July 15, 2013 -- Denying health insurance coverage for medical reasons will soon be a thing of the past when the Affordable Care Act comes into full swing January 1. But there are still many unanswered questions about what’s going to happen until then.
According to the report, "Health Insurance Application Rejection Rates Rising?” 29 percent of people seeking coverage are denied because of medical conditions. Insurers can reject an application for any number of reasons, including a high Body Mass Index or anticipated medical problems, but they must inform the applicant about their appeal rights, which include an internal review. But what happens when that appeal is denied? Does the person have any other recourse?
Shannon Johnston* had such an experience when she applied for individual coverage from Kaiser Permanente last October. Her next step was seeking an internal review but again she was turned down. Then Kaiser informed her that she “may have the right to request further review (an external review)” of that determination via an Independent Review Organization appointed by the Insurance Division of the Department of Consumer and Business Services.
Johnston planned to pursue the external review only to learn that such an attempt would likely prove futile. According to Cheryl Martinis, public relations spokesperson for the Insurance Division, an external review involving an IRO only applies to those who are already covered by an insurer and their specific insurance claim was denied (as per Section 2719 of the Public Health Service Act as added by Section 1001 of the Affordable Care Act).
A review of “Appealing Health Plan Decisions” on the federal government’s website www.healthcare.gov supports the Insurance Division’s statement that external review appeals relate only to denials of claims, not to denials of applications for insurance coverage.
But Kaiser doesn’t think the appeals question is quite that clear.
“The legal implications of the federal law regarding the appeal rights and process for individual insurance subscribers is still being actively discussed,” explained Michael Foley, senior public affairs consultant. “There are unanswered questions.”
Until those questions are resolved, Kaiser is informing people about their external review rights for Adverse Determinations under the Affordable Care Act.
“The way the process works is the patient requests Kaiser Permanente to pursue the external appeal,” he said. “Kaiser then contacts DCBS, which assigns an independent review organization.”
While the Insurance Division is confident that an external review is not required or even available, Martinis suggested applicants who are denied coverage should consider the next steps.
“If an insurance company offers that (an IRO review) avenue to a consumer, if would be their choice about whether it is worth their time,” Martinis notes. “They would want to follow the company’s instructions about how to appeal.”
How do other insurers such as Regence, Health Net and LifeWise handle similar situations? Like Kaiser, they all inform the applicant about their appeal rights by requesting an internal review and share information about how to get help with such an appeal. They also inform them about Oregon’s high-risk pool.
“Regence is working diligently to prepare for the many changes occurring as a result of the Affordable Care Act, including the new enrollment process,” said Regena Frieden spokeswoman. “Under current law, applicants who are denied coverage because they do not meet the eligibility requirements or underwriting guidelines are given the option to appeal. The information on how to appeal the enrollment decision is provided in our correspondence to the member, along with instructions on how to contact the state insurance department if they need assistance with the appeal.”
Unlike Kaiser, once an applicant has exhausted their right to an internal review, either by having their appeal denied or by not filing an appeal, these other insurers stop there.
“I think the circumstances for external review are very prescribed and wouldn’t apply to an application for coverage,” said Deana Strunk, communications manager at LifeWise Health Plan of Oregon.
*Name has been changed.
FOR MORE INFORMATION:
http://www.cbs.state.or.us/external/ins/consumer/appeals-guide/appeals-guide-toc.html
http://www.cbs.state.or.us/external/ins/consumer/health-insurance/common-questions-2a.html
http://www.cbs.state.or.us/external/ins/consumer/health-insurance/common-questions-1a.html
http://www.dol.gov/ebsa/faqs/faq-aca.html
http://www.dol.gov/ebsa/newsroom/tr11-02.html
http://www.americanbar.org/content/dam/aba/events/taxation/taxiq-11may-214.authcheckdam.pdf
Image for this story by Michael (CC BY-NC 2.0) via Flickr.
