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Patients Often Win If They Appeal A Denied Health Claim

Apr 14, 2014
Originally published on April 15, 2014 3:29 pm

Federal rules ensure that none of the millions of people who signed up for Obamacare can be denied insurance — but there is no guarantee that all health services will be covered.

To help make sure a patient's claims aren't improperly denied, the Affordable Care Act creates national standards that allow everyone who is denied treatment to appeal that decision to the insurance company and, if necessary, to a third party reviewer.

For Tony Simek, a software engineer in El Mirage, Arizona, appealing was the only way he was able to get treatment for sleep apnea. Though mild for many people, the condition had become life-threatening for Simek.

"I had actually gotten to a place where I had fallen asleep while driving a vehicle," Simek says. "That's something that would normally have never ever happened to me."

Simek's doctor recommended he go to a lab to undergo another sleep study test to see if his night-time breathing machine needed adjustment. But his insurance company denied the test.

"I was rather surprised," Simek says, "so I reached out to my doctor to find out why. My doctor had been told [by the insurance company] that it was 'not medically necessary' in their judgment of my health condition."

Simek spent hours on the phone with the health plan, trying to get approval for the test. The insurance company sent him four denial letters. Simek has job-based health insurance through a California employer, so he filed an appeal with the California Department of Insurance.

"I have never had a problem with health insurance prior to this," Simek says.

Capital Public Radio analyzed data from California and found that about half the time a patient appeals a denied health claim to the state's regulators, the patient wins.

The picture is similar nationally. A 2011 GAO report sampling data from a handful of states suggests that even before the new standardization for appeals was implemented under the Affordable Care Act, patients were successful 39 to 59 percent of the time when they appealed directly to the insurer. When appealing to a third party (such as the state insurance commissioner), patients also were often successful in getting the service in question — patients won 54 percent of such decisions in Maryland, in the GAO sampling, and 23 percent in Ohio.

"It's often very worthwhile for a consumer to appeal," says Cheryl Fish-Parcham, who directs the private insurance program at Families USA, a nonprofit that supports the new health law. "It's a really important protection for people," she says.

Until a few years ago, Fish-Parcham says, the rules regarding such appeals varied by state and employer.

"Insurers often get it wrong the first time," she says. "So if you've been denied a health care service, it might be because the plan didn't understand why that service was needed and why it fit their guidelines."

Administrative errors are the source of many denials, says Peter Kongstvedt, a senior health policy faculty member at George Mason University.

"It can be an error on the health plan side," he says. "Maybe they put somebody in the system wrong and they don't know that [he or she is] eligible yet. Or a data entry error occurs, and the computer says, 'Oh, we don't pay for this service on that diagnosis,' — that type of thing."

Other denials, like Simek's sleep test, are based on judgments of medical necessity. Insurers may consider a treatment experimental. Kongstvedt, a former executive in the managed health care industry, says such decisions require human discernment.

"The computer doesn't — usually doesn't — make that decision," he says. "It simply flags it and then it gets reviewed — first by a nurse reviewer, who then presents it, usually, to a medical director," he says.

Insurers say medical studies support their decisions.

"The more evidence that's available about the appropriateness and effectiveness of a particular drug or treatment or technology — that's what drives what's covered," says Robert Zirkelbach, of America's Health Insurance Plans, the trade group representing insurers.

Zirkelbach says only about 3 percent of claims are denied. And, he adds, insurers support the new strengthening of the appeals process.

"Health plans are committed to getting it right," he says.

Appealing the denial was the right thing for Tony Simek. Ultimately, a California regulator overruled his insurer, and Simek got the test.

"I have been sleeping well ever since," he says.

The federal law requires insurers to notify patients of their right to appeal. But Fish-Parcham says many patients are not exercising that right as frequently as they should.

This story is part of a reporting partnership with NPR, Capital Public Radio and Kaiser Health News.

Copyright 2017 Capital Public Radio. To see more, visit Capital Public Radio.

AUDIE CORNISH, HOST:

Millions of people have signed up for health coverage under the Affordable Care Act. The new rules ensure that no one can be turned down for insurance but there's no guarantee that all services will be covered. What is guaranteed is that anyone denied treatment can appeal.

Capital Public Radio's Pauline Bartolone reports from Sacramento.

PAULINE BARTOLONE, BYLINE: Sleep apnea is a common condition. But for Tony Simek, who works as a software engineer outside of Phoenix, Arizona, his loss of sleep became life-threatening.

TONY SIMEK: I had actually gotten to a point where I'd actually fallen asleep while driving a vehicle.

BARTOLONE: Simek's doctor recommended he go to a lab to get another sleep study to adjust his nighttime breathing machine. But his insurance company denied the test.

SIMEK: I was rather surprised by that, so I reached out to my doctor to find out why. And apparently my doctor had been told that it was not medically necessary in their judgment of my health condition.

BARTOLONE: Simek spent hours on the phone with the health plan, trying to get the service. The insurance company sent him four denial letters.

SIMEK: I have never had a problem with health insurance prior to this.

BARTOLONE: Simek has job-based health insurance through a California employer, so he filed an appeal with the California Department of Insurance. Data show about half the time a patient challenges a health care denial to the state, the patient wins.

CHERYL FISH-PARCHAM: It's often very worthwhile for a consumer to appeal. It's a really important protection for people.

BARTOLONE: Cheryl Fish-Parcham is an insurance expert with Families USA. She says the Affordable Care Act provides that every insured person has the right to appeal a denial to the health plan and to an expert outside reviewer. Until a few years ago, the rules varied by state and employer.

FISH-PARCHAM: Insurers often get it wrong the first time. And so if you've been denied a health care service, it might be because the plan didn't understand why that service was needed and why it fit their guidelines.

BARTOLONE: Another problem could be administrative error, says Peter Kongstvedt. He used to manage health plans. Now, he's at George Mason University in Virginia.

PETER KONGSTVEDT: It can be an error on the health plan side. Maybe they put somebody in the system wrong and they don't know that they're eligible yet. Or data entry error occurs and then the computer says, oh, we don't pay for this service on that diagnosis, that type of thing.

BARTOLONE: Other denials, like Simek's sleep test, are based on medical necessity. Or insurers may consider a treatment experimental. Kongstvedt says such decisions require human judgment.

KONGSTVEDT: The computer doesn't - usually doesn't make that decision. It simply flags it. And then it gets reviewed first by a nurse reviewer, who then presents it usually to a medical director.

BARTOLONE: Insurers say medical literature backs up their decisions. Robert Zirkelbach is from America's Health Insurance Plans, the trade group representing insurers.

ROBERT ZIRKELBACH: The more evidence that's available about the appropriateness and effectiveness of a particular drug or treatment or technology, that's what drives what's covered.

BARTOLONE: Zirkelbach says only about 3 percent of claims are denied and insurers support the strengthening of the appeals process under the Affordable Care Act.

ZIRKELBACH: You know, health plans are committed to getting it right.

BARTOLONE: Appealing was the right thing for Tony Simek. A California regulator overturned his insurer's denial and he got the test.

SIMEK: And I have been sleeping well ever since.

BARTOLONE: The federal law requires insurers to notify patients of their right to appeal. Families USA says it's an opportunity people are not using as much as they could. For NPR News, I'm Pauline Bartolone in Sacramento.

CORNISH: This story is part of a partnership with NPR, Capitol Public Radio and Kaiser Health News. Transcript provided by NPR, Copyright NPR.