Managing Your Dermatology Practice: Payers Who Renege

My column on prior authorization seems to have struck a nerve. Almost a year later, I'm still getting notes and e-mails echoing my complaints, and favoring our strategy of assigning patients the task of obtaining prior authorization forms, since the dispute is between the patient and the insurer.

Several correspondents brought up the more serious issue of insurers who grant an authorization, then change their minds after the fact.

A colleague here on the East Coast described his own reductio ad absurdum experience, the worst-case scenario: Two insurers paid all of his claims for intense pulsed light (IPL) treatment for rosacea for more than a year. Then, without warning, they not only ceased paying for the procedure, but demanded that all payments already made for IPL be returned!

After a protracted exchange involving the AMA and the AAD Coding Task Force, the insurers backed down on their refund demands. However, they stood by their refusal to pay any IPL claims going forward.

Some third-party nightmares are unavoidable, but a little vigilance can prevent many of them. For one thing, don't cave to patients who insist that you submit a charge that you know (or strongly suspect) will not be covered in the first place.

I tell such patients they are welcome to submit the claim themselves, but I cannot tell their insurer that a treatment was medically necessary if it was not.

When a payer authorizes payment and then reneges, be ready with a solid counterattack.

First, check the laws in your state; many have statutes specifically forbidding such practices. In my state, for example, if a patient's benefits are subject to return or reduction, or if coverage is contingent on further investigation, providers must be informed of that in advance. Absent such prior warning, any reneging is unlawful.

In California, once an insurer authorizes treatment, it cannot be rescinded or modified "after the physician renders the service in good faith and pursuant to the authorization for any reason, including, but not limited to, the plan's subsequent determination that it did not make an accurate determination of the enrollee's or subscriber's eligibility" (Health and Safety Code 1371.8, Insurance Code 796.04).

Plainly stated, care that has been authorized must be paid, even if the payer made a mistake and the patient was not covered for the specific services provided. The California Code of Regulations has a nearly identical provision (28 CCR 1300.71 [a][8][T]).

There is precedent in federal law as well: In Meadows v. Employers Health Insurance, the court ruled that eligibility, once verified, cannot later be rescinded, as "plans are not insulated from the consequences of their own misrepresentations" to providers.

When a payer violates local or federal statutes, don't hesitate to call them on it. And don't hesitate to report them to appropriate government agencies if they won't comply.

Meanwhile, start looking ahead toward some long-range solutions to the burgeoning prior authorization problem.

If you have the ear of a state or federal legislator, discuss it with him or her. Explain how much time your staff wastes jumping through insurers' hoops to the detriment of your patients and at high cost to you, for the sole, undeserved benefit of payers.

Explain the predicament of patients on effective, stable treatment for a chronic condition that will never resolve, who are forced to repeat the entire preauthorization rigamarole every few months.

Obviously, there is no medical or common-sense justification for such rationing by inconvenience. A "one and done" law, stating that once a medication is authorized, it remains authorized unless or until the patient's medical status changes, would be a simple solution to a major problem.

And while you're at it, raise your voice against "step therapy" or "fail first" requirements, where patients must fail one or more cheap, ineffective medications before getting the one they need.

Such policies place the insurer's medical judgment ahead of the physician's, and some states are introducing laws to prohibit it. New Jersey now forbids step therapy for pain treatment, and California and other states are considering legislation that would outlaw it in any form.

My column on prior authorization seems to have struck a nerve. Almost a year later, I'm still getting notes and e-mails echoing my complaints, and favoring our strategy of assigning patients the task of obtaining prior authorization forms, since the dispute is between the patient and the insurer.

Several correspondents brought up the more serious issue of insurers who grant an authorization, then change their minds after the fact.

A colleague here on the East Coast described his own reductio ad absurdum experience, the worst-case scenario: Two insurers paid all of his claims for intense pulsed light (IPL) treatment for rosacea for more than a year. Then, without warning, they not only ceased paying for the procedure, but demanded that all payments already made for IPL be returned!

After a protracted exchange involving the AMA and the AAD Coding Task Force, the insurers backed down on their refund demands. However, they stood by their refusal to pay any IPL claims going forward.

Some third-party nightmares are unavoidable, but a little vigilance can prevent many of them. For one thing, don't cave to patients who insist that you submit a charge that you know (or strongly suspect) will not be covered in the first place.

I tell such patients they are welcome to submit the claim themselves, but I cannot tell their insurer that a treatment was medically necessary if it was not.

When a payer authorizes payment and then reneges, be ready with a solid counterattack.

First, check the laws in your state; many have statutes specifically forbidding such practices. In my state, for example, if a patient's benefits are subject to return or reduction, or if coverage is contingent on further investigation, providers must be informed of that in advance. Absent such prior warning, any reneging is unlawful.

In California, once an insurer authorizes treatment, it cannot be rescinded or modified "after the physician renders the service in good faith and pursuant to the authorization for any reason, including, but not limited to, the plan's subsequent determination that it did not make an accurate determination of the enrollee's or subscriber's eligibility" (Health and Safety Code 1371.8, Insurance Code 796.04).

Plainly stated, care that has been authorized must be paid, even if the payer made a mistake and the patient was not covered for the specific services provided. The California Code of Regulations has a nearly identical provision (28 CCR 1300.71 [a][8][T]).

There is precedent in federal law as well: In Meadows v. Employers Health Insurance, the court ruled that eligibility, once verified, cannot later be rescinded, as "plans are not insulated from the consequences of their own misrepresentations" to providers.

When a payer violates local or federal statutes, don't hesitate to call them on it. And don't hesitate to report them to appropriate government agencies if they won't comply.

Meanwhile, start looking ahead toward some long-range solutions to the burgeoning prior authorization problem.

If you have the ear of a state or federal legislator, discuss it with him or her. Explain how much time your staff wastes jumping through insurers' hoops to the detriment of your patients and at high cost to you, for the sole, undeserved benefit of payers.

Explain the predicament of patients on effective, stable treatment for a chronic condition that will never resolve, who are forced to repeat the entire preauthorization rigamarole every few months.

Obviously, there is no medical or common-sense justification for such rationing by inconvenience. A "one and done" law, stating that once a medication is authorized, it remains authorized unless or until the patient's medical status changes, would be a simple solution to a major problem.

And while you're at it, raise your voice against "step therapy" or "fail first" requirements, where patients must fail one or more cheap, ineffective medications before getting the one they need.

Such policies place the insurer's medical judgment ahead of the physician's, and some states are introducing laws to prohibit it. New Jersey now forbids step therapy for pain treatment, and California and other states are considering legislation that would outlaw it in any form.

My column on prior authorization seems to have struck a nerve. Almost a year later, I'm still getting notes and e-mails echoing my complaints, and favoring our strategy of assigning patients the task of obtaining prior authorization forms, since the dispute is between the patient and the insurer.

Several correspondents brought up the more serious issue of insurers who grant an authorization, then change their minds after the fact.

A colleague here on the East Coast described his own reductio ad absurdum experience, the worst-case scenario: Two insurers paid all of his claims for intense pulsed light (IPL) treatment for rosacea for more than a year. Then, without warning, they not only ceased paying for the procedure, but demanded that all payments already made for IPL be returned!

After a protracted exchange involving the AMA and the AAD Coding Task Force, the insurers backed down on their refund demands. However, they stood by their refusal to pay any IPL claims going forward.

Some third-party nightmares are unavoidable, but a little vigilance can prevent many of them. For one thing, don't cave to patients who insist that you submit a charge that you know (or strongly suspect) will not be covered in the first place.

I tell such patients they are welcome to submit the claim themselves, but I cannot tell their insurer that a treatment was medically necessary if it was not.

When a payer authorizes payment and then reneges, be ready with a solid counterattack.

First, check the laws in your state; many have statutes specifically forbidding such practices. In my state, for example, if a patient's benefits are subject to return or reduction, or if coverage is contingent on further investigation, providers must be informed of that in advance. Absent such prior warning, any reneging is unlawful.

In California, once an insurer authorizes treatment, it cannot be rescinded or modified "after the physician renders the service in good faith and pursuant to the authorization for any reason, including, but not limited to, the plan's subsequent determination that it did not make an accurate determination of the enrollee's or subscriber's eligibility" (Health and Safety Code 1371.8, Insurance Code 796.04).

Plainly stated, care that has been authorized must be paid, even if the payer made a mistake and the patient was not covered for the specific services provided. The California Code of Regulations has a nearly identical provision (28 CCR 1300.71 [a][8][T]).

There is precedent in federal law as well: In Meadows v. Employers Health Insurance, the court ruled that eligibility, once verified, cannot later be rescinded, as "plans are not insulated from the consequences of their own misrepresentations" to providers.

When a payer violates local or federal statutes, don't hesitate to call them on it. And don't hesitate to report them to appropriate government agencies if they won't comply.

Meanwhile, start looking ahead toward some long-range solutions to the burgeoning prior authorization problem.

If you have the ear of a state or federal legislator, discuss it with him or her. Explain how much time your staff wastes jumping through insurers' hoops to the detriment of your patients and at high cost to you, for the sole, undeserved benefit of payers.

Explain the predicament of patients on effective, stable treatment for a chronic condition that will never resolve, who are forced to repeat the entire preauthorization rigamarole every few months.

Obviously, there is no medical or common-sense justification for such rationing by inconvenience. A "one and done" law, stating that once a medication is authorized, it remains authorized unless or until the patient's medical status changes, would be a simple solution to a major problem.

And while you're at it, raise your voice against "step therapy" or "fail first" requirements, where patients must fail one or more cheap, ineffective medications before getting the one they need.

Such policies place the insurer's medical judgment ahead of the physician's, and some states are introducing laws to prohibit it. New Jersey now forbids step therapy for pain treatment, and California and other states are considering legislation that would outlaw it in any form.