Obtaining Correct Benefit Information Prior to Treatment

Most healthcare organizations supplement online eligibility information by verifying benefits over the phone. Unfortunately, carriers routinely warn that benefit information obtained over the phone is “not a guarantee of payment.”

One way to obtain more accurate benefit information is to take the verification of benefits process “one step further” by demanding Benefit Clarification Disclosure. Benefit Clarification Disclosure refers to a formal written request for the carrier to provide written benefit information including the exact fee schedule, coding criteria and other cost-containment features and limitations which may be applied to the billed charge.

Requesting disclosure of these potentially applicable limitations can be extremely important. As medical billing professionals are well aware, healthcare organizations are in a unique position of being a third party creditor for many healthcare services. In exchange for providing valuable medical services, providers routinely accept an Assignment of Benefits (AOB) related to the patient’s healthcare policy or plan; however, the specifics of this coverage are largely unknown and may or may not be an equitable arrangement for the planned services. There are two ways to more accurately determine benefits—obtain a copy of the policy or plan benefits and review the numerous limitations and exclusions, or make a written Pretreatment Disclosure Request asking the carrier to divulge the benefits for the planned services.

The Right to Disclosure to Insurance Benefit Information is recognized under many state and federal laws. However, disclosure laws normally protect the beneficiary’s right to obtain detailed benefit information but remain silent regarding the treatment provider’s right to benefit information. Often, the insurance company will provide benefit information as a courtesy, but such verification does not necessarily have the same implication as a disclosure made in accordance with consumer protection mandates. Since the Provider/Assignee’s right to obtain benefit information is often not routinely recognized by the insurance carrier, it is important to submit a copy of the AOB when a disclosure request is made. The wording of this document may play a large role in whether the carrier will recognize the provider’s rights or simply ignore the request as being outside the bounds of what is required by law to be provided to healthcare organizations.

ERISA, the federal law governing most employee health benefit plans, has very detailed disclosure requirements which are potentially applicable to both beneficiary and assignee requests. The U.S. Department of Labor provides information on protections related to the ERISA benefit claims procedure regulation, which applies to most employer sponsored benefit plans. ERISA specifically requires carriers to disclose certain documents and information used in making group health claim determinations. This protection is very important because it can be used by providers to obtain access to internal clinical criteria, fee schedules and usual, customary and reasonable charge data used to adjudicate and calculate claims. These protections typically mandate disclosure of information to insurance beneficiaries. However, litigation initiated by providers has demonstrated that such protections can extend to other qualified parties, such as an authorized representative or a third-party assignee, if the request is made in compliance with the regulation.

Many state laws require accurate disclosure of coverage terms. State unfair claims practices mandates often prohibit any misrepresentation of benefit information by an insurance carrier. These laws typically require insurance commissioners or other insurance authorities to track and investigate potential violations of this law. Most of these investigations focus on whether the violations are a frequent business practice of the insurer under investigation. Therefore, any complaint related to such laws should attempt to show a pattern of violations over time. Some states have passed even more protective managed care disclosure requirements such as the Alabama Patient Right To Know Act, the Arkansas Patient Protection Act of 1995, and the Texas Verification Law. Despite these protections, widespread violations are often found by states that assess disclosure law compliance.

The state of New York passed the New York Managed Care Bill of Rights, which requires the disclosure of denial information including clinical information used in decision making as well as information regarding the appeal process. To test carriers’ compliance with the protections, the New York Attorney General’s office conducted an “undercover investigation” wherein they posed as a consumer shopping for healthcare coverage. As part of the investigation, letters were sent to 22 New York-area health plans inquiring about the coverage available through their various plans. The letters sought specific coverage information related to their healthcare needs such as coverage and clinical review criteria for insulin pumps, surgery for Crohn’s disease, arthroscopic knee surgery and breast reductions. Some carriers did not respond and those that did respond frequently provided insufficient coverage information to comply with the new law. See the New York Attorney General web site www.oag.state.ny.us/press/reports/hmo_coverage_info_report.pdf for a copy of the report, including a list of carriers and the grade each was given.

The New York Attorney General’s report is an indictment of the carrier’s poor attempts to convey coverage information and points out the harmful repercussions on patients and providers as indicated in the following quote:

The impact of these findings must be measured in human terms. Violation of the information of the MCCBOR is not an abstract problem. The direct consequences of such violations are likely to be confusion, anxiety and fear among consumers with real medical needs. Navigating the health care market is no easy task, and when the choice is compounded by an imminent or existing medical need, full disclosure by health plans takes on added significance. Each time a plan neglects to provide clinical review criteria, the consumer is cast into a state of limbo in which a critical life decision is reduced to uncertain guesswork and high-risk speculation. Each miscalculation caused by a lack of information could leave the prospective enrollee with the choice of either paying for expensive treatment out of pocket or foregoing necessary medical care. The MCCBOR was passed so that consumers would not face that choice. Our survey demonstrates the urgent need to ensure that New York health plans comply with the law.

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