The insurance appeals process – Part 1: How it all works
Ruling the insurance appeals process – Part 1: How it all works
One thing that many residents do not know is that there are more benefits to becoming a board certified physician than just that plaque on the wall. One of these benefits is that ability to pick up a few extra hours of work here and there doing consulting for the multitude of companies that would like the opinion or expertise of a physician.
In some cases this consulting can be about products under development. Sometimes it is reviewing the work that another physician has done, perhaps for a hospital quality care committee. There is also work for some reviewing legal cases. But probably the biggest area of this work is insurance work – usually in the area of appeals.
When I became board certified, I did a few google searches and ended up signing up with a number of insurance companies to become a third party peer reviewer. Through this work, I have learned a huge amount about how insurance companies work, and actually developed a far greater respect for what they do than I had previously. I have also learned the ins and outs of the insurance appeal system, which a third party reviewer is invariably involved in, and in doing so have gained a skill set that allows my insurance appeals to be invariably accepted. For that reason, I recommend that every young physician review charts – if not for the money, for the education.
But for those who don’t, let me pass on some of the pearls I have gained from this work, that perhaps when your patients are being denied services you think they should have, you will have a better idea of how to have a successful appeal.
In this post, I am going to talk about how the system works and why things get rejected. In the next post, I will discuss a few things you can do to win appeals.
Any time an insurance company receives a claim, it goes through an automated process that determines if it will be automatically approved. This is typically based on a comparison between what was requested and the ICD9 codes used to justify that request. As long as these codes match and the service is not major, approval will likely happen right there. In some cases, likely with more costly or rare services, the case will be manually compared with the written coverage guidelines for the patient’s plan. In some cases records will have to be provided, which will be reviewed against plan guidelines. If the case meets guidelines, based on the review of a (potentially non-physician) employee of the insurance or review company, it will be approved right away.
If something is rejected, there is now an opportunity for an appeal, initiated either by physician or patient. In this process, the appealing provider provides notes that clearly document what was done (or is proposed to be done), usually with intention to prove that it was needed. This is different than the initial gathering of documents, where usually one just provides medical records but doesn’t really do anything to otherwise justify the request. These documents are now again compared to plan coverage provisions, to see if the case meets guidelines. Usually this comparison will be done by a physician working for the insurance company, or third party reviewer at a contracted review company (like me.) At this level of appeal, the question is whether or not the case meets the guidelines, not whether an exception to guideline should be made. If the case does not meet guidelines, it will again get rejected.
If this second rejection occurs, the appealing party now has a opportunity for a second appeal. In the second appeal, documents are again provided (or are re-reviewed), but now the possibility exists that the case might be considered outside of the standard guidelines. This level of appeal is almost always done by a third party physician with expertise in the specific field at hand. It is at this level of review that a therapy that is still experimental might be evaluated as still being medically necessary, and thus being covered despite a policy against coverage of experimental procedures and treatments (ie a novel chemotherapeutic regimen after traditional therapy has failed.) These reviews are usually done based on industry standard definitions of medical necessity or experimental/investigational (see appendix). In this stage, the appeal documentation of the appealing physician is crucial, particularly if they provide a thoughtful letter justifying the request.
To some, this process seems ungainly and complicated, or even downright evil. Physicians bristle at the idea that an insurance company would ever deign to tell them how to practice medicine, even with the help of a unbiased third party (like me.) I have had these feelings myself at times – but these feelings are unjustified.
There is a near-unlimited amount of medical care that could potentially be delivered for patients in this country, but the amount of funds is relatively fixed. As such, it is absolutely imperative that there is some system of rationing involved that will work towards using those limited funds where they will be most useful. Weeding out requests for therapies that are medically unnecessary or unproven is part of that. While it can be frustrating, we have given insurance companies this job. We can argue that they shouldn’t make so much money doing it, but its hard to argue that it doesn’t need to be done.
Before I started doing this type of reviewing, I generally thought that insurance companies rejected payment for sport (and profit), with little justification or reason. Now I realize that the system is actually quite just. Basically, all that is required for something to get approved is that the therapy requested is reasonably within the standard of care and can be supported by current evidence. In other words, it should be good medicine. Occasionally appropriate therapy will have to go through the appeals process to get approved, but if what one is doing is appropriate, it will almost always get through.
I have been consistently impressed with the thoroughness and timeliness of insurance company guidelines, which read like well sourced peer reviewed review articles. They are generally very up to date, and very well thought out, and often were written by experts in the field.
So why do things get rejected? Here’s an ordered list.
1 – Poor documentation. Of every 10 charts I review, 6 were rejected because the physician did not document what they were doing and why they were doing it. When we are residents, we are taught to thoroughly document what we do, and the thought process involved. Some doctors in private practice have gotten so far from this that their charts have almost no useful information in them. If that chart is being used to justify an expensive therapy, there is almost certainly going to be a problem. Physicians have to expect that someone else may read their chart in an effort to justify their actions. If it doesn’t tell the story or is illegible, rejection is on the way.
2 – Bad medicine. Of every 10 charts I review, in at least 3 the physician is asking for something that shouldn’t be done, such as a hysterectomy in a 30 year old woman with a normal uterus, without any real attempt to treat her conservatively. The physician may get mad about the case getting rejected, but in truth they are practicing bad medicine. The insurance company is right to reject them. My experience is that the level of anger that physicians experience in these cases is directly proportional to the bogosity of the treatment they are recommending. Sometimes a physician requests something that he/she knows is bad, but the patient is requesting, and even writes “we’ll see if insurance will approve this”. These almost always get rejected (for good reason), and the physician is usually happy to tell the patient that the evil insurance company won’t pay for what they want. Insurance companies are happy to be the bad cop in these situations. I have spoken to docs in this situation and heard a sigh of relief when I said that the case doesn’t meet the guidelines.
3 – Industry acceptance of something that cannot be supported in the literature. Breast MRI is a great example. Radiologists love to recommend a breast MRI when they have an ‘indeterminate’ mammogram, but this use of breast MRI cannot be supported in the literature, and may actually be harmful. Doctors freak when the insurance company rejects these, but in truth these doctors are not familiar enough with the literature to realize that what they are asking for is experimental, and possibly harmful. Another example would be something like compounded bioidentical hormones or salivary hormone testing. Lots of people believe in them, yet there is no real literature to support their efficacy, safety, and usefulness. This leads to appropriate insurance rejection, and failed appeals.
4 – Industry introduction of new technology that has yet to be adequately studied. It is common for industry to try to get their new technology into the standard of care before a study can prove it to lack efficacy. Short armed retropubic/obturator slings are a great example. They were on the market for years before any data proved their efficacy, and we are now finding that they aren’t as good as longer ones (what a surprise!). This is the kind of thing that an insurance company might reject, and rightly so. MRI guided focused ultrasound for fibroids is another good example of this. Its a new technology, and data to show comparable efficacy to traditional therapies just isn’t there, nor for cost effectiveness.
5 – Failure to attempt reasonable treatments that are less expensive prior to going to expensive treatments. Docs hate this, but they really should try less expensive things first. In most cases, generic drugs are as good as brand, and it does behoove use to spend less money when we can. Trying some birth control pills for dysfunctional uterine bleeding prior to going to hysterectomy is not only cost effective, it is good medicine. As docs in general are often not worrying too much about cost, insurance companies worry about it for us. It is the job we have asked them to do when we decided to create the insurance system about 30 years ago (blame Nixon.)
In my time working with this stuff, I have been genuinely impressed with a consistent desire to cover evidence based and efficacious care from every insurance official I have spoken to. While the company as a whole may be profit driven, the guidelines they use to ration care seem completely appropriate and up to date. As physicians, there will be times that we are forced to justify what we do, but this should not be an undue burden. Throughout residency we are forced to justify what we do, and it makes us better doctors. Applying the same skills to creating a rational and well sourced argument for our actions continues to be necessary, and helps us to stay thoughtful and current. Embrace the opportunity to put real words on paper that really describes the course of care. It will make you a better doctor, and will get your therapies approved along the way.
In part 2 of this article, I will discuss how to successfully appeal an insurance rejection. If you are practicing good medicine, its not hard to be successful.
** Standard industry language for medical necessity
1. Supported by credible scientific evidence published in peer-reviewed medical literature and recognized by the relevant medical community.
2. Clinically appropriate in terms of type, frequency, extent, site, and duration, and considered effective for the condition in question.
3. Not primarily for the convenience of the patient or health care provider.
4. Not more costly than alternative services at least as likely to produce the desired result.
** Standard industry language for experimental/investigational –
1. Does the requested service have final approval from the appropriate government regulatory bodies for this member’s particular condition (respond only if applicable)?
2. Is the requested service of proven benefit according to published peer-reviewed medical literature for the diagnosis or treatment of the member’s particular condition?\
3. Is the requested service generally recognized by the medical community as reflected in the published peer-reviewed medical literature as effective or appropriate for the member’s particular condition?
4. Is there proof as reflected in the published peer-reviewed medical literature that the requested service is at least as effective in improving health outcomes as the established alternatives for the member’s particular condition?
5.Is there demonstrated evidence as reflected in the published peer-reviewed medical literature that, over time, the requested service leads to improvement in health outcomes, for this member’s particular condition; i.e. the beneficial effects outweigh any harmful effects?