Common reasons that plans deny care and what you can do about it

Four reasons most insurance plans deny care

Most plans — whether HMOs or insured plans, deny care for one of four reasons:

  • The patient went “out of plan” to receive care, instead of following the plan’s rules and seeing a provider who has a contract with the plan;
  • The services requested were determined not to be “medically necessary;”
  • The services requested were determined to be “experimental or investigational;”
  • The services were simply not covered by the plan — for example, almost all plans exclude coverage for cosmetic procedures, and so would not cover a face lift or breast-augmentation surgery.

Some options when a health plan denies care

Follow the rules

Make sure that you are following the plan’s rules for obtaining referrals to specialists. It is very difficult to make a plan pay for care when a patient “self refers” outside of the plan. (It is possible, however, when the plan imposes unreasonable delays on its members to receive specialty care. A case handled by Mr. Ehrlich, Kotler v. Pacificare (2005) 126 Cal.App.4th 950, held that a plan could be held to have breached its obligations to the insured by failing to provide timely specialist care.)

Get help from your doctor to prove medical necessity

All plans have a process for appealing the denial of care. Invoke that procedure. This can sometimes be done by phone, but make sure you do it in writing. If the denial was based on a lack of medical necessity, you must have the doctor who made the request that was denied write a clear, comprehensive letter explaining why the plan’s denial was wrong. Ideally, the letter should refer to the plan’s definition of “medical necessity” and explain why the requested care fit within that definition. Doctors are busy, and frequently tend to write short, conclusory letters that do not provide sufficient facts. Make sure that the doctor provides sufficient detail.

Be aware that off-label use of FDA-approved drugs is often covered under California law

Plans often will deny coverage for so-called off-label use of FDA-approved drugs — that is, the use of an FDA-approved drug for a treatment or purpose that it has not been directly approved for by the FDA. Plans will often issue these denials even though California law requires them to cover off-label use of FDA-approved drugs if the treatment meets certain conditions, which are often easily satisfied. (Ins. Code section 10123.195; Health & Safety Code section 1367.21, subd. (a).)

Make sure to request independent medical review of a denial based on “experimental or investigational” treatment if the patient has a terminal illness

Insurance Code section 10145.3, and Health & Safety Code section 1370.4, the Friedman-Knowles Act, requires health plans (both insured plans and health-care service plans) to pay for experimental treatment that would otherwise be excluded by the plan, where an independent medical review shows that the experimental treatment would be more beneficial than conventional treatment.

Again, plans frequently ignore this law, and simply deny care as experimental or investigational without even advising the policyholder of their rights under the Friedman-Knowles Act to request independent medical review.

How we help consumers and insurance policyholders

While much of our practice involves work we do for other lawyers, we also handle cases for people and businesses involved in disputes with their insurance companies. If you, your business, or a member of your family is involved in an insurance-related dispute, we might be able to help.

Our analysis of insurance issues is so well respected that we are sometimes consulted by insurance companies themselves. We were recently asked by a major insurer to advise it on whether to make a $17 million claim to its own insurance company.

We do not handle litigation on a high-volume, assembly-line basis, and we are therefore very selective about the cases we take. But when we do take a case, we devote considerable thought, care, and attention to it, so that it moves as quickly through the courts as the judicial system permits.

Southern California civil appeals attorney, Jeffrey I. Ehrlich, is an appellate specialist certified by the State Bar of California’s Committee on Legal Specialization.

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