Why Insurance Article § 15-1009 Should be Applicable to Managed Care Organizations
This is the second of two articles regarding Maryland laws in need of updating.
By: Jason C. Anderson and Gustavo Matheus
In our last article, found here, we discussed the need for changes to be made to clarify Maryland Department of Health regulation COMAR 10.67.06.07H. In this article we will discuss the challenges of obtaining preauthorization, the importance of Maryland Insurance Article § 15-1009, and why this law should be applied to Medicaid HMOs (“MCOs”).
To adequately serve their communities, healthcare providers rely on managed care plans and insurance carriers to reimburse services rendered to their members. While that may seem obvious, the reality is that hospitals often are unable to obtain reimbursement for medically necessary services that would otherwise be covered. As explained in this article, increasingly there is a need for statutory assurances of reimbursement for preauthorized care. These legal guarantees should be expanded to include MCOs, one of the biggest payer groups in Maryland.
Preauthorization Requirements for Physicians and Facilities
Consider, for example, a patient with past uterine bleeding who is in need of a hysterectomy. Her health plan will typically require preauthorization for this outpatient procedure, as the payer will want to ensure that the patient’s medical condition warrants this service. In this scenario, the surgeon’s office will inform the health plan that its member requires a laparoscopic hysterectomy. The insurer will usually request medical records and, if deemed to be medically necessary, will preauthorize the treatment. The surgeon then informs the hospital that the outpatient procedure scheduled at the facility will be covered, providing the preauthorization number issued by the health plan. Both providers working together in the care of the patient are legally or contractually bound to these requirements.
Maryland Insurance Article § 15-1009
In the example above, providers can generally depend on a health plan’s promise to reimburse the provider for certain services as reflected in the preauthorization. However, in the realm of healthcare reimbursement, a health plan’s promise to pay may not result in reimbursement. That is why in Maryland providers must count on Maryland Insurance Article § 15-1009 to legally enforce the payor’s preauthorization. In pertinent part, § 15-1009 states that:
If a health care service for a patient has been preauthorized or approved by a carrier or the carrier’s private review agent, the carrier may not deny reimbursement to a healthcare provider for the preauthorized or approved service delivered to the patient unless:
(3) a planned course of treatment for the patient that was approved by the carrier was not substantially followed by the health care provider[.]
This important qualification is a saving grace allowing providers to be reimbursed even when the preauthorization does not exactly match the actual services rendered.
Another exception allows to a health plan to deny a claim for lack of prior authorization if:
(2) critical information requested by the carrier regarding the service to be delivered to the patient was omitted such that the carrier’s determination would have been different had it known the critical information[.]
In tandem with the first allowance discussed above, this exception gives leeway to a provider who renders a new procedure based on information obtained during the actual treatment. The full text of Maryland Insurance Article § 15-1009 may be found here.
Maryland Insurance Article § 15-1009 goes a long way in creating a legally enforceable expectation of reimbursement for preauthorized services. When providers obtain preauthorization for a service and perform the specific service that was authorized, providers can generally expect those services to be reimbursed.
How The Law Balances the Increase in Diagnosis and Procedure Codes
Medical billing has become increasingly complex, sometimes seemingly requiring the skills of a clairvoyant to predict the specific diagnosis and procedure code that will apply to an expected procedure. Authorizations issued by managed care plans are made in reference to ICD-10 diagnoses and corresponding procedure codes. However, there are well over 70,000 ICD-10 procedure codes and over 69,000 ICD-10 diagnosis codes, compared to about 3,800 procedure codes and roughly 14,000 diagnosis codes within the prior revision (ICD-9). This has created a daunting challenge for healthcare providers seeking preauthorization of medically necessary, covered services. Indeed, it is not uncommon for a surgeon to request (and obtain) an authorization for one procedure, but ultimately perform a slightly different procedure. The result is that an authorized service will be denied for lack of authorization. Consider the case of the hysterectomy patient. There is a code for removal of a uterus weighing up to 250 grams and another for a uterus having a mass greater than 250 grams. We have seen denials for such situations.[1] In another case, a patient had a hiatal hernia repaired as part of an abdominal surgery. While there was no dispute that the treatment was medically necessary and that the surgery was otherwise clinically warranted, the unanticipated procedure resulted in the entire claim – including the preauthorized services – being denied for lack of authorization.
Despite this explosion in codes, one benefit afforded to a patient by Maryland Insurance Article § 15-1009 is that healthcare providers need not delay treatment to obtain approval for exact treatment. A more generic code can be used, or even one that is not exactly what ultimately is rendered. The healthcare provider knows that she will reimbursed pursuant to the law, and she need not delay her patient’s procedure to obtain a final exact diagnosis and its corresponding code.
The Limited Applicability of Maryland Insurance Article § 15-1009
One glaring omission in Insurance Article § 15-1009 is that MCOs are not bound by this statute. Specifically, Maryland Health-General Article § 15-101.1 provides that MCOs are exempt from the insurance laws of Maryland, unless expressly stated. Maryland Health-General Article § 15-102.3 provides a number of Insurance Article laws applicable to MCOs. However, Insurance Article § 15-1009 is notably absent. This oversight leaves open the possibility that an MCO may refuse payment even though the hospital obtained preauthorization. Without the ability to redress such refusals, hospitals may end up absorbing the costs of services rendered to MCO enrollees. You could call it free healthcare – free for health plans, at the cost of Maryland’s healthcare providers.
What is Needed and How You Can Help
In this article, we are not suggesting any changes to the language of Insurance Article § 15-1009. Rather, we are advocating that this statute be added to the list of statutes applicable to MCOs in accordance with Health-General Article § 15-102.3. This is not without precedent. Two Insurance Article statutes are in fact applicable to MCOs: § 15-1008 (the “Retroactive Denial” statute) and § 15-1005 (the Maryland “Prompt Pay” statute). Adding a restriction on denials for lack of prior authorizations makes sense and is consistent with how Maryland regulates commercial healthcare plans.
One important way for Maryland citizens, physicians, and hospitals to support this needed change is by contacting their Maryland General Assembly representatives. Each Delegate and Senator can make a difference, either by sponsoring a bill to implement this necessary change, or by voting in favor of a bill to include § 15-1009 to the list of laws applicable to MCOs. Our elected leaders must be informed of the impact of this statute on Maryland’s citizens, physicians and hospitals, and the need to include this law in the list of those applicable to MCOs.
Please contact your Maryland representatives where you live and work. You may identify and contact your representative through this link.
Help us to ease the strict preauthorization requirements imposed by MCOs and to improve healthcare coverage and reimbursement in Maryland.
[1] A physician may be able to estimate the weight of a uterus through ultrasound.
Anderson & Quinn, LLC is a law firm based in Rockville, Maryland, providing individuals, businesses, corporations, and healthcare institutions with the legal and litigation support they need to protect revenues. Jason Anderson is an associate at Anderson & Quinn, LLC, 25 Wood Lane, Rockville, MD, 20850. Tel: 301-762-3303. Jason may be reached at janderson@andersonquinn.com. Gustavo Matheus is chair of the firm’s healthlaw practice. Gustavo may be reached at gmatheus@andersonquinn.com.
