOB (Explanation of Benefits) instead of "Coverage Policy
Bulletin" referenced and referred on Aetna's web site, which is a popular
practice by Aetna and more and more health insurers, in the course of
settling physician class actions and "compliance with" ERISA claim
regulation. SPD supersedes and invalidate any other "Coverage Policy
Bulletin" and other company policy and internal guidelines if they are
conflicted with the individual plan's SPD (Summary Plan Description).
"No ERISA Appeals, No Science"
JO ORTLIEB v UNITED
HEALTHCARE
8th Cir., 10/28
"....Thereafter, Ortlieb contested the denial
of coverage by filing her case in the district court. The
district court reviewed the benefit determination using an
arbitrary and capricious standard of review. In opposing United
HealthCare’s motion for summary judgment, Ortlieb submitted four
technical documents discussing TPN, none of which were included
in the administrative record. The district court declined to
consider the new evidence. Based on the administrative record,
the district court determined United HealthCare reasonably
relied on the assessments of multiple doctors that TPN was an
unproven therapy for Ortlieb’s medical conditions. The district
court rejected Ortlieb’s argument that United HealthCare had
failed to consider the “life-threatening condition” exception to
the unproven service exclusion. The court granted summary
judgment in favor of United HealthCare. Ortlieb now
appeals......"
ERISAclaim.com Comment:
"No ERISA Appeals, No Science"
If healthcare providers didn't appeal under
ERISA in a timely fasion, the federal court may not consider
these new evidence at trial, even they could truly
scientifically persvasive, as they are not considered as these
new scientic eveidence are not part of administrative records
the court will exam under ERISA.
Timely ERISA appeal is more important than
"true science" under ERISA, as federal law and rules are also
important things to follow.
This will help all of us here in recent
denials crisis.
Krodel v. Bayer Corporation
(10/12/2005, D. Mass.)
Page 17 of 20
"Here, the Court holds only that where 1) a participant applies for coverage
of a benefit which 2) is apparently covered
under the language of an
SPD and 3) the plan
administrator thereafter re-interprets it in a more restrictive fashion and
denies coverage 4) in contravention of the conclusions of all of the medical
experts involved, that decision is arbitrary and capricious. The decision of
the Plan Administrator will be reversed."
Krodel v. Bayer Corporation
(11/19/2004, D. Mass.)
Self-Insured Employer Simply Rubber Stamped the
Decision of CIGNA and Violated New ERISA Claim Regulations
Bayer’s Denial of Dr. Krodel’s Claim
"1. Bayer violated ERISA by failing to "afford a
reasonable opportunity to any participant whose claim for benefits has
been denied for a full and fair review by the appropriate named fiduciary
of the decision denying the claim." 29 U.S.C. §1133(2); 29 C.F.R. §
2560.503-1(h)(1). Under that provision, a plan administrator is required
to provide a review that "does not afford deference to the initial adverse
benefit determination".29 C.F.R. § 2560.503-1(h)(3)(ii)."
" 2. Bayer also violated 29
C.F.R. § 2560.503-1(h)(3)(iii) which provides that:
In deciding an appeal of any adverse benefit
determination that is based in whole or in part on a medical judgment,
including determinations with regard to whether a particular treatment,
drug, or other item is . . . medically necessary or appropriate, the
appropriate named fiduciary shall consult with a health care
professional who has appropriate training and experience in the
field of medicine involved the medical judgment. Id. §
2560.503-1(h)(3)(iii) (emphasis added).
As far as the record shows, Defendants failed to seek
any medical advice in making their determination with respect to Dr.
Krodel’s claim. Thus, a clear violation of the regulation occurred.
"3. Upon notifying Dr. Krodel of the denial of his
claim, Bayer violated 29 C.F.R. § 2560.503-1(g)(1)(v)(A) which provides
that, if a specific internal rule is relied on in making a determination,
that rule must be provided or a statement made that it will be made
available to the claimant free of charge. Id. § 2560.503-1(g)(1)(v)(A)."
"4. Bayer also violated 29 C.F.R. § 2560.503-1(g)(1)(v)(B),
which states that:
If the adverse benefit determination is based on a
medical necessity . . . either an explanation of the scientific or
clinical judgment for the determination, applying the terms of the plan
to the claimant’s medical circumstances, or a statement that such
explanation will be provided free of charge upon request [will be
provided to the claimant]. Id. § 2560.503-1(g)(1)(v)(B).
"5. Finally, Bayer violated its own internal rule by
failing to inform Dr. Krodel that he might qualify for a different
prosthesis."
"Second, Plaintiff contends that he is entitled to
statutory penalties of approximately $40,000 (i.e. up to $100 per day for
400 days) based upon Defendants’ alleged failure to provide information to
Dr. Krodel as required by ERISA. See 29 U.S.C. §1132(c). Specifically, Dr.
Krodel alleges that the non-provision of the SOP constituted such a
failure. His argument has merit because the SOP contained the underlying
basis for his exclusion from coverage."
|
Therefore, it is extremely
important for medical device makers and health-care providers to
distinguish pure policy exclusion from medical necessity denials, and to
understand appropriate actions and steps to be taken to prevail benefits
claims under ERISA, the federal governing Law for your reimbursement
from any employer-sponsored health-care plans.
FDA approval is only the
beginning of medical device marketing, ERISA claims practice is the real
challenging steps for medical device claims to be reimbursed
legitimately under federal laws and specific health plan provisions.
V. ERISA Provides Specific Protections for Medical Claim Denials and
Appeals
What You
Should Know about Filing Your Health Benefits Claim
New Federal Claim Regulation,
effective January 1, 2003, is the best and the most powerful protection
for improper medical necessity denials:
-
"Plans must
consult with
appropriate health care
professionals in
deciding appealed claims
involving medical judgment."
[70268-70269,
CFR § 2560.503-1(h)(3)(iii)]
-
"The term `health care professional' means a
physician or other health care professional licensed, accredited, or
certified to perform specified health
services
consistent with State law." [page
70271
CFR § 2560.503-1(m)(7)]
-
A Full and Fair Review
with new definitions and protection requires De Dovo reviews on two
appeals by at least four (4) different
people, two (2) different fiduciaries
with ERISA plan, and two (2) different Health-care professionals
independent to the ERISA plan.
[Page 70252-70253,
70268-70269,
CFR § 2560.503-1(h)(3)]
-
Plan must disclose all the
"secrets" under new
definitions of relevant documents with better disclosure obligations,
no more medical necessity secrets, UCR fee
schedules are no longer confidential. [Page
70252 & 70271,
CFR § 2560.503-1(m)(8)
(DOL
FAQ B-5, C17)]
VI. No ERISA Appeals, No Acceptance
of Scientific Papers and FDA Approvals
When F.D.A. Says Yes, but Health Insurers Say No to Medical Devices
(The New York Times; one-time registration required)
"Charité needs to show
substantial improvement in the patients' quality of life and clinical
outcomes," said Michael Chee, a spokesman for
Blue Cross Blue
Shield of California, a unit of WellPoint that is one of many large Blue
Cross insurers that has denied coverage for Charité."
"Johnson is hoping to gain more support after
the publication on July 15 of
two articles on the F.D.A.
trial data in Spine, a peer-reviewed medical journal. "We expect
that will lead to a new round of policy reviews," said John Argiro,
director of reimbursement for DePuy Spine, the Johnson subsidiary that
makes the disk."
If healthcare providers fail to appeal under ERISA
in a timely fashion, the federal court may not consider these new
evidence at trial, as medical device makers have hoped, even if they
could be truly scientifically pervasive, as ERISA judicial review
standards will generally only allow a court to review administrative
records developed through appeals, and preclude these peer-reviewed
articles not submitted by ERISA appeals from being introduced as a
part of administrative records that a court will exam under ERISA.
Timely ERISA appeal is more important than "true
science" under ERISA, as federal law and rules are also important
things to follow, as prerequisites of any of the scientific evidence,
that would support medical necessity for these new medical devices.
JO ORTLIEB v UNITED
HEALTHCARE
8th Cir., 10/28/2004
"....Thereafter, Ortlieb contested the denial of
coverage by filing her case in the district court. The district
court reviewed the benefit determination using an arbitrary and
capricious standard of review.
In opposing United HealthCares motion for
summary judgment, Ortlieb submitted four technical documents
discussing TPN, none of which were included in the administrative
record. The district court declined to consider the new evidence.
Based on the administrative record, the district court determined
United HealthCare reasonably relied on the assessments of multiple
doctors that TPN was an unproven therapy for Ortliebs medical
conditions. The district court rejected Ortliebs
argument that United HealthCare had failed to consider the
life-threatening condition exception to the unproven service
exclusion. The court granted summary judgment in favor of United
HealthCare. Ortlieb now appeals......"
And there is no other way around ERISA if any one is expected to get
paid by an employer sponsored health plan, regardless of its shape, HMO,
POS, PPO & P4P:
CLEGHORN V BLUE SHIELD OF
CALIFORNIA
and
Aetna Health Inc. v. Davila,
in accordance with unanimous US Supreme Court ruling.
VII. ERISA Pre-Service Claim
Regulation Provides The Best Protections for Any Claims with Requirement
of Pre-Certifications, Prior-Authorizations or Any Prior-Approvals
When F.D.A. Says Yes, but Health Insurers Say No to Medical Devices
(The New York Times; one-time registration required)
Excerpt: Eight months later, though, most private insurers still refuse
to cover the cost of the procedure, which is generally
$30,000 to $45,000 for a
single disk. And while Medicare does provide some coverage, its
reimbursement level for hospitals is far less than the cost of the disk,
which Johnson lists at $11,500 but sells at discounts of as much as 20
percent to its high-volume customers.
""About
80 percent of my patients
who could be candidates for the
disk aren't covered for it by their insurance," said Dr. Scott G.
Tromanhauser of the Boston Spine Group."
ERISA Claims Procedure.§2560.503-1(m)(2)
"(2) The term “pre-service claim” means any
claim for a benefit under a group health plan with respect to which the
terms of the plan condition receipt of the benefit, in whole or in part,
on approval of the benefit in advance of obtaining medical care."
Benefit Claims Procedure Regulation
DOL >
EBSA >
Frequently Asked Question
The regulation applies to coverage determinations
only if they are part of a claim for benefits. The regulation, at §
2560.503-1(e), defines a claim for benefits, in part, as a request for
a plan benefit or benefits made by a claimant in accordance with a
plan’s reasonable procedure for filing benefit claims. A claim for
group health benefits includes pre-service claims (§ 2560.503-1(m)(2))
and post-service claims (§ 2560.503-1(m)(3)). If an individual asks a
question concerning eligibility for coverage under a plan without
making a claim for benefits, the eligibility determination is not
governed by the claims procedure rules.
If, on the other hand, the
individual files a claim for benefits in accordance with the plan’s
reasonable procedures, and that claim is denied because the individual
is not eligible for coverage under the plan, the coverage
determination is part of a claim and must be handled in accordance
with the claims procedures of the plan and the requirements of the
regulation. See 65 FR at 70255."
Therefore, if a surgery, such as with Charité
disk, is required by the plan to obtain a prior-approval, and such
request is denied, the patient and doctor can appeal the denial even
if the surgery was never performed yet, because it is a pre-service
claim under ERISA, ("no money-down appeal", as Dr, Zhou calls it). A
pre-service claim under ERISA is also entitled to "ERISA Prompt Pay"
protections.
| |
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ERISA “Prompt Pay” Time
Limits
© 2003 - 2004 Jin Zhou, ERISAclaim.com
|
ERISA §2560.503-1
Claims Procedure
|
New Rules
Effective
on 01/01/2003 for all ERISA plans
self-insured and fully-insured,
§2560.503-1(a) |
Old Rules |
|
Urgent Care Claim |
Preservice Claim |
Post-Service
Claim |
Disability Claims |
ERISA Claims |
|
Claim Beginning
Time |
Beginning at a Time a Claim Is Filed,
Regardless of Clean Claim or Not, In Accordance With Plan
Procedures,
§ 2560.503-1(f)(4) |
|
Decision Maximal
Time Limits |
In No Event
Exceeding 90 Days Period,
§2560.503-1(f) |
< 180 days |
|
"Not Clean"
Notification Time |
24 hours |
5 days |
N/A |
N/A |
N/A |
|
Claimant Claim
Cleanup Time |
48 hours |
45 days |
45 days |
45 days |
N/A |
|
Plan Initial
Determination |
ASAP,
<48 hours (clean claim)
< 72 hours (cleaned up claims)
|
15 days |
30 days |
45 days |
90 days
|
|
Claimant Appeal
Deadline |
180 days |
180 days |
180 days |
180 days |
60 days |
|
Plan 1st Level
Appeal Response Time |
72 hours
|
15 days |
30 days |
45 days |
60 days |
|
Plan 2nd-Level
Appeal Response Time |
15 days |
30 days |
90 days |
120 days with
extensions |
|
Plan Extension
Time |
48 hours |
15 days |
15 days |
75 days |
120 days |
|
Review/Appeal
Maximal Limit |
72 hours |
30 days (one
Appeal)
15 days (two
appeals) |
30 days (two
appeals)
60 days (one Appeal) |
105 days |
180 days |
|
Initial
Determination/EOB by: |
"The Plan Administrator",
§ 2560.503-1(g) |
|
Appeal Delay &
Denial to: |
"An Appropriate Named Fiduciary of the
Plan",
§ 2560.503-1(h) |
|
Review/Appeal
Decision by: |
"The Plan Administrator",
§ 2560.503-1(j) |
|
| |
VIII. ERISA Compliance/Approval must
be integral and final step of any FDA approved medical device for
medical device makers and health-care providers.
After millions were spent by medical device makers for research,
clinical trial and FDA approval, market share and earnings for the new
devices will be surprisingly disappointing to health-care providers,
their patients and investors if increasing claim denials for new
technology, even FDA approved are not appealed or effectively appealed.
Medical device makers must include ERISA claim
compliance and appeals in their standard marketing programs to
health-care providers in order for their patients to receive benefits
reimbursement that each patient is legally entitled to under federal law
and specific benefits plan provisions.
IV. Medical Necessity for
The Federal
Employees Health Benefit Plan (FEHBP)
Under5 U.S.C. § 8901, the Federal Employees Health
Benefit Plan (FEHBP) provides
health care coverage to more than nine million Federal employees and
their dependents. The U.S. Office of Personnel Management (OPM) is
enforcement Federal agency for administration of benefits claims, but
OPM contracts with health plans to serve Federal employees, administers
the FEHBP.
There is no specific definition for "medical
necessity" or medical necessity review standards for both initial and
administrative appeal process in both federal statute and administrative
regulations,
except
for "FEHB Plan Brochures" drafted by health plans or insurers but
published by OPM.
Federal Employees Health Benefit Plan does offer
appeal process similar to ERISA appeal process although ERISA regulation
does not directly regulate federal employee benefit plans.
OPM does retain level to appeal jurisdiction but
delegates discretionary authority to each individual health plan
contractor.
Most health-care plan contractors voluntarily adopt
ERISA claim regulation and state law regulated utilization review and
ex-con review programs even though neither ERISA or state law directly
apply to the federal employee health pogrom.
After exhausting to levels of appeal with OPM, and a
claimant may commence lawsuit only in federal court and against OPM,
Federal Government, instead of health plan and its contractors for a
possible recovery similar to ERISA remedies, no punitive damage.
For OPM appeal process and each individual plan brochures, the following
hyperlinks will be extremely authoritative and helpful, especially each
individual plans appeal process and OPM second-level appeal guidelines.
For better understanding of relevant federal law on medical necessities,
the following information from HHS web site will be extremely helpful:
|
Sara Rosenbaum
Brian Kamoie
D. Richard Mauery
Brian Walitt
U.S. Department of Health and
Human Services
Substance Abuse and Mental Health Services
Administration
Center for Mental Health Services
View the
PDF version |
|
Table of Contents |
|
SMA03-3790
07/2003
|
|
VI:
Relevant Federal Laws Pertaining to Medical Necessity Reviews
"Relevant
Federal Laws Pertaining to Medical Necessity Reviews
This part considers two sources
of law relevant to medical necessity determinations. First, two
sets of Federal standards governing employee health plans are
examined. The first set of standards is embodied in the
regulations promulgated by the Department of Labor in 2000 that
set forth the "full and fair review" procedural requirements that
all ERISA health benefit plans must meet. The second set is
embodied in the standards governing medical necessity reviews that
are currently in use by the U.S. Office of Personnel Management."
"The ERISA statute regulates
health and welfare benefits for more than 140 million workers and
their families (Rosenbaum, Frankford, Moore, & Borzi, 1999). ERISA
requires every health benefit plan within its scope to provide
adequate notice in writing to a participant when a claim is
denied, "setting forth the specific reasons for such denial,
written in a manner calculated to be understood by the
participant."29
In addition, ERISA affords a health plan member whose claim has
been denied a "reasonable opportunity . . . for a full and fair
review by the appropriate named fiduciary of the decision denying
the claim."
....
With disclosure of protocols and
explanations of the application of medical necessity, the Federal
full and fair review regulations exceed the reach of State
utilization and independent review statutes and regulations."
Office of Personnel Management Standards: FEHBP
"......Although
the ERISA full and fair hearing regulations and the FEHBP provide
further procedural safeguards to health plan enrollees, both have
important limitations. The ERISA regulations do not contain a
right to an external appeal, despite providing important
additional access to information and better claims procedures not
previously available. The FEHBP, limited to Federal employees,
provides a right to appeal outside the health plan to the OPM or
to Federal court if necessary, but, as with ERISA plans, monetary
damages are limited to payment for the cost of the denied benefit
itself (i.e., punitive and "pain and suffering" damages are not
available).
As a result of the modest reach
of Federal law, the definition of medical necessity is still
governed by the terms of the contract negotiated between buyers
and sellers." |
| |
|
"Figure
5 presents the key elements of medical necessity review and
compares ERISA procedures with those established by OPM.
Medical Necessity in Private Health Plans
Figure 5: Medical Necessity Utilization Review
and Appeals Procedures
| Issue |
ERISA |
FEHBP |
|
Standards for initial utilization review process |
X |
|
|
Standards for internal appeals of initial denials |
X |
|
|
Timelines |
X |
X |
|
Qualifications of reviewer |
X |
|
| De
novo review |
X |
|
|
Evidentiary standards |
X |
|
|
Access by claimant to health plan evidence |
X |
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Treatment guidelines |
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Definition of medical necessity |
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External de novo administrative review of health plan
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Executive Summary
"Medical Necessity in Private Health Plans
Executive Summary
This report addresses how the
term "medical necessity" is defined in private health insurance
coverage decisions. It summarizes a review of the literature, an
extensive review of legal cases that challenge insurer decisions,
materials prepared by the insurance industry, consultation with
experts in the field, a review of investigations conducted by
State departments of insurance and attorneys general, and
interviews with health care executives regarding the
decisionmaking process itself. The report does not explore factors
that can affect access to care that might be considered clinically
necessary by treating professionals or the effects of medical
necessity decisions on therapeutic outcomes.
Sources of medical necessity
definition: Few regulations address the
definition of medical necessity. There is no Federal definition,
and only slightly more than one-third of States have any
regulatory definition of medical necessity. As a result, the
meaning of "medical necessity" is most commonly found in
individual insurance contracts that are defined by the insurer and
hold primacy in most determinations.
Rather than turning simply on
whether a proposed treatment meets professional medical standards,
the prevailing definition of medical necessity is broadly framed,
multidimensional, and controlled by the insurer, not the treating
professional. The process of medical necessity determination is
rarely public information. Even where a claimant can show that a
clinical recommendation is consistent with professional clinical
standards, the insurer may reject a proposed treatment if it is
inconsistent with other definitional elements such as relative
cost and efficiency.
The multiple dimensions of the prevailing
medical necessity definition: The
evidence suggests that the medical necessity definition spans five
dimensions:
- Contractual scope-whether
the contract provides any coverage for certain procedures
and treatments, such as preventive and maintenance treatments
that are not necessary to restore a patient to "normal
functioning." This dimension preempts any other coverage
decision.
- Standards of practice-whether
the treatment accords with professional standards of practice.
- Patient safety and setting-whether
the treatment will be delivered in the safest and least
intrusive manner.
- Medical service-whether
the treatment is considered medical as opposed to social
or nonmedical.
- Cost-whether
the treatment is considered cost-effective by the insurer.
Regulation of the medical
necessity definition and coverage determination process:
Some State external review laws provide appeals procedures that
permit reviewers to reject the insurer's medical necessity
definition and look at the evidence with a fresh eye. However,
many State laws parallel insurers' multidimensional definitional
approach. It does not appear that either the State or Federal
regulatory process has moved away from the industry's prevailing
medical necessity standard."
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Traditional "squeaky wheel" approach by medical device makers are insufficient and
practically flawed under new health-care crisis, partially blamed by
critics on new technology costs.
We offer educational assistant programs to medical device makers and
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