Dealing with HMO denials; turning a no’ into yes’

Documenting medical evidence properly is essential

One of the most unpleasant acts performed by an HMO is denial of a procedure or referral that a doctor recommends for a patient. This denial often is based on a perceived lack of medical necessity. It is important for the practicing physician to use the denial either as a basis for learning or as a basis for an appeal. It is the practicing physician’s responsibility to appeal a denial he or she considers inappropriate.

As someone who has occupied the medical director’s seat, I’d like to spend a few minutes educating readers on the reasons behind some of these denials and when it is appropriate to appeal them.

In general, "lack of medical necessity" means that in the opinion of the medical director, the requested procedure or referral is unnecessary. Here are some typical examples:

• A primary care physician wants to admit a patient to the hospital for treatment of pneumonia. The admission is denied because the medical director feels that the pneumonia can be treated on an outpatient basis. To determine this, the medical director must act on the basis of what is provided either in the phone call from the physician’s nurse or the referral authorization request.

The medical director will look for evidence or information regarding:

— how clinically ill the patient appears to be based on the vital signs and other information provided;

— what type of pneumonia the physician thinks the patient has (community-acquired or other);

— whether the patient has any comorbid conditions such as AIDS, heart disease, or another chronic condition.

In a case such as this, one of the biggest reasons for denial is that the referring physician has not documented just how sick the patient is and why he or she must be hospitalized. There are well-established national criteria and indications for hospitalization of patients with pneumonia. If the information provided to the medical director does not meet the criteria, then the denial is appropriate more often than not.

• A request for a hysterectomy is another classic example of a potential denial based on lack of medical necessity. The American College of Obstetrics and Gynecology has established national guidelines regarding the indications for hysterectomy. If the authorization request does not include those indicators for a hysterectomy, then the request will be denied.

In other words, annoying as it is to receive a denial, there usually is a very good basis for the denial. The request is evaluated compared to indications found on nationally accepted guidelines. If the indications are not there, the request is denied.

If a physician feels the request has been unfairly denied, then he or she should call the medical director and find out what guideline was used as the criteria for the denial. Perhaps some important information was left off the request, or there are circumstances that demonstrate the necessity of the request but that were not fully documented.

Put necessary information in initial request

A call to the medical director often results in an approval rather then continued denial because new information is exchanged. This process can be eliminated if the request contains all the necessary information in the first place. It will take more time to fill out a request extensively, but this usually results in even more time saved because if the request is approved, no appeal will be necessary.

Many HMOs and risk-bearing IPAs are doing away with requiring authorization requests for many common procedures and referrals. This is usually for two reasons:

1. The physician has demonstrated over a period of time a lack of denials. Therefore, it makes little economic sense for the HMO or IPA to continue to require authorization request. Rather, the organization can choose to simply monitor the physician’s practice.

2. The referral specialists are capitated. It is the responsibility of the referral specialists to manage care appropriately because the specialist is at risk by virtue of being capitated.

The area where a denial based on lack of medical necessity can get tricky is when treatments for cancer or other illnesses are deemed experimental. This is a problem for the patient to handle because this is usually a benefits determination and is based on the individual insurance policy held by the patient. However, the physician can assist the patient in the appeal by giving the patient information supporting the assertion that the treatment or procedure is not experimental.

The bottom line is that you don’t have to always take no for an answer. Spend some time with the managed care organizations you contract with. Find out their documentation requirements, and take the extra time to follow these requirements. It usually is worth your while.