At the time of patient admission, the Provider called the Insurance Company to verify policy benefits. An insurance representative confirmed that coverage was currently in effect and provided coverage details. A preauthorization was subsequently obtained from the case management department. However, after charges are filed, the carrier denies the claim based on a policy exclusion.
The Provider appealed the denial based on the verification and precertification. Several state laws may be applicable to such retroactive denials of care. Further, federal and state courts have ruled that insurers have the duty to pay according to the verification given at the time of patient admission. This determination is based on the court’s recognition that any verification of benefits acts as an inducement on the provider to treat the patient in return for a promise of payment.
Potential Application For Your Facility
A good verification of benefits and preauthorization of care is the first line of defense in seeking reimbursement from an Insurance Carrier. Your facility should aggressively appeal denials where verification and preauthorization was obtained but later found to be inapplicable by the carrier.
Your appeal letter should site all specifics obtained during the verification/preauthrization process, including the name of the insurance carrier representative who your office spoke with and the date and time the information was obtained. To strengthen your letter, you should cite any available legal citations which support your position for payment. At least three states, Illinois, New Jersey and Ohio, have passed managed care reform which might be applicable.
New Jersey’s Title 26:2S-6, “Designation of licensed physician as medical director for managed care,” states that an HMO Medical Director is responsible for the carrier’s treatment policies, protocols, quality assurance activities and utilization management decisions of the carrier. The treatment policies, protocols, quality assurance program and utilization management decisions of the carrier must be based on generally accepted standards of health care practice. Further, the medical director must ensure the following:
“A utilization management decision shall not retrospectively deny coverage for health care services provided to a covered person when prior approval has been obtained from the carrier for those services, unless the approval was based upon fraudulent information submitted by the covered person or the participating provider;
Ohio Managed Care law contains a similar protection of authorization care. Ohio Rev. Code Ann. §1753.16 states that a health insuring corporation or utilization review organization that authorizes a proposed admission, treatment, or health care service by a participating provider based upon the complete and accurate submission of all necessary information relative to an eligible enrollee shall not retroactively deny this authorization if the provider renders the health care service in good faith and pursuant to the authorization and all of the terms and conditions of the provider’s contract with the health insuring corporation.
Just this year, Illinois Managed Care Reform went into effect and requires health care plans to pay for covered post-stabilization care if authorization to render them is received from the health care plan or its delegated health care provider, or if two documented good faith efforts were made by the treating provider to contact the enrollee’s health care plan or delegated health care provider and neither were accessible. The act prohibits health plans from retrospectively denying coverage and payment for post-stabilization medical services for which prior authorization or deemed approval is received.
If such managed care reforms do not appear to be applicable, your health care attorney may be able to provide citations from local cases where the courts have held insurance carriers liable for a misrepresentation of policy benefits.
In a Missiouri case, Response Oncology, Inc. v. Blue Cross & Blue Shield of Missouri, 941 SW 771, the medical provider sought a verification of coverage for high-dose chemotherapy. Blue Cross Blue Shield verified that coverage was available when, in fact, the contract only covered the much less expensive blood treatment, home care infusion. In reviewing the details of the agreement, the court ruled that the insurer was prohibited from denying coverage since verification of coverage for high-dose chemotherapy had been given to the medical provider. The court found that the contract entered in between the provider and insurer was ambiguous as to chemotherapy coverage and that any ambiguity had to be construed against the insurer.
Health Law Attorney Firm Clark and Mascara advise that these types of claims be reviewed with legal counsel to determine the application of individual case facts with relevant state and federal decisions. The firm’s website newsletter, www.clark-ins.com/newslett.html, discusses some of the cases favorable to providers. The newsletter states that the most important documentation is of the facts surrounding the verification of benefits, including a copy of any verification of benefits sheet completed by the facility, collector’s notes that reference any such communication, and any confirmation letters or acknowledgments issued by the insurance company. The newsletter also states that most cases are strengthened if the person who made the verification is still currently employed by the medical office or hospital or would be available to sign an affidavit as to the content of his or her conversation with the insurance company.
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