Avoiding the Pain of Insurance Denials

by Marlin W. Schul, M.D., MBA, RVT, FACPh

Helping patients achieve symptomatic relief from venous disorders is not always easy when an insurance carrier is involved. Phlebological procedures fall under extensive scrutiny by insurance carriers of all types. The U.S. has seen a tremendous rise in utilization of phlebological procedures because of an expanding provider pool and the availability of less-invasive treatment modalities. Insurers often look at the treatment options differently; a request for surgical stripping is rarely reviewed, but thermal ablation procedures may be scrutinized intensively even when used to treat the same pathology. Adding to this complex scenario is the variation between medical policies and therapeutic options covered by the majority of insurance plans. If this complexity is not enough, watch what happens when an insurance denial arrives in your office after you have requested or administered medically appropriate care.

In a perfect world, patients with symptomatic venous insufficiency would choose their provider and receive mutually agreed upon therapy without insurance carrier interference. We do not live in a perfect world, however, and the reality is that if you elect to involve insurance carriers in your day-to-day activities, you have elected a path potentially fraught with frustration.

Examples of what insurance carriers may do include the following:

  1. Deny payment after previously sending out an approval letter for treatment
  2. Not permit preauthorization for phlebological procedures and yet quickly deny payment once procedures are performed
  3. Deny payment based on experimental/investigational claims
  4. Provide low reimbursement

The intention of this review is to enlighten and embolden you regarding effective strategies for battling insurers and winning insurance appeals. The suggestions represent proven strategies used by this author but are in no way intended to reflect legal opinion. It is advisable to consult a health-care attorney familiar with the Employee Retirement Income Security Act (ERISA) if you elect to add this component to your insurer-battling arsenal.

Preventing denials

The best insurance appeal is the one you don’t need to file. Office staff and/or providers expend a significant amount of energy when insurance denials occur. A successful framework for preauthorization is an imperative step in avoiding insurance denials and lessening the overall workload of you and your staff.

The basic principles necessary for effective preauthorization are:

  1. Understanding insurance carrier medical necessity and therapeutic guidelines
  2. Providing complete information detailing physical exam and duplex findings
  3. Verifying benefits to include exclusions, preexisting conditions and the name of the person providing the information
  4. Only submitting claims for review once medical necessity has been established

If these simple preprocedure steps are followed, the number of insurance denials should dramatically lessen.

Dissecting the insurance denial

Where do you begin when you receive a denial? What resources do you need? What strategy is best for a given appeal? It depends. Generally speaking, we ask three questions:

  1. What is the specific reason for denial?
  2. Does the patient’s insurance plan fall under ERISA rule?
  3. Does the reason for denial fall under ERISA?

The reason for the denial, found on the explanation of benefits or in the pre-service denial letter, identifies the problem (e.g., lack of medical necessity, experimental/investigational status, cosmetic claims, exclusions, etc.) Once you identify the problem, the path you pursue becomes clear. Some reasons for non-ERISA denials include failing to document medical necessity, denials of care for any reason following an initial approval letter, coding issues and bundling, and fee schedules. Non-ERISA denials fall under state law, and a couple of common examples are listed below.

Denial of payment after receiving an approval letter

Your pre-service efforts pay off, and you receive an approval letter and provide the care you requested for the patient. Weeks later, you receive a denial letter or an explanation of benefits (EOB) stating a refusal to pay. This type of denial is not your or your patient’s fault. If an approval letter comes, it is natural to assume it will be honored, no matter what the small print says. If the approval letter was based upon accurate good faith communication efforts on behalf of the patient, what else are you or the patient to do?

Common triggers for this problem are:

  1. Insurer communication errors, for instance, between the third-party administrator who authorized the treatment and the fiduciary (the fiscally responsible party)
  2. Missing documentation of the procedure (e.g., op reports)
  3. Preexisting conditions not identified by the insurer

Every state has consumer protection laws. If you are struck with this situation, the patient shares a new financial risk and may suddenly acquire a much higher financial responsibility. You could elect to hold the patient to their new obligation, write off the excess financial burden or win an appeal with a simple phone call. In our experience these cases are all overturned no matter what the trigger, assuming that the original information was provided in good faith.

The first phone number you need is typically found on the EOB that provides direction. The only other number you need is that of your state’s attorney general. If declaring the injustice by the insurer action does not promptly get a check released, communicating that your next phone call will be to your state’s attorney general may get action and respect.

This phone call is incredibly effective and far simpler than any letter-writing campaign. Keeping your state attorney general’s contact number handy and training billing personnel to recognize when this occurs will minimize the delay in reimbursement. The only exception to this argument is when a patient becomes uninsured between the approval letter and the service. In this instance, there is no recourse, and the financial arrangements become purely between you and your patient.

Precertification/predetermination/preauthorization not permitted

This is actually clever. You have an ironclad preauthorization process established in your office, and the insurer is preventing you from using it. The biggest issue-here is recognizing that even though you cannot acquire a pre-service approval letter, all other rules apply for a given carrier. This is simply a situation that calls for flexibility. You know what the medical necessity guidelines and therapeutic plans include for the given carrier. It is important to realize that the patient needs to meet the same criteria that the insurer applies to your other patients when it comes to medical necessity and treatment options. Verifying benefits will help you eliminate concerns of exclusions or preexisting conditions. After affirming that benefits are available, establish medical necessity according to the carrier’s guidelines, and you may treat your patient.

We routinely deal with this situation and find it is simple to make sure certain medical necessity is met and then submit paper claims with a letter of medical necessity with each date of service. If medical necessity is not supported with each date of service, denial of service will be expected. This seems like a true paper-work hassle to manage on the front end, but the reality is that the claims get paid. When we didn’t do this, every date of service was denied.

Becoming familiar with ERISA

From this point forward, the discussion becomes interesting and complex. What is ERISA? The following is shared from the U.S. Department of Labor (www.dol.gov):
“A group health plan is an employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.

Most private-sector health plans are covered by the Employee Retirement Income Security Act (ERISA). Among other things, ERISA provides protections for participants and beneficiaries in employee benefit plans (participant rights), including providing access to plan information. Also, those individuals who manage plans (and other fiduciaries) must meet certain standards of conduct under the fiduciary responsibilities specified in the law.”

This federal rule is not a simple document, but it serves to level the playing field when you are met with unjust insurance denials. ERISA applies in an estimated 80 percent of insurance plans, including self-insured and fully funded plans. Plans that are excluded under ERISA include those of schools, churches, and government or government health plans.

ERISA is not an appeal but rather a set of rules that allows you to build and direct a meaningful argument to the appropriate party, the fiduciary. The fiduciary relationship is the connection between the patient, provider and the insurance company. The fiduciary is the person who has the ability to exercise final decision-making authority as it pertains to the health plan. There are specific rules regarding disclosure of information, established time frames for proper procedure and statutory penalties for breach of rules by the fiduciary. Nothing beats not needing to do an appeal, but, if you are faced with an insurance denial, it might be worthwhile to understand a few facets of this federal rule that will add teeth to and simplify the appeal process when indicated.

The summary plan document (SPD)

The SPD is the figurative “holy grail” of the specific health plan for Company X. This is the document that your insurer is to interpret when making coverage decisions. The SPD shares the specific coverage of the plan and identifies specific processes in perfecting your claim.

As a representative for your patient, you may directly request this document from the employer in an effort to perfect your claim. The following identify important features of the SPD that may help you:

  1. Plan administrator information (name, address, business phone/fax)
  2. Verification statement that the plan administrator may be served with service of legal process
  3. Specific appeal processes and timelines
  4. Definitions section
  5. Coverage/limitations section, including outpatient testing and durable medical goods.

Once you have established that the problem and the plan fall under ERISA, you initiate your first appeal in concert with your SPD request. We send a simple SPD request with a short description of the problem, sharing that the recipient has 30 days to provide the SPD before penalties accrue. This letter is sent via certified mail to the health-plan administrator of the employer. A carbon copy is sent to the insurer as a Level I appeal. Corporate Web sites such as www.hoovers.com are useful resources to identify the appropriate recipient for the letter or fax. If the plan administrator and address is still unknown, you may elect to send the letter by certified mail addressed to the chief executive officer of the company to be certain it gets the attention it deserves. The reason for fax or certified mail is to start the 30-day clock on the SPD request. For every day beyond 30 days the SPD has been withheld, penalties accrue at a rate of $110 per day according to federal statutes.

The importance of the SPD cannot be overstated. It is critical to possess the SPD if you are to be successful with ERISA. A motivated patient will have an electronic copy emailed to your office manager so that you may review its contents. The electronic copy is preferred in our experience, as search commands allow for quick identification; these documents may be large, and the information you need is typically limited to a few sections. Often, the mere request of an SPD will drive action on a denied claim.

Experimental/investigational denial

In the past year, denials for endovenous laser procedures because of an experimental claim have begun to occur. We can argue our case in a written appeal and provide 60 literature sources stating that these procedures are safe and effective, but will that effort change reviewers’ opinions if the guidelines they are using still say these treatments are “experimental”?

If you do not have the SPD, you should now request this document. The plan rules are typically very generic, and that helps when battling an experimental/investigational denial. Scroll to the definitions section of the SPD, and determine what defines “experimental/investigational” under the plan rule. An excerpt from an SPD is shown below.

In this instance, the patient acquired an electronic copy of the SPD and e-mailed it to our office for review. If each bullet point is critically reviewed, endovenous laser therapy does not meet the definition of experimental/investigational in this plan. This may be referenced in a short appeal letter that is faxed to the employer and the insurer, and your approval should be expected within short order. This same process may be used with any treatment claimed to be experimental/investigative. The key is understanding and following three steps:

  1. Requesting the SPD from the employer/employee
  2. Reviewing the definitions
  3. Building your argument through the SPD designated appeal path

Low reimbursement

If you have a contracted rate with an insurer, you should expect your contracted rate. Any discrepancy is typically corrected with a phone call. If you are not contracted with a specific insurer and you suddenly receive 9 percent of your billed charge, chances are you did not receive fair reimbursement. There are many potential reasons for this. Perhaps you received the technical component versus the global, the insurer received poor data when codes bundled, or the insurer committed a simple egregious action. Whatever the cause, the SPD often defines what reimbursement should have been, as this excerpt shows below.

In this instance, one could presume that your 9 percent reimbursement was not the “typical fee” charged in your geographic area. Insurers have this information, and there is no hiding what the prevailing charges are in your geographic area. It is not uncommon to see the definition include a specific percentage, for example, 70 percent or 80 percent of the “typical fee.” The key here is acquiring the SPD and putting teeth in your reply by using the facts of the plan. Other ERISA topics include coverage versus exclusion and full and fair review claims.

Summing it up

ERISA does not need to trigger a fear response or signify a monumental challenge. This federal rule is valued for its ability to hold accountable those ultimately responsible for the inappropriate denial of claims. Implementation is fairly simple when the following essentials are applied:

  1. All communication with ERISA is directed primarily to the employer, not the insurer. You may burn your Level I appeal with the insurer by using a carbon copy of the SPD request you sent to the employer.
  2. Acquiring the SPD is an essential step toward success, and statutory penalties of $110 per day may be assessed if the employer fails to provide a copy of the SPD within 30 days.
  3. All written communication should be done by certified mail or fax to verify time of receipt. Remember that you must fax or send the request by certified mail to start the clock. Recipients cannot use the excuse that it was lost when you have submitted this document and can track when it was received.

Dealing with insurance plans is not likely to become easier anytime soon, so becoming familiar with ERISA principles and non-ERISA strategies may make a provider’s life easier over time. In the coming months, the American College of Phlebology will be conducting a survey to help identify the most common reimbursement issues facing its members. This survey will be shared at the ACP’s 2008 Annual Congress, to be held Nov. 6–9 in Marco Island, Fla. An “SPD Request” template has been posted on the members area of the ACP Web site (www.phlebology.org). This is the same template the author uses when requesting a summary plan document.

There are many reimbursement issues facing phlebologists today. This summary merely touches the surface of a rather expansive and ever-changing insurance environment that requires you to be ready for the worst as the insurance carrier rules change. As we have seen, it is not the insurance carrier rules that ultimately matter; rather it is the rules of the employer-sponsored health plan.