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The first recourse for most health insurance plan members who are denied coverage for a medical procedure is an appeal to the health plan itself. In fact, HMOs adjudicate more than 250,000 such appeals each year for their privately insured enrollees alone. A new study reveals that most preservice appeals dispute choice of provider or contractual coverage issues, rather than medical necessity. Medical necessity disputes proliferate not around life-saving treatments, but in areas of societal uncertainty about the legitimate boundaries of insurance coverage, according to David M. Studdert, L.L.B., Sc.D., M.P.H., of the Harvard School of Public Health, and Carole Roan Gresenz, Ph.D., of RAND.
They suggest that greater clarity about the coverage status of specific services, through more precise contractual language and consumer education about benefits limitations, may help to avoid a large proportion of disputes in managed care. In the study, which was supported in part by the Agency for Healthcare Research and Quality (HS11285), they reviewed the administrative files associated with 3,519 appeals lodged by privately insured enrollees at two large HMOs to understand the sources of conflict between patients and managed care organizations.
Just over one-third (37 percent) of preservice appeals involved medical necessity determinations, another one-third (37 percent) centered on the scope of contractually covered benefits—for example, dental care, alternative medicine, and experimental treatments—and most of the remainder (20 percent) involved disputes over use of out-of-network providers. Enrollees won half of medical necessity appeals (52 percent), 35 percent of out-of-network appeals, and 33 percent of contractual coverage appeals. Appeals covered relatively few services and focused mostly on therapies that are generally regarded as nonessential, for example, surgical treatments for obesity, breast alteration, and varicose vein removal.
More details are in "Enrollee appeals of preservice coverage denials at 2 health maintenance organizations," by Drs. Studdert and Gresenz, in the February 19, 2003, Journal of the American Medical Association 289, pp. 864-870.
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