- Are carriers allowed to deny payment for health care services that the policy says are covered?
Yes, if the policy indicates that the coverage of services is conditional, and the conditions are stated. For instance, a policy might state that health conditions that existed before the effective date of the policy (preexisting conditions) will not be covered for a specific period of time after the effective date of the policy, so health care services for such conditions will not be covered. Frequently, carriers specify that payment is limited to costs for covered health care services that the carrier agrees are “medically necessary.” Carriers then perform a utilization management (UM) review of requests or claims for health care services in order to determine whether the services are or were medically necessary for a covered person’s situation. However, there are legal limitations on the use of UM by carriers. Carriers are not permitted to require prior authorization for emergency services (and HMOs are required to cover at least a medical screening fee for medical screenings performed in an emergency room). Also, if a carrier takes over the responsibility of payment for a covered person after another carrier determined health care services were medically necessary, the second carrier must accept the first carrier’s UM determination. BUT the second carrier is only required to pay for health care services included under the carrier’s policy. So, even when the second carrier must accept the UM decision of the first carrier, the second carry still may not pay for the health care services the first carrier determined to be medically necessary if the second carrier’s policy excludes benefits for the particular health care services.
- When can a UM determination be made?
A UM determination may be performed prior to services being rendered (usually referred to as prior authorization), while services are being rendered (usually referred to as concurrent review) or after services are rendered (usually referred to as retrospective review). If a carrier requires prior authorization or concurrent review of a service, the policy must say so. If neither prior authorization nor concurrent review is required, then a carrier may make a retrospective review. BUT if a carrier gives prior authorization for a service, or approves it upon concurrent review, the carrier may not later make a retrospective review and deny coverage because the carrier believes the services were not medically necessary afterall.
- Are there standards for making UM determinations?
Yes. There are standards regarding: timeliness of decisions; who is eligible to make adverse UM determinations; communication standards; and, staffing availability during certain hours to address UM questions. For instance, both carriers and hospitals are required to have adequate UM staff available seven days a week from 9:00 A.M. until 5:00 P.M. in order to address UM questions in a timely manner consistent with the requirements of law, and the UM program must be available 24 hours a day. Decisions to deny payment for a requested service must be made by a physician under the clinical direction of the carrier’s medical director. Also, all decisions must be in writing and issued to the health care provider.
- What are the timeframes for making UM determinations?
When a UM determination involves a prior authorization or concurrent review, carriers must respond within certain timeframes, or else the request for services will be deemed approved. Generally, carriers must respond within 15 days after the date the request was made. When a covered person is receiving inpatient hospital services, the carrier must respond within 24 hours. In all cases, a carrier must respond consistent with the medical exigencies of the case. If a carrier needs additional information to make a determination, the carrier must ask for it in writing. The health care provider must respond to the request for additional information within 72 hours, or the health care provider’s request for prior authorization is deemed withdrawn. After a carrier receives the requested additional information, the carrier has another 15 days (or 24 hours if the person is an inpatient in a hospital) to respond, but in any event, the carrier must respond in a timeframe consistent with the medical exigencies of the case.
- May a carrier require that communication be by telephone only?
No. The Health Claims Authorization, Processing and Payment Act or “HCAPPA” (P.L. 2005, c. 352 ), requires that carriers and health care providers have a means of written communication agreed to by the carrier and the health care provider.
- How does a health care provider prove that it met the 72 hour standard for providing additional information?
Carriers and health care providers should be communicating by fax and/or email, in addition to any telephone conversations. Accordingly, the health care provider should maintain copies of emails and faxes.
- Are there standards about the measures carriers use to determine whether a service is medically necessary?
A carrier’s treatment policies, protocols, quality assurance program and UM decisions are required to be based on generally accepted standards of health care practice. When a carrier has a network-based plan, the health care providers must have a process whereby they may comment on the carrier’s UM protocols (by specialty). In addition, the HCAPPA defines the term “medically necessary.”
- Are health care providers entitled to know what UM standards carriers are using for UM determinations?
Yes. Carriers are required to make information available on the Internet. A carrier must identify the commercial company that produced clinical guidelines that the carrier has purchased for use in determining medical necessity. Also, a carrier must post a copy of all internally-produced clinical criteria that it uses to determine medical necessity. All information is required to be posted in a clear and conspicuous manner, and changes in any of the information must be posted on the Internet site at least 30 days prior to the change becoming effective. In addition, when carriers issue adverse UM determinations, the written determinations must set forth the specific reason(s) the carrier does not consider the services to be medically necessary, identifying the criteria on which the decisions are based.
- What does “medically necessary” mean?
The term “medically necessary” has been defined differently by different groups. However, the term is now defined in the HCAPPA, so as of July 11, 2006, the HCAPPA’s definition applies to health benefits plans subject to the HCAPPA. The HCAPPA defines “medically necessary” to mean “…a health care service that a health care provider, exercising his prudent clinical judgement, (sic) would provide to a covered person for the purpose of evaluating, diagnosing or treating an illness, injury, disease or its symptoms and that is: in accordance with the generally accepted standards of medical practice; clinically appropriate, in terms of type, frequency, extent site (sic) and duration, and considered effective for the covered person’s illness, injury or disease; not primarily for the convenience of the covered person or the health care provider; and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that covered person’s illness, injury or disease.”
- Is prior authorization, preauthorization and precertification the same thing?
The terms “prior authorization” and “preauthorization” usually mean the same thing. The term “precertification” is often used interchangeably with prior authorization or preauthorization, but not always. Some carriers use the term to refer to an administrative process primarily for purposes of establishing an internal “tracking” account for a specific covered person for more complex health care experiences, such as an inpatient hospital admission which usually results in multiple services being delivered for an episode of care over the course of one or more days, with bills for both medical and hospital services being generated, a discharge plan, possible case management needs, etc. The carrier can verify what it means when it uses the term “precertification.”
- If a carrier gives prior authorization for a service, does that mean that the carrier will pay for or provide benefits towards the services?
Not necessarily. The prior authorization may or may not address other questions related to eligibility of the covered person and the health care provider. Even if it does, the information on which eligibility is based may change between the date of the authorization and the date of service. For example, if the policy terminates prior to the date that the services are actually rendered, then the carrier may not have an obligation to pay for the service. In addition, if a carrier believes that information it received involved a fraud, the carrier may reverse a medical necessity determination and may not pay for the previously-authorized services.
- Must a carrier provide prior authorization of a service if a health care provider requests prior authorization?
Whether prior authorization is required is a matter of the terms of the language of the policy covering the covered person, and/or contract language between the carrier and the health care provider, if the health care provider participates in the carrier’s provider network. Of course, a carrier may elect to accommodate requests for prior authorization of services even when not otherwise required.
- If a carrier denies services on the basis of a UM determination, can the denial be appealed, and if so, who has the right to present the appeal?
A carrier’s UM determination that is adverse to the interests of the covered person may be appealed. The covered person has the right to appeal the adverse UM determination. However, a covered person also has the right to allow a health care provider to make UM appeals on behalf of the covered person, and pursuant to federal law, a physician may make an appeal on behalf of a covered person without consent, if necessary, in emergency and urgent care situations (but note that carriers are not permitted to require prior authorization for emergency services under New Jersey law). If an appeal is to be made to the Independent Health Care Appeals Program, the covered person’s consent must be in writing, and accompanied by an authorization for release of the covered person’s relevant medical information.
- Must a health care provider obtain consent from a patient in order to file a UM appeal?
Yes. A health care provider does not have an independent right to appeal an adverse UM determination under New Jersey law. Carriers may accommodate UM appeals made by health care providers without evidence of consent, and may even put them through the required Stage 1 and Stage 2 UM appeal process. However, in order to appeal to Stage 3 at the Independent Health Care Appeals Program (IHCAP), the health care provider must have consent from the patient to do so.
- When may a health care provider get consent from a patient to make a UM appeal on the patient’s behalf?
As of July 11, 2006, a health care provider may obtain consent from a patient to appeal an adverse UM determination on the patient’s behalf before or after services are rendered, or before or after an adverse UM determination is made. Of course, consent must be obtained prior to the expiration of the timeframe for filing the appeal.
- Is there a specific form that health care providers should use to get consent to make a UM appeal?
The health care provider should use the Department of Banking and Insurance’s form, Consent to Representation in Appeals of Utilization Management Determinations and Authorization for Release of Medical Records in UM Appeals and Independent Arbitration of Claims (MS Word), which is available on the Department’s web site.
- May a health care provider require a patient to complete a consent form as a condition of rendering services?
- May a health care provider modify the Department’s consent form?
No. However, a health care provider may add its name to the form where indicated, and may make accurate translations of the form into additional languages as appropriate for the health care provider’s situation.
- Will the Department of Banking and Insurance be translating any of its forms into additional languages?
No. These forms are for distribution by health care providers to their constituency. The health care providers may make accurate translations of the forms as appropriate for their circumstances. (Please note, the Department of Health and Senior Services has posted some translations of some of the forms on the Office of Minority and Multicultural Health web page.)