1. What is health insurance and what is a benefit plan?
Answer: Health insurance is designed to assist in payment of basic medical care expenses, such as hospitalizations, surgery, physicians’ visits, laboratory tests, x-rays and prescriptions. The members of a health insurance plan are committed to pay either a fixed rate or percentage of the costs, regardless of the amount of health care they may require.
"Benefit" is the amount payable by the insurer when the member utilizes medical services or incurs health-related expenses that are covered by the health plan. The benefit plan explains the degree to which members can expect the health insurance plan to share the cost of medical expenses and how the member can access medical care through the health insurance plan.
Members should carefully review the benefit plan. It contains very specific details or criteria as to what will be covered and what will not be covered. Services not covered are also referred to as exclusions.
There also may be limitations to some benefits, meaning that a service may be covered only under specific circumstances, or up to a certain dollar amount.
2. When might your health plan’s coverage decision be at odds with your physician’s recommendations?
Answer: There are several reasons why a health care plan’s decision may be at odds with a physician’s recommendations. In many of these cases, the plan bases its "denial of benefits" decision on one of the following:
- Not Covered
The course of care proposed by your physician is simply not covered by your health benefit plan. Although the treatment may be medically necessary for your condition, it is not something that would be paid for by your health benefit plan, and is stated as such in the booklet provided by your plan.
- Not Medically Necessary
The course of care proposed by your physician is defined by your health plan as "not medically necessary." The benefit plan will typically provide a definition of "medically necessary" in the booklet, which outlines the specifics of your coverage. This definition is used by the plan to determine whether the care you have requested is "medically necessary" by their interpretation of the definition. The interpretation of that definition will be the determining factor as to whether the requested service is covered and to what extent.
The course of care proposed by your physician or desired by you, involves the services or consultation of a clinician who is out-of-network. Your health plan may not cover any services by out-of-network physicians or they may cover some services only under specific circumstances, which may be defined in your plan benefit booklet.
The course of care proposed by your physician is considered experimental or investigational. Some benefit plans exclude coverage of any treatment that is considered to be experimental or investigational, while others may consider coverage under limited circumstances where scientific evidence supports an improvement in health outcome.
- Too Costly
The course of care or the prescription proposed by your physician is a more costly treatment option or medication, and your health plan may cover a similar, but less expensive treatment option or medication than the one your physician recommended. The insurer tries to hold down overall costs, which in turn may keep down the shared costs to members.
3. When my health plan or insurance company denies coverage or payment for a medical service, procedure, or therapy, what questions should I ask?
Answer: You should ask:
What was the reason for the denial? (Test or treatment not medically necessary, treatment is experimental/investigational, care was out of network, service not a covered benefit, other reason.)
Did the health plan/insurance company seek expert medical determination before making the decision to deny payment? If so, what are the qualifications of the medical expert(s)? What medical evidence and/or other sources of information did the medical expert use in his/her medical peer review?
If I want to appeal the decision, what is my next step?
4. What are my patient rights?
Answer: Your specific patient rights depend on the kind of insurance claim denial (see # 2 and # 3) and which state you live in. In many cases you have the right to appeal an insurance claim denial. Your plan has specific procedures for you to follow. If you have exhausted those procedures, in many cases you have the right to an independent medical review through an accredited, licensed independent review organization (IRO). These organizations contract with appropriately credentialed, licensed health care professionals throughout the United States, who serve as independent medical peer review providers. An independent medical peer review provider is not employed by your health plan and not involved in your care. He/she must be board certified in the appropriate specialty and have adequate knowledge and experience to perform independent medical reviews. He/she will look at all of the relevant documentation used by your health plan in making its decision(s) and at any additional information you or your physician choose to provide. Depending on your state, you would request an independent medical peer review through your health plan or through your state.
5. What informs or guides coverage policy?
Answer: The original purpose of any kind of insurance is to cover the kinds of risks that are low in probability (things that probably won’t happen to you) but would cost you large amounts of money of they do happen. Health insurance started out this way. But it has changed; most health plans now cover routine as well as extraordinary health care expenses.
The biggest challenge in designing any kind of health insurance system is this: Most of the time a third party -- not you or your doctor – but your employer or the government, for example – bears the cost of health care, including routine care, for you and your family. You pay only a certain amount or a percentage, which doesn’t change no matter how much or how little care you and/or your family members receive. Depending on your doctor’s fees, the price of your prescription drugs, the costs for your hospital care, etc., the total cost of your care (of which you pay only a small part) could just go up and up without any limits. If this were the situation for everyone with health care coverage, then at some point your employer or the government couldn’t afford to pay for your health care.
So the "third party" –the government or your employer –together with your health plan-- makes decisions about what insurance will cover. An employer may buy coverage only for certain conditions and/or treatments. An employer and health plan may not cover treatment for pre-existing conditions (health problems that started before your health insurance started to cover you). Some health plans differ in the number and kinds of preventive and routine medical services they will cover. Your plan may cover only treatment that has proven medical benefit, based on scientific evidence. It may cover only the basic evaluation and procedures/medications needed to treat you safely and effectively, even when other alternatives are available. Your plan probably has specific criteria for what it considers "medically necessary" exams, tests, and treatment. These are either defined in the plan information you have, or you may request them from your health plan.
Decisions about what to cover and what not to cover are based on lots factors, including current medical evidence, the health risks of the people being covered (what kinds of health problems are they likely to have?), and the overall cost to the employer or government for the insurance plan. Your health plan document (often called the Summary Plan Description) explains key definitions related to your coverage, included and excluded health services, and the basis for coverage decisions.
6. What is meant by an "experimental or investigational" medical procedure, drug, device, or therapy?
Answer: As a basis for determining eligibility for insurance coverage or payment, these terms generally mean that additional research is still needed to determine safety, effectiveness, benefit compared to standard practices, and characteristics of patients most likely to benefit. The clinical scientific data available is relatively weak and inconclusive. There may be professional medical debate about the strength, reliability and/or meaning of the available scientific evidence.
7. When the FDA has "approved" a medical device for marketing, can I be confident that the device provides the benefit and safety claimed by the manufacturer and/or clinical provider?
Answer: Begin by asking this device’s "class". The FDA recognizes three classes of medical devices. Class I devices must meet "good manufacturing standards." Class II devices must additionally meet "performance" standards. Neither of these standards requires the manufacturer to conduct and submit to the FDA research findings that a device effectively treats or diagnoses a particular condition or disease (that is, it is effective and makes an improvement in clinical condition or outcome). Manufacturers of Class III devices have submitted clinical research data proving the safety and effectiveness of the device for a specific clinical condition or disease. If the Class III device is used for an FDA-approved clinical application, a patient has some assurance that it is reasonably safe and effective in the "labeled" use.
8. What does it mean when a drug or medical device is used "off-label"?
Answer: When the FDA approves a drug or medical device for marketing, the specific clinical conditions for which it has been approved are listed in its label (i.e., product package insert). The drug or device can legally be used "off-label" by a licensed physician, but it cannot be marketed for use in an "off-label" application. Additionally, the FDA has not evaluated the drug’s or device’s safety and effectiveness in this "off-label" use. Supporting scientific evidence supporting off-label use varies from conclusive to insufficient. Ask your doctor or health plan about the quality of scientific evidence supporting this "off-label" use.