Common reasons claims are denied
Coverage limitations. Insurance plans often exclude or restrict particular services and limit certain types of care such as chemical dependency treatment or psychological testing. Managed care companies do not write the plans they manage and cannot authorize care that the benefit does not cover.
Plans may ‘carve out’ or ‘carve in’ mental health care benefits
In “carve-out” plans, HMOs and insurance companies that do not have in-house expertise in mental health care or chemical dependency treatment “carve out” these services so that coverage is managed separately from the medical benefit. Carved-out services typically are delivered exclusively by designated providers or groups that contract with the HMO to provide mental health care to members.
Carve-outs have led to concerns about parity, particularly when mental health benefits are reduced or restricted compared with other medical benefits in the plan.
In a “carve-in” plan, mental health care remains within the overall health care coverage, which can facilitate collaboration between mental health and medical care providers. Parity for mental health care may be less of an issue than with “carve-out” plans, but “carve-in” plans might not be equipped to adequately meet the needs of patients with serious, persistent mental illness.4
Recommendation. Make sure you and your patients understand their benefit limitations. All employees with health insurance receive a summary plan description (SPD), which outlines benefit coverage and limitations. Encourage patients to read this document and contact their managed care companies with questions about coverage. Also ensure that your office managers:
- become familiar with SPDs for commonly encountered plans in your practice
- proactively verify patient benefit coverage.
Medical necessity. Practitioners in inpatient or residential settings experience the highest rates of denials of requested care on grounds that care is not medically necessary. Managed care company guidelines specify criteria that must be met—such as active suicidality, disorganized thinking, or significant medical co-morbidity—before care can be authorized.
Recommendation. Document specifically and concisely in daily notes why a patient requires the care you are providing. Managed care company guidelines are only guidelines; when the patient does not meet criteria, the medical director is more likely to authorize care if you clearly state the rationale for that level of care.
Patient is not progressing. Medical and mental health care is expected to provide a therapeutic outcome. When little progress is being made toward treatment goals, managed care companies have an obligation to the payers they represent to ensure that patients receive effective care.
Recommendation. Set realistic goals in the treatment plan. If a patient has a chronic condition and is not expected to improve but requires ongoing care to maintain function, state this in the treatment plan. If a patient is not making progress toward treatment goals, explain the reason and how you are addressing it.
No prior authorization. Some services—such as psychometric testing, inpatient care, or residential treatment—require prior authorization for reimbursement. Particularly for expensive treatments, payers require prior authorization so that utilization review occurs while care is being delivered, as opposed to afterward when costs are more difficult to contain.
Recommendation. Be familiar with prior authorization policies of common plans in your practice. If you discover you have provided care that required prior authorization, make a good-faith effort to submit clinical notes and explain why you did not request prior authorization. Many managed care companies will authorize payment after the fact if care was necessary and reasonable.
Duplication of services. Psychiatric patients often move from practice to practice, sometimes several times a year, without telling clinicians. Thus, laboratory testing, psychometric testing, and other diagnostic services may be repeated. Managed care companies take the stance that duplication of services is expensive and unnecessary, whereas you may argue that you must have adequate information to care for patients appropriately.
Recommendation. When assessing new patients, make it a priority for your office staff to ask patients about care they have received in the last year and obtain records from other providers. If you duplicate services, explain in your treatment plan why it was necessary for your patient’s care.
Interacting with managed care
Unfortunately, clinicians and managed care company representatives often view their relationship as adversarial (Box 3). Yes, some managed care representatives unfairly limit mental health care, and some clinicians maximize income potential by overbilling or providing unnecessary care. In our experience, however, most people on both sides of the equation are doing their jobs fairly and reasonably.
Medical care is expensive. Managed care’s role is not to deny care to patients who need it but to help the fiduciaries they represent—private companies or government entities—ensure that appropriate and economically responsible care is delivered. When you interact with managed care companies, keep 3 principles in mind: