N.Y. Consumers to Get Better Explanations When Coverage Denied

Last October New York State Attorney General Eliot Spitzer announced a set of agreements that will enable consumers to challenge denial of coverage by health maintenance organizations (HMOs).

The agreements with six of the state’s largest health insurance plans require HMOs to spell out the specific reasons for denying a treatment deemed “not medically necessary.” Under current law, plans are required to disclose the reasons and clinical rationale they use to deny coverage, but have done so only in the most general terms, according to Spitzer. Consumers will now be told the specific medical findings on which the plans relied to support denials of service.

Seth Stein, J.D., executive director of the New York State Psychiatric Association, said, “The settlement is certainly a welcome development. We have been meeting with the attorney general and others for at least four years about problems related to denials of service. The kind of computer-generated responses doctors were receiving about reasons for denial made appeals very difficult.”

The health plans are Aetna/U.S. HealthCare Inc./Prudential Health Plan of Hartford, Conn.; Excellus Health Plans Inc. of Rochester; Group Health Inc. of Manhattan; HIP Health Plan of Greater NY Inc.; Oxford Health Plans of Trumbull, Conn.; and Vytra Health Plans of Long Island Inc.

Staff of Spitzer’s Health Care Bureau examined how HMOs authorized or denied care during the period from January 1, 1999, through June 30, 1999. This examination, said Spitzer in a press release, “revealed that these plans were refusing to pay for extended hospital stays and recommended treatment for anxiety, depression, and substance abuse, while offering nothing more than a generic phrase to justify the denial of such claims.”

Some doctors treating addicted or suicidal patients were told that plans would no longer pay for the care they recommended at psychiatric hospitals because “the proposed service or treatment was not medically necessary.”

The health plans have also agreed to:

• ensure that any company hired to conduct utilization review for a health plan complies with the terms of the agreement with the attorney general’s office and with state laws;

• disclose to patients and their doctors that under the state’s utilization review law, a plan’s failure to meet the statutory deadlines for processing an appeal will result in an automatic reversal of the denial. When a plan does not meet the deadline, it must notify the consumer that the denial was reversed;

• comply with all the provisions for monitoring by the attorney general’s Health Care Bureau, including maintaining complete and accurate records related to each denial; and,

• contribute $1 million to cover the costs of the attorney general’s investigation.

Spitzer said his office will monitor HMOs for at least a two-year period to ensure that the plans comply with the terms of the agreement.

According to Donald Moy, J.D., general counsel of the Medical Society of the State of New York (MSSNY), the settlement will not affect the society’s lawsuits against six managed care companies that together account for almost half of the managed care contracts controlling patient care in New York.

Those suits (Psychiatric News, October 19, 2001) charge the companies with “continual arbitrary denial of medically necessary care, capricious reductions in reimbursement claims, subjective downcoding and bundling of claims, as well as utilization of computer programs that deny claims based on arbitrary guidelines.”

The MSSNY suit also cites “the failure of carriers to provide adequate staffing for the volume of claims being submitted and their failure to provide information to physicians about how claims decisions are made.”

Moy told Psychiatric News that four of the six insurance companies have sued to shift the cases to federal courts and that no action on the merits of the cases is expected in the near future. He mentioned, however, a recent favorable ruling in Connecticut in which a state court had decided that medical societies have the right to sue insurance companies. ▪