Treatment Decisions and Arizona Law

All of the avenues for review of a denial of coverage or medical necessity decision in Arizona require that patients or their physicians take various actions within specific time frames

Gaye L. Gould

Inherent in every managed care system is the inevitable conflict between a patient’s desire for a certain medical treatment or procedure and the health insurer’s desire to minimize costs.

Over the years, a majority of states enacted laws that require managed care organizations to submit to an independent review of such disputes, but federal courts offered mixed opinions over whether or not states could require independent review without running afoul of federal law. For example, one federal appeals court invalidated a Texas law calling for independent review on the ground that it was “preempted” by ERISA, a federal law applicable to employee welfare benefit plans.

Fortunately for consumers, the U.S. Supreme Court provided certainty through its 2002 ruling in Rush Prudential HMO, Inc. v. Moran, which the American Medical Association hailed as “a major victory for America’s patients and their physicians.”

Arizona law (A.R.S. § 20-2537 et seq.) provides patients with the right to an independent review by an unbiased physician or healthcare provider when the patient’s primary care physician and the health care insurer disagree over coverage or the medical necessity of a certain course of treatment or procedure. While these laws have been on the books for some time, it was not until Rush was decided that patients could be certain that they are entitled to an independent review.

In Rush, the patient (Moran) suffered from shoulder pain and numbness. Moran’s primary care physician recommended surgery by an out-of-network specialist who had developed an unconventional treatment. Moran’s HMO denied the request, finding that the procedure was inappropriate and not “medically necessary” and that Moran should have the standard surgery performed by a network physician. When Moran sought an “independent medical review” of her claim as guaranteed by Illinois law, the HMO refused to provide the review and then argued in court that ERISA preempted the Illinois law.

The case ultimately wound up in front of the U.S. Supreme Court at a time when federal legislation was pending that would provide patients with the right to an external review. That legislation later stalled, but it may be revived now in an attempt to create some uniform national standards for external reviews.

Arizona is one of more than 40 states with laws requiring managed care organizations to submit to independent review. However, a Kaiser Family Foundation study reported that, across the U.S., these external review programs are used infrequently; when they are used, the external reviewers rule for the consumer about 45% of the time. In Arizona, the consumer prevails in only about 21% of the cases – the lowest rate in the nation.

Under Arizona law, a patient covered by a health care insurer or that patient’s treating physician may challenge the insurer’s denial of coverage in various ways.

First, if the treating provider certifies and documents that the ordinary time periods for challenging a denial would be “likely to cause a significant negative change in the member’s medical condition at issue,” the law provides for an expedited medical review, appeal and external review.

Without this emergency certification, the patient or treating provider may request an informal reconsideration of the denial and may then appeal that adverse decision within the organization. If the internal appeal is unsuccessful, the patient may initiate an external independent review at no cost to him or her.

In Arizona, an external review is performed by an independent review organization selected by the director of the Arizona Department of Insurance. The review organization must use licensed health care professionals who have no interest in the particular case under review and no other conflicts of interest.

All of the avenues for review of a denial of coverage or medical necessity decision in Arizona require that patients or their physicians take various actions within specific time frames. The insurers are required to provide information explaining the time frames and the whole process up front, and insurers are required to notify members of the right to appeal whenever they issue an explanation of benefits.

Arizona law contains a number of other requirements and details that are beyond the scope of this article.

These materials are designed to provide general information prepared by professionals in regard to the subject matter covered. It is provided with the understanding that the author is not engaged in rendering legal, accounting, or other professional service. Although prepared by professionals, these materials should not be utilized as a substitute for professional service in specific situations. If legal advice or other expert assistance is required, the service of a professional should be sought.