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The New Landscape - Appealing Denied Health Claims May Not Be Easier Under New Law
Fighting with a health plan over a denied claim can leave people feeling they’ve been injured all over again. The options for challenging an insurance company’s decision are limited. Appeals can be slow and cumbersome, if they are available at all, and most patients are barred from suing for damages resulting from denials and delayed treatments.
The new health law makes the system somewhat more consumer-friendly. Starting this fall, patients in all health plans can contest claim denials in an independent state-level review procedure — a recourse that has not generally been available to employees of companies that pay their employees’ health claims directly.
Since more than half of all covered workers are in a “self-funded” plan, the change is significant. “This fixes a long-standing problem,” said Sara Rosenbaum, head of the department of health policy at the George Washington University School of Public Health and Health Services. The provision does not apply, however, to “grandfathered” plans — those in existence on March 23, when the health law was enacted.
Nor does the new law make it any easier for consumers to sue for punitive damages or for pain and suffering. Under Erisa, the Employee Retirement Income Security Act of 1974, people covered by employer health plans can sue in federal court only for the cost of the benefit that was denied them. Some state courts provide stronger remedies, but only to people with individual health insurance policies.
So those who hoped for bigger, more powerful weapons to fight claim denials are likely to be disappointed, some experts said. The new provisions do not “significantly change existing law,” said Timothy S. Jost, a law professor at Washington and Lee University. “It basically solidifies where things are.”
Under the current system, health plans must have an internal appeals process; usually the process has more than one level of appeals, but a study by researchers at Georgetown University’s Health Policy Institute found that the original denial is typically upheld.
Most states offer an independent review of denials; the new law will extend that option to every state, as well as to the self-funded plans.
But even though these external reviewers rule in favor of consumers about half the time, few people take advantage of them. “Consumers often don’t know external review exists and they may have to exhaust multiple levels of internal appeals first,” said Sabrina Corlette, a research professor at Georgetown’s Health Policy Institute.
Some states also require consumers to pay up to half the cost of an external review, and some allow the insurer to refuse to maintain insurance coverage during the appeals process. Consumer advocates hope that additional rules governing changes to the appeals process under the new health law, to be issued shortly by the Department of Health and Human Services, will address these and other concerns.
Cynthia Risco is learning just how difficult navigating the appeals process can be. In 2007, she learned she had Behcet’s disease, an autoimmune condition that inflames blood vessels and results in skin ulcers, eye problems and gastrointestinal bleeding, among other things.
The recurring gastrointestinal bleeding caused extensive scarring, and now she can digest only liquids and soft foods. Last fall, through her participation in a research study, Ms. Risco, 38, was prescribed Remicade, a drug typically given to patients with other autoimmune conditions.
The drug worked. But last December, three months after starting monthly injections, Ms. Risco got a notice from her husband’s group insurance plan that the treatment would not be covered, because it was considered experimental in patients with Behcet’s disease. Ms. Risco discontinued Remicade and started taking a different immune-suppressant drug that, while less effective, was approved by her health plan.
Meanwhile, she filed and lost two internal appeals asking the plan to reverse its decision and reimburse her for the $7,000 she spent for her earlier injections.
Now Ms. Risco, of Sun City, Calif., has assembled the paperwork to file an external appeal with the state. She also consulted a lawyer who specializes in Erisa cases about suing in federal court, but said she was told that the best she could hope for was to get her outstanding bill covered.
“As for the delay and the consequences to me of their inaction,” she said, “that’s irrelevant.”
One of the lawyers Ms. Risco contacted was William Shernoff, who specializes in health insurance claim denials. Mr. Shernoff says he turned down her case, as he has those of hundreds of other patients enrolled in employer plans.
Because no damages are permitted in such cases, he said in an interview, personal injury lawyers can’t do much to help, and have no financial incentive to take them. And the same lack of financial incentive applies to the insurer, who has little to lose except the cost of the treatment denied. For that reason, Mr. Shernoff calls the external appeals process a “toothless tiger.”
“The only true way to make sure insurers behave,” he said, “you have to hold them financially accountable.”
This is the 11th in a series of articles on how the health overhaul will affect everyday lives.
A version of this article appeared in print on June 22, 2010, on page D5 of the New York edition.