Understanding – and Dominating – the Health Insurance Appeals Process

By Dr. Brandon Green

Getting most American health insurance companies to pay for anything but basic, low-cost preventative health services is famously challenging.  Indeed, data compiled by the Centers for Medicare and Medicaid Services on private plans sold through state exchanges bear this common perception out.  Health insurers nationwide deny almost 1 in 5 in-network claims on average, while some of the least member-friendly insurers deny over half of their claims.   And while that kind of business behavior seems egregious in our free-market economy (imagine paying any other business up front for a service, only to have them refuse to provide it over 20% of the time without any refund), this phenomenon is really a feature – not a bug – in the system.  Boiling it down to their basic economic model, health insurers make money by not providing healthcare.  Premium dollars not spent = profit.  So, it should come as no surprise that any benefits they do pay for, particularly big-ticket items like surgeries or high-end medical devices such as powered prostheses and orthoses, generally require some arm twisting.  Enter the appeals process.

The good news is that appealing health insurers’ denials can be effective (on average 40% of appeals are successful), and patients tend to even beat those odds if their appeals are well-written and well-researched.  But the appeal process on its face is designed to seem daunting and futile; indeed very few Americans file any challenges at all when care they need is denied even though their rights to an appeal process have been enshrined multiple times in federal law through the Affordable Care Act (ACA) and Employee Retirement and Income Security Act (ERISA).  In my experience, when the makers of sophisticated treatments and/or prescribing physicians offer to help and work together with their patients in this process the team effort pays off for everyone.  Here are the basic steps involved in the appeal process, and some best practices I recommend for success:

1. The Prior-Authorization request document. This is best done in the form of a classic History and Physical Exam document (in the voice of the prescribing physician, or some other treating member of the team like a Prosthetist-Orthotist, therapist, et al), which fully tells the who, what, where, when, why, and how of the patient’s story leading them specifically to needing the treatment being requested.  For more complicated diagnoses it’s helpful to attach medical records from other members of the treating team (e.g., Physical Therapy notes for lower extremity conditions), and, for more novel treatments, offering up a bibliography of supporting research, along with a summary of key takeaways from those studies, can lay a foundation for strong appeals against all manner of denial reasons.

2. First Appeal.  Don’t despair if your prior-auth request doesn’t work on the first try; rather make careful notes of a) what reasoning the insurer gives for the denial, b) what policies of theirs do they cite [go find those on the insurer’s website], c) what are the appeal instructions and deadlines, and d) what holes in their argument are immediately apparent (e.g., check that they even understood the patient’s condition or requested care).  From those notes and resources, you can now construct a short but forceful appeal letter with a laser focus on the flaws of the insurer’s arguments.  Insurers’ own policies can be used against them in many cases. For instance, by cross referencing their own definitions of medical necessity or experimental/investigational treatments, you can often contradict their denial rationale using their own words.   Remember to write in a way that is respectful and accessible to your audience, being conscious of the fact that the appeals department staff who will be reading your letter are probably not sub-specialist experts in the field concerning your patient’s condition.

3. Peer-to-Peer review.  Often following the first denial, before or after a written appeal is filed, insurers will permit a phone conversation between a physician medical director on their staff and one of the patient’s supporting clinicians with knowledge of the matter.  For high-cost treatments, many of these are merely nice gestures, wherein the medical director actually has no authority to overturn the denial without a written appeal.  So, what’s the point? Even if a written appeal is ultimately required, making a good impression on a medical director can pay dividends behind the scenes when a subsequent written appeal is being considered, particularly for smaller insurance companies.  Carefully pick your representative here; they need to be simultaneously knowledgeable about the patient and the care being requested, and they need enough flexibility in their schedule to be able to take a call from the medical director within a window that works for both.  That said, if you cannot find a suitable advocate, it’s generally ok to skip this step and stick with exclusively written appeal(s).

4. Second Appeal. So, your first appeal was not successful, and you have a second denial letter. Depending on the type of insurance plan the patient has, the next appeal can function either essentially as a repeat of the first one, merely as a stepping stone to an independent external reviewer (in the case of non-grandfather plans issued after the ACA), or an opening for the patient to take their case directly in front of the leadership of their employer or union (in the case of grandfathered / self-insured plans).  Either way, if your well-written / well-supported first appeal did not overturn the original denial, chances are that the insurer did not actually respond to your arguments, and simply reissued their denial without new supporting rationale.  Make new arguments if needed based on the rhetoric or policies in the second denial, but note the work done in your prior auth and first appeal should be briefly reprised to keep the record focused on the main reasons for why the care requested is medically necessary for the patient at hand.

5. External Review.  Whether you’re taking your case to a physician working for an Independent Review Organization (IRO), a grievance committee at the patient’s employer, or even a state / federal Administrative Law Judge, the basic strategy is the same.  Remember you’re talking to a brand-new audience, and don’t assume they will read the whole case file on their own.  Either in your cover letter, or during oral arguments, tell the patient’s story from the beginning, reprise the arguments made by you and the insurer in chronological order of the denial letters and appeals, and make 100% sure the reviewer has the entire case file in their hands to verify what you’ve said later (e.g., reattach all the previous correspondence to your external review request even if the insurer claims they will forward all of that on – they often conveniently forget to send those documents).  If it’s clear the insurer never read the medical records, didn’t understand the care being requested, or never responded to your appeal rebuttals, then say so as you wrap up your case.  Having the moral high ground as the party that actually engaged in the process in good faith, while the insurer was shirking their responsibility, can tip the scales in your favor with an external reviewer who might otherwise be initially ambivalent.

For manufacturers and frequent prescribers of particular technologies, keeping a running list of outcomes after external review – noting the names of the IRO / individual reviewers if known and reasons given for their ruling – can be a useful tool for writing future appeals for similar patients.  If there are particular rhetorical / policy strategies that lead to victory more often, lead with those, and shorten or exclude those that prove less persuasive.  Attach de-identified approval letters as you win cases to future appeals to establish a clear precedent for coverage.   You might see a pattern of a particular IROs or an individual physician reviewer consistently rubber-stamping insurers’ denials / also not engaging in the specific facts of several cases; I have found documentation of that kind of behavior can be powerful evidence in complaints to state insurance commissioners and in civil lawsuits, if you have the time and resources to litigate as a high-level way to force behavior change by the insurers.

There is a lot of learned helplessness among med-tech companies and clinicians in getting insurers to cover new and/or sophisticated treatments.  The insurers rely on that, expecting they will get to keep more of their premium dollars if they make accessing benefits difficult.  They want you to give up, but don’t. If a patient really needs a treatment, even if it seems like a long shot, then getting coverage they deserve is all about telling the story well (the truth, the whole truth, and nothing but the truth), and overcoming denials with targeted rebuttals.  With time and accumulated authorizations insurers’ policies can be changed, and you will help lots of individuals along the way.