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“DENIED”: The Managed Care Company’s Most Often Used Word

Americans today face the challenge of obtaining good and affordable health care coverage. There are horror stories everywhere that health care benefits cover less and less but cost more and more.  Worse yet, even when people work hard and pay high premiums to secure health care benefits for their families, managed care companies often throw up hurdles and road blocks that prevent people from getting the care they need.  These practices are especially troubling because consumers have precious few ways to prevent or seek redress for a managed care company’s wrongful denial of benefits. 

All too often, a managed care company’s knee-jerk response to a request from a patient’s physician for treatment is to deny it.  Usually the managed care company denies care on the ground it is either “not a covered benefit” or because the request is “not medically necessary.”  Remarkably, these denials are made despite direct recommendations for treatment by the patient’s own physician, who has cared for and treated that patient, and is thus in the best position to know what medically necessary care the patient needs. 

Managed care companies interpret “medical necessity” as broadly or narrowly as they need to deny care they prefer not to pay for.  They explain that “medically necessary services” are provided when the symptoms are appropriate with regard to standards of good medical practice. They neglect to inform patients, however, that the decision to cover care is mostly driven by undisclosed, cost-based criteria and financial incentives unrelated to and more restrictive than whether a particular treat is “medically necessary” for the patient’s health. Care is too often “medically necessary” only if the corporate caregiver can make a profit providing it. Otherwise it is denied.   

In this environment, lawyers representing managed care patients can take steps to help their clients overcome a managed care company’s knee-jerk denial of care for lack of medical necessity. For example, when a managed care company issues its denial of medically necessary treatment, the insured can appeal that ruling to the managed care’s internal grievance or appeal board for review. 

The Grievance/Appeal Process: The Grievance/Appeal committee is usually made up of a case manager and one or two outside physician advisors who are consultants for the managed care company. The managed care company’s in-house attorney sometimes participates as well. When the insured files his/her grievance/appeal the committee will seek information from the insured and/or the insured’s attorney asking why the initial denial should be reconsidered and overturned. The grievance is normally in the form of a written appeal or both a written appeal and the opportunity to appear personally before the committee.

Case in point is a recent situation where Aetna denied medically necessary skilled nursing care for a two year old child who suffers from chronic lung disease, including severe tracheomalisa, recurring tracheostomy, reactive airway disease, and recurrent tracheitis.  Aetna’s denial followed an all-too-common pattern for managed care companies.

The child’s father works as a security guard for a prominent hotel in South Florida . At the time of the child’s birth up until the middle of this year, the family was insured with Beach Street Insurance.   Under the Beech Street policy, the child received skilled nursing care 10 hours a day 7 days a week to tend to her chronic lung disease.  Recently, the father’s employer asked other insurance carriers to bid on providing health insurance for hotel employees.  Aetna was chosen and Aetna representatives promised to the child’s father that if the family moved to Aetna there would be a “no loss/no gain” policy with respect to any coverage the child received from Beech Street . In other words, whatever the family was receiving through the Beech Street policy, they were promised that they would get the same coverage -- i.e., skilled nursing care 10 hours a day 7 days a week with the Aetna policy.

Shortly after becoming insured with Aetna, the family learned for the first time that it would not cover private nursing care for the child on the grounds that the care she needed was actually “custodial” instead of “skilled.”  Aetna denied the care on the basis of the exclusion of the language of the policy which states that nursing home care is only covered when (a) the member has skilled nursing needs; (b) placement of the nurse is done to meet the skilled needs of the member only, not for the convenience of the family care giver; and (c) care must be recommended by the member’s primary care and/or treating physician. 

The parents appealed to the Grievance/Appeal Committee. During the appeal hearing, the managed care company was unable to state the reasons or identify the documents they relied upon to support their conclusion that the child was not in need of skilled nursing care.  Aetna simply had no foundation for its positions that skilled nursing care was only done for the convenience of the family (the caregiver), and not for the child, and that the child’s treating physicians had not in fact recommended the skilled nursing care (which they had). 

Aetna’s actions were not new or unusual. To the contrary, their treatment of this child and her family are an everyday example of how the managed care industry denies medically necessary care to very sick people without regard to the consequences of doing so.  Because the family was covered under a private employee-based plan covered by ERISA, Aetna had no fear that it could be sued for damages.  It was thus free to deny the care and save the money, regardless of how that denial would affect an ill child and her family.

In this particular case, because the denial was patently incorrect, the committee overturned its initial decision. In the meantime, however, the parents had to endure the anguish of knowing that their daughter could stop breathing at anytime, and that they, being unskilled, feared that they would not be able to help her. The child suffered serious infections during the many weeks of that she was without skilled nursing care and suffered terribly. Still, Aetna only granted the family a brief reprieve by agreeing to cover skilled nursing care for an additional three months.

When representing or counseling a client in a grievance/appeal, it is critical to document why the care sought is medically necessary.  The most obvious (and effective) way to do this is to obtain letters from the patient’s treating physicians explaining why the patient needs the care and what will happen if he or she doesn’t receive it.  Having the treating physicians attend the hearing – either in person or via telephone – is also highly recommended. It is difficult for the physician advisers who have never seen, let alone treated the patient, to go against the advice of the physicians who have had a relationship with that patient and who have actually prescribed the medically necessary care that is being denied.

In ERISA-based policies, where we are left with no choice but to go down the grievance/appeal road, the more information and back-up material you have to fight the denial of care, the more likely you are to get it overturned. Grievance/appeal hearings are not trials or formal legal arguments to a court or jury. Nonetheless, with so much at stake for a client, it pays to prepare well and to seek every source of support for the care your client needs.