What is “medical necessity” and how is the term used by health insurance companies in determining whether a person receives coverage?
Medical necessity can be vague and interpreted in many ways; to the insured, anything which improves physical or mental health counts. For Health Maintenance Organizations (HMOs) and Managed Care Programs, however, it can be whatever they can or decide to cover. For doctors, it may be both, including incentives from insurance companies to save as much money on treatments as possible. Furthermore, aid may also be restricted by third-party “specialty management” employees hired by HMOs, and these clusters are often responsible for delayed treatment in favor of reducing costs and maximizing profits.
Physicians and their staff spend far too much time persuading insurance companies to cover particular medications and procedures. In 2006, primary care nursing staff spent an average of 13 hours per week on authorizations, primary care clerical staff spent about 5.6 hours, and primary care physicians (PCPs) spent about 1.1 hours. The same study, published in Health Affairs in 2009, also concluded that all combined practice interactions with health plans (authorizations included) cost our health care system between $23 billion and $31 billion per year. A more recent study of twelve primary care establishments (Journal of the American Board of Family Medicine) estimated the “average annual anticipated cost per full-time physician for prior authorization activities” to fall between $2,160 and $3,430, and the authors concluded that “preauthorization is a measurable burden on physician and staff time.”
Due to authorization restraints from HMOs, physicians are often forced to find the most affordable methods of treatment rather than the most effective. Here are some other reasons why your claim might be denied by an insurance company:
- The number-one reason for denied claims by large HMOs, according to the AMA’s National Health Insurer Report Card, is “non-covered charges,” referring to medical necessity. An insurance agency’s request for additional information may be a sign that a charge or service will be denied as “non-covered,” as third-party specialists hired by HMOs are employed to determine what is and is not medically essential.
- HMOs often require the insured to receive treatment from particular medical providers, and if the insured chooses another provider who hasn’t agreed to the HMO’s terms of payment, that provider is the insured’s responsibility.
- HMOs can also deny claims for even the smallest details, such as an incorrect birthdate or diagnosis code.
If you or a loved one has been wrongfully denied by a health insurance company, contact Mike Agruss Law for a free consultation. We are a Chicago-based injury law firm representing individuals (and their families) who have suffered an injury in an accident. We will handle your case quickly and advise you every step of the way, and we will not hesitate to go to trial for you.
Lastly, Mike Agruss Law is not paid attorneys’ fees unless we win your case. Our no-fee promise is that simple. You have nothing to risk when you hire us – only the opportunity to seek justice.