Less Than The Law Allows

State and Federal Laws Require EOB’s to Provide Specific Information

Insurers call it an Explanation of Benefits. But many EOB’s read little more than “Claim denied” and leave the explanation to your own guesswork.

A poorly written explanation of benefits may be more than just a nuisance; it may also be a violation of federal and state law. Providers can, and should, attempt to obtain a full explanation for any claim denial.

Both Texas state statutes and ERISA regulations require insurers to include specific information in any denial notice. Insurers bound by state law must state the reason for rejection, according to Vernon’s Annotated Texas Statutes, Title 28, Article 21:55. Further, self-funded plans bound by ERISA must include in any denial notice the reason for denial and include a specific reference to pertinent plan provisions on which the denial is based.

“This can be a direct qoute or a reference to specific portions of the plan,” said Kim Guynan, pensions benefits advisor for the Department of Labor.

“If it is not there, you can certainly request it. The regulations provide the rights to the participant, but the provider can request it. If they do not get a response, then the participant should request it.”

Guynan states that providers are encouraged to request the specifics on health claim denials because many times, claims are denied due to needed medical information. Providers may be able to provide the needed information, such as an operative report or diagnosis code, more quickly than the participant.

Both state and ERISA law also require insurers to indicate if additional material or information is necessary for a review of claim. However, carriers and plan administrators have a wide berth of discretion when assessing whether additional information is needed to reject a claim.

Carrier Liability

In Booten v. Lockheed Medical Benefit Plan, a patient sought payment for oral surgery undertaken after four of her teeth were almost knocked out. The treatment plan centered on resetting the teeth by splinting the loose teeth to her back teeth. Aetna paid a portion of the claim but denied any expenses related to the back teeth because they were not injured. Aetna determined that any work to the back teeth was strictly dental and no medical records were requested to determine the relationship of the back teeth to the injury and subsequent treatment.

The patient’s doctor’s submitted medical information explaining the procedure. However, Aetna responded with a serious of letters which stated simply, “These services are not covered under your Lockheed Medical Benefits Plan.”

After ruling in the patient’s favor, the court noted that Aetna could have easily obtained the medical rationale from providers that these services were the result of an accident. But instead of requesting these records, Aetna issued what the court regarded as “a stream of cookie-cutter denial letters.”

“What we got here,” the court records state, “is a failure to communicate. This is an all-too-common occurrence when ERISA-covered health benefit plans deny claims. While a health plan administrator may – indeed must – deny benefits that are not covered by the plan, it must couch its rulings in terms that are responsive and intelligible to the ordinary reader. If the plan is unable to make a rational decision on the basis of the materials submitted by the claimant, it must explain what else it needs.”

Seek Patient Involvement

Guynan said that ERISA specifically mandates carriers must indicate if any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary. However, once again, the law is written so that the participant has a right to this informaton.

If a provider is having difficulty getting information from the carrier, Guynan said that a conference call may be helpful in resolving the issues. That way all potential parties are there to contribute information. Finally, to comply with state and ERISA regulations, denials must contain information on appealing the decision. If any of the required information is not in the EOB, providers should seek it and ask for the response in writing.