Recently, many of our clients have found that more and more of their in-network, contracted claims which they have billed to the various payors are being denied, in whole or in part, for an alleged lack of medical necessity. This article provides some considerations to be made when dealing with payors who have denied claims based on medical necessity grounds.
Examine Your Contract
Definition of Medical Necessity
Providers should examine their contracts with the payor at issue. First, determine how the terms “Medical Necessity” or “Medically Necessary Services” (or the equivalent) have been defined in your contract. Ensuring that the services in question comply with that definition will be critical to succeeding in any challenge to the payor’s denial of the claim. Should any challenge of the payor’s denial result in litigation or arbitration, your expert witness will also need to become very familiar with the definition included in your contract and be able to support that the services provided do meet the definition provided.
This means that during the contract negotiation and/or drafting stage, providers should seek to include expansive definitions of medical necessity and avoid allowing payors to insert specific guidelines that are more limited or not readily used by physicians and or other providers who actually make treatment decisions. For instance, many payors will attempt to insert language defining “Medical Necessity” by the Milliman Care Guidelines (MCG), a set of guidelines that physicians and other providers do not consider (nor are they supposed to consider) when making medical decisions based on their professional judgment. The MCG attempt to usurp physicians’ opinions and expertise in favor of a strict, funnel-like system that narrows the acceptable care based on the patient in question’s symptoms and diagnoses. Challenging the acceptability and applicability of the MCG when they do not appear in the contract is quite feasible as providers do not use or rely on these guidelines and they often do not meet the clinical standard of care, but challenging the MCG when a payor has inserted them as the measure of medical necessity in a contract becomes more difficult.
Payors will often also try to insert language into the definition of Medical Necessity section of the contract which states that the payor’s own plan document will define what is medically necessary. Again, providers should strike this language, as it allows the payors to control what will be deemed medically necessary, another attempt to move away from the treating provider’s own clinical judgment.
Timeframes and Processes for Challenging Denial
Providers should also examine their contracts to determine how long they have to challenge the payor’s denial and what processes they must follow to challenge the denial, including those that must be completed before litigation or arbitration can proceed.
Timeframes for challenging denials will vary, but providers should become familiar with the payor’s guidelines for appeals (often 30, 60, 90, or 180-day timeframes). While it’s better to comply with these deadlines, deviation and variation from appeal deadlines is not fatal to pursuing these claims. Assuming the provider in question provided medically necessary services to the payor’s member pursuant to the contract, the provider has substantially complied with their contractual obligations, even if it sent an untimely appeal. Additionally, in certain circumstances, appealing may be futile, and the futility of appeal can be used to explain why a provider did not appeal and should not be penalized for failing to do so.
Determining the deadline by which an arbitration or litigation must be filed will be even more critical. Such a deadline can often be located in a section of the contract which deals with arbitration or litigation or in a provision titled, “Statute of Limitations.” Common limits on the ability to bring arbitration or file suit include 12-months, 18-months, or 24-months from when a claim arose and may be much shorter than provided by state law. Determining when a claim arose can become a hotly contested issue between the parties, and taking a conservative approach, such as the date of the patient in question’s discharge from the provider, will protect the provider from arguments that its claims are contractually stale. Deadline for pursuing arbitration or filing suit should be strictly adhered to, in order to avoid challenges from the payor that such claims have expired and can no longer be pursued by the provider. Entering a tolling agreement with the payor can prevent claims from going stale, and can be employed as a tactic to allow for more meet and confer and settlement discussions between the provider and payor to proceed before filing suit/arbitration. Also of note, in certain states, contractual limitations periods are unenforceable. The applicable state law should be researched to determine if this is so for the claim(s) at issue.
Often, payors require the provider to exhaust the appeals process, generally through at least a second-level appeal, before proceeding to arbitration or litigation. Some payors also require a formal meet and confer process before arbitration or litigation can proceed. The meet and confer may take the form of a formal demand letter, which can be generated by outside counsel or someone within the organization, but may also require a telephonic or in-person meeting with payor representatives. Depending on the ongoing business relationship between the entities, the meet and confer can function as an informal mediation and a way to resolve ongoing claim processing issues, or may instead function as a formality that must be adhered to before more formal arbitration and/or litigation efforts may proceed.
Before generating a demand letter or engaging in a telephonic or in-person meet and confer, a provider should organize all of its claims which have been denied for alleged medical necessity with the payor in question, and determine the total value of those claims. To the extent those claims can be classified to fit into particular categories based on the particular medical necessity issue and/or issues in dispute, the categorization can help identify trends in the payor’s denials, and ensure that the letter and/or meeting agenda is organized to alert the payor of their improper denial trends.
Filing Suit or Pursuing Arbitration
Providers should ensure that they have as robust a medical record as possible and that they have collected the appropriate documentation from all of the patients in question’s treating providers for the denied or downcoded services in question. Collecting records for other related stays for the same patient (either before or after the denied dates of service) may also be helpful to emphasize the overall status and condition of the patient during the denied dates in question. Providers should also consider exactly what type of medical necessity denial the payor has asserted. For example, a payor may have chosen to challenge the medical necessity of services based on the level of care provided. Providers should ensure they have documents reflecting that the level of care provided was a clinically appropriate level at which to treat the patient.
The provider may also want to gather peer-reviewed scholarly and scientific articles, FDA findings, Medicare guidelines, and other supporting materials for the services provided. In the alternative, this task can be left to the medical necessity expert selected by the provider.
Selecting an Expert
Medical necessity disputes frequently become what is known as a “battle of the experts,” in which each party will put forth an expert to explain why the healthcare services provided were or were not medically necessary. Typically, payors will utilize an in-house medical director or nurse as their expert. Providers should consider what type of medical necessity claim denials they are challenging, in order to select an appropriately knowledgeable expert. Often, the denied claims will range through a varied assortment of medical ailments and medical specialties. A physician with broad-experience, such as an internal medicine physician or general practitioner, will likely be able to serve as the expert on many of the claims at issue due to their broad based knowledge. However, for highly specialized claims, providers should consider engaging a more specialized expert to opine on the services. This may provide a higher level of clarity, skill, and credibility to the arbitrator, judge, and/or jury. Providers may also want to consider utilizing the treating physicians for the patient in question, especially when their unique knowledge of the patient’s situation may be more compelling to the trier of fact.
For additional information and guidance on the issues outlined above, please contact Bridget Gordon in Los Angeles at 310-551-8175.