(p. 641) Navigating Adverse Managed Care Decisions
This chapter provides strategies for navigating adverse managed care and insurance company determinations. (For ease of reference, we will use the terms “managed care company” or “company” to refer broadly to managed care companies and health insurers.)
You can avoid many problems with managed care by understanding the company’s policies and procedures before you provide services and before you submit claims.
Before providing services, you should review your provider contract (if you have one), the company’s provider manual, and the provider section of the company Web site for provider updates from the company. Look for pre-authorization or pre-certification requirements (which require you to obtain company approval before you provide services), procedures for submitting claims, recordkeeping requirements, and other restrictions that can impact reimbursements (i.e., requirements for timely submissions).
Before submitting claims, make sure that you are using the required forms and providing the requested information accurately. Claims are often rejected because of simple mistakes like missing or incorrect diagnosis and procedure codes or patient and provider information.
You should also have a system for tracking whether your claims are being fully and promptly paid. Having a good billing service or utilizing billing software can reduce the burden of obtaining authorizations, submitting and tracking claims, and resolving disputes with managed care companies when they do arise.
If certain companies make up a significant share of your practice. It may be helpful to identify a contact at the company who can help you resolve problems. Developing a rapport with that company representative.
Keeping good records is another important preventive measure. You should keep records of all your contracts, contract addenda, fee schedules, and provider updates organized for each insurer. It is also critical to keep your authorization and claims records complete and organized for each patient.
When Problems do Arise: Overall Strategic Approach
Despite the preventive measures outlined earlier, you should expect to encounter some adverse managed care determinations and other problems. Managed care companies process an enormous volume of claims and problems are inevitable. Moreover, the fundamental purpose of these companies is to “manage” care to reduce unnecessary or inappropriate care and (p. 642) to reduce costs. However, in some cases, the company may be trying to cut costs regardless of what is appropriate. The authors have observed that a company will often ignore the requirements stated in its own provider contracts. Also a company might ignore what patients have been promised in their benefits booklets and other marketing material.
Your overall approach to navigating denials should be to start as politely as is appropriate and then increase your assertiveness as necessary to resolve the problem. For significant problems that you cannot promptly resolve, your goal is to find the available leverage to increase your bargaining position against the large managed care company.
It is important to be persistent. The saying “the squeaky wheel gets the grease” is very applicable to managed care. Some companies seem to have the view that if they deny most requests the first or second time, most providers will become frustrated and give up. This leaves a much smaller group of persistent providers to deal with. You should be one of those providers.
The best starting point is often a cordial phone call. This is particularly appropriate if you have an established relationship with a company representative. The problem may be a simple mistake or misunderstanding on your part or the company’s part. Starting confrontationally may trigger an equally confrontational, and unhelpful, response from an overworked company representative. If your initial cordial attempts do not resolve your problem, do not hesitate to escalate to written communications by e-mail or certified letter. This will create a paper trail that will be helpful if you need to take the issue higher up within the company or to an outside entity.
You should also determine whether the adverse decision is one that is subject to the company’s appeal procedures, as is the case for most denials of patient care. If so, inform yourself about the appeal procedures and the deadlines for filing an appeal. Appeals can be cumbersome and sometimes involve two or three levels (if your appeal is denied at the lower level), but this can be the best vehicle for responding to denials, particularly where detailed information about a particular patient is central to the dispute.
If an appeal is not available or advisable (for example, a patient urgently needs care and there is no expedited appeals process) and your initial efforts did not resolve your issue, escalate by applying leverage. Some companies are more responsive when you demonstrate that you know how to enlist help from outside entities such as professional associations, government agencies and others who can help put pressure on insurance companies in resolving persistent problems. Consider copying your next e-mail or letter to the following:
1. The national, state, and local psychological associations to which you belong
2. Your insurance commissioner
3. Your state attorney general or other agency concerned with protecting consumers (if the issue has an impact on patients)
4. Federal enforcement authorities (if you believe the company violated HIPAA, the federal parity law, or other federal law)
5. Your state or federal legislator
These entities may be able to provide you with guidance or advocacy support. Your national, state, or local psychological association can be an important resource, particularly if your issue is one with a broad impact on other psychologists and their patients. On adverse decisions affecting many psychologists, there is often strength in numbers. A managed care company is more likely to act on a complaint from a state or local psychological association than one from an individual psychologist. A listing of the state psychological associations and their contact information can be found at www.apapracticecentral.org/advocacy/state/associations.aspx.
If your initial company contact is not helpful, do not hesitate to elevate your problem to the next level. Ask for contact information for the person’s supervisor. That person may be more knowledgeable about company policies (p. 643) or have greater authority than a lower level “front line” employee has.
When Problems do Arise: Specific Pointers
Clarify the Company’s Decision and its Justification
An important threshold step is to verify exactly what the company’s adverse decision is and the justification for the decision. If either is uncertain, ask the company for clarification.
Start by reviewing the denial letter, explanation of benefits, or other communications from the company that state or relate to the adverse decision. Determine whether the cited reason makes sense in light of the policy provisions, policies, criteria, statutes, or regulations that the company cites. If the company cites internal policies or other documents that you do not have, ask to see them.
The general trend is toward greater transparency by managed care companies about their policies. In fact, the Office of Legal and Regulatory Affairs of the American Psychological Association Practice Organization has been successful with several state psychological associations in improving transparency of managed care and insurance company operations.1 The interim final regulations implementing the federal mental health parity law require that the companies subject to parity make available to providers and patients any medical necessity criteria used to deny care.
Be Clear and Concise
Company employees typically handle large volumes of information and do not have time to read a lengthy or rambling description of your problem. Your communications should be as succinct as possible.
Start with a clear, simple statement of the problem and what action you want from the company to fix it. Also, provide a brief factual background and argument explaining why the company’s decision was wrong. Briefly cite any applicable contract provisions by citing the provider contract or other materials that relate to coverage, payment, and limitations. In addition, certain states may have favorable laws (like a “prompt payment law”) that can help your case. Again this is where contacting your state psychological association is extremely helpful, since they will be familiar with state laws in your jurisdiction.
Where further detail is necessary or helpful to your argument, you can “layer” your communication by providing that additional detail in an appendix or later section of the communication. This makes the additional information available if the company representative needs it, without cluttering your communication.
Direct Your Request to the Right Company
Some managed care issues are made more confusing by the managed care practice of having different companies involved in contracting with the psychologist, authorizing care, processing claims, and paying them. This may leave the psychologist unsure as to which company should address the problem. In the case of adverse managed care decisions, however, it is usually clear which company has announced that decision. If there is any uncertainty, you can direct your communications to all companies that might be involved and let the companies sort out who is responsible. If your problem is with the behavioral health carve out company (or some other company that is essentially performing services on behalf of the main health insurer), you may want to copy your complaint to the main insurer. That is the company ultimately responsible for providing quality care to their insureds, and it may be the only company subject to state or federal insurance regulation.
(p. 644) Responding to Particular Types of Adverse Decisions
Medical Necessity and Patient Privacy
Managed care determinations that mental health treatment is not medically necessary have always been one of the most common managed care problems for psychologists. This issue has become more prominent, however, since the federal mental health parity legislation took away companies’ ability to rely on annual limits on care (e.g., 20 or 40 outpatient therapy sessions per year). With annual limits no longer available as a tool for containing costs, many managed care companies have placed greater emphasis on medical necessity criteria.
Before considering strategies for responding to an adverse medical necessity determination, it is important to understand the company’s definition of medical necessity, how it applies the definition to mental health care, and its strategy for managing medical necessity determinations. Most companies use a medical necessity definition that has the same basic provisions, focusing on treatment that is necessary, appropriate, and effective for treating a mental health condition or relieving its symptoms. Obtain the company’s medical necessity definition and any guidance on how it is applied to the type of mental health care you are providing (e.g., outpatient therapy for moderate depression).
Many companies have an “up and out” view of how medical necessity applies to the course of treatment. They expect that there will be a treatment plan aimed at improving the patient’s symptoms attributable to the mental health diagnosis and improving his or her functioning to the point that treatment can be reduced and then terminated. Some companies expect that the treatment plan will set goals for the level of improvement that will trigger a reduction or termination of care. Generally, companies consider coverage for long-term treatment to be the exception rather than the rule; and something they only accept in rather severe cases.
As far as strategies for managing medical necessity, some managed care companies scrutinize all care for medical necessity at a particular point, for example by considering medical necessity for therapy after 10 or 12 sessions or reviewing all psychological or neuropsychological testing for medical necessity in advance. Other companies “manage the outliers.” They recognize that most mental health care takes place within certain parameters and they focus their medical necessity scrutiny on cases where treatment has taken place over what the company considers a long time period at a high level of care, considering the patient’s diagnosis, symptoms, and risks.
The challenge in fighting medical necessity determinations is often providing sufficient information to justify further care without providing more than the minimum necessary information about the patient to the managed care company. For instance, some psychologists will attempt to protect the patient’s privacy by providing a milder diagnosis than the psychologist really believes is actually appropriate. The diagnosis may be of particular concern when the patient is likely to become involved in litigation or apply for a military or government position that will cause his or her mental health records to be voluntarily or involuntarily released. The milder diagnosis, however, is likely to make the managed care company approve less care than the patient actually needs for his or her condition.
Another privacy dilemma concerns the amount of detail about the patient you should provide in order to support your position that the assessment or treatment that you have requested or provided is medically necessary. For this issue, it is important to understand privacy protections under HIPAA. Under the HIPAA Privacy Rule, companies may only request the “minimum necessary” patient information to carry out the intended purpose of the request. Psychologists and managed care companies, however, often had very different interpretations about how much sensitive patient information was necessary for determining medical necessity. This rule was revised by the Health Information Technology for Economic and Clinical Health (HITECH) Act to place this decision in the hands of the party releasing this information. Contrary to expectations, however, the federal government did not provide guidance on how this revision would be implemented when it issued the January 2013 regulations to finalize the HITECH changes to HIPAA. For example, it (p. 645) did not provide more specific guidance on how you should make the “minimum necessary” determination. Absent further guidance, you should strive to provide only basic information that justifies further treatment without unnecessarily revealing information to the company.
The HIPAA Privacy Rule draws a brighter line for those psychologists who choose to maintain separate psychotherapy notes: You may only release them with the patient’s authorization and the managed care company may not coerce the release of those notes by withholding payment or refusing to authorize care unless the patient authorizes their release. Thus, the company is only entitled to that basic information, such as a diagnosis and a summary of symptoms and the treatment plan, which is excluded from psychotherapy notes protection. This basic information (sometimes called the “clinical record” and analogous to “progress notes”) is the type of information designed to be shared with others in the health care arena, treating professionals and insurers. By contrast, the detailed and unprocessed psychotherapy notes are meant for the psychologist’s own use in treating the patient.
While companies have generally respected the prohibition on seeking or coercing release of psychotherapy notes, some companies have asked during telephone medical necessity reviews for the detailed, sensitive information that would typically be protected within psychotherapy notes. If you keep psychotherapy notes and are faced with such a request, argue that this is an attempt to circumvent psychotherapy notes protection under the law.
Remember that where you are seeking to uphold your patient’s privacy rights under HIPAA, the US Department of Health and Human Services’ (HHS) Office of Civil Rights (which enforces HIPAA) may be an important source of leverage (www.hhs.gov/ocr/).
Adverse Actions Regarding Your Reimbursement Rate
If you are in-network and have a contract with the managed care company, look to the payment provisions and payment schedule in your provider contract.
If the issue is that the company has reduced its reimbursement rate, review the provision of the provider contract regarding changes to the contract. Most provider contracts allow the company to make changes to the contract, including the reimbursement rate, after a certain amount of written notice—typically 60 or 90 days. So make sure that the company is following the terms of the contract regarding notice requirements. Most provider contracts also state that you must either accept the change or terminate your contract, but companies are sometimes willing to forego a rate cut with respect to psychologists who have a unique value to the network. A provider can document that he or she has a practice specialty in demand or that they are one of the few psychologists in their geographic area. These strategies can all be utilized in your communication with the company. Further strategies for responding to reimbursement rate cuts and negotiating with insurers are found in Responding to Rate Cuts in the reference materials.
If you do not have a contract with the company, your reimbursement rate is typically determined by the managed care company’s contract with the employer and/or policyholder; this is typically considered “out of network coverage.” Managed care companies generally do not reimburse psychologists at their full private pay rate. Prior to 2009, many companies based out-of-network rates on a percentage of the “usual, customary and reasonable” (UCR) rate as determined by the “Ingenix” database. However, settlements in a number of Ingenix cases (which alleged that the flawed database improperly suppressed UCR rates) have caused companies to shift to other methods for determining out-of-network rates, such as using a percentage of Medicare rates.
A special consideration for fee disputes is that if you discuss the rate issue with other psychologists who are your economic competitors, or conduct advocacy with those competitors, you must be mindful of antitrust concerns. What may seem like a natural discussion of what the rate should be, or the effects of a rate cut, could be perceived by antitrust enforcement (p. 646) agencies as evidence of unlawful price fixing or boycotts. (See antitrust resources in reference list for further information.) Concerns about perceived price fixing and boycotts often occur when a provider along with a group of economic competitors attempt to advocate a reimbursement rate. While there is still strength in numbers when tackling fee issues, advocating privately on your own is often wiser since you will not trigger antitrust risks.
Special thanks to Alan Nessman and Ieshia Haynie for their contributions.
References and Readings
American Psychological Association. Practice Organization (n.d.). Practice central: Resources for practicing psychologists. Retrieved February 2013, from www.apapracticecentral.org
Appelbaum, P. S. (1993). Legal liability and managed care. American Psychologist, 48(3), 251–257.Find this resource:
Bruce W. Clark, B. W. (1995). Negotiating successful managed care contracts. Healthcare Financial Management, 49(8), 26–30.Find this resource:
Gray, B. H., & Field, M. J. (Eds.). (1990). Controlling costs and changing patient care: The role of utilization management. Washington, DC: National Academy Press.Find this resource:
Higuchi, S. A., & Hinnefeld, B. J. (1998). Practicing in the new mental health marketplace: Ethic, legal, and moral issues. Washington, DC: American Psychological Association.Find this resource:
Hummel, J. R. The managed care contract: The blueprint for monitoring agreements. Healthcare Financial Management, 55(6), 49–50.Find this resource:
See www.apapracticecentral.org/reimbursement/maximize/index.aspx for guidance on disputes with managed care companies.
See www.apapracticecentral.org/reimbursement/billing/index.aspx for guidance on billing and claims disputes.
See www.apapracticecentral.org/business/hipaa/index.aspx for HIPAA guidance.
See www.apapracticecentral.org/advocacy/index.aspx for information on the HITECH Act, mental health parity and litigation against managed care companies.
Chapter 105, “Defending Against Legal (Malpractice and Licensing) Complaints”
Chapter 121, “Managing Your Managed Care Contracts”
Chapter 128, “UNDERSTANDING FUNDAMENTALS OF THE HIPAA PRIVACY RULE”
1. For example, the April 2004 settlement with CIGNA in the class action In re Managed Care Litigation (US District Court, S.D. Florida) contained several provisions that made the company’s policies and procedures more transparent to providers. Similar provisions were contained in the August 2006 settlement with Humana in the same case. In both settlements, the APA Practice Organization collaborated with the Florida Psychological Association.