You can appeal an insurance rejection of a treatment

A health insurance plan is a contract, the parties to which are the insurance company and the people who, in exchange for premiums, are entitled to benefits.

These contracts are complex because (i) insurance in general is complex; (ii) health care is complex; and (iii) the Colorado Legislature has seen fit to meddle in the details of coverage and claims in an effort to protect consumers.

In regard to claims (which insurance companies have been known to not pay), lawmakers have imposed on the health insurance industry a detailed set of rules.

These rules kick in whenever a claim is rejected because the insurance company has decided a treatment is “not medically necessary, appropriate, effective, or efficient.” Here’s how the rules work.

If a health insurance company denies a claim for the abovestated reason, it must provide a written notice that includes a detailed explanation for the denial, with reference to specific provisions of the plan contract. This notice must also describe the process by which a denied claim can be appealed.

If the covered person does not accept the insurance company’s explanation (concluding instead the company motto must be “Just say no”), a right exists for a two-step internal review. In the first step, someone at the insurance company who was not involved in the original denial looks at the situation and decides whether to reverse the denial or let it stand.

If the decision is that the denial stands, the covered person is entitled to a second internal review. For this second review, the law requires that the reviewer be a health care professional who was not involved in the initial denial or the first review, and who does not have a financial interest in the outcome of the review.

The second review is more formal than the first, with the covered person being allowed to participate and, if desired, bring a lawyer or a health care professional as an advocate.

The final nonjudicial step in the appeal process involves an independent external review. Here, the Colorado Division of Insurance gets into the act and appoints an “independent external review entity” to handle the appeal.

A company wanting to qualify as an independent external review entity must meet rigid criteria intended to assure independence and competence (either of which may be suspect in the case of an internal review).

The individual chosen to do the review must be an expert in the treatment of the medical condition at issue and — you’ll be pleased to know — can’t have a history of disciplinary action by a hospital or licensing agency.

Assuming the covered person hasn’t by now expired, either party is free to challenge the independent expert’s decision in court.

Keep in mind the above-described system isn’t intended for a claim denial based on the insurance company’s decision that treatment of a particular condition — say warts — is not a covered benefit under the plan.

The system is only for denials where the condition is covered but the insurance company has decided a particular treatment would be a waste of its money. Under the terms of the health insurance company’s plan contract, other procedures for appeal might be available for other types of claim disputes.

Jim Flynn is a local attorney. Contact him c/o The Gazette, P.O. Box 1779, Colorado Springs 80901; fax 578-8836 or e-mail jtflynn325@hotmail.com. Not all questions can be answered.