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Jul 2015

Beware of New Ways Health Plans Utilize IROs to Escape Responsibility for Paying Your Healthcare

It never ceases to amaze us here at SAC the lengths to which health plans go to avoid paying for medically necessary care that hospitals provide to patients. Remember the days when your treating physician determined exactly what care was necessary for you and their opinion really mattered? Those days may soon be gone. Certain health plans have now set up a process that utilizes what they refer to as “Independent Review Organizations (IROs.)” These IROs are setup to actually determine whether services rendered to patients are medically necessary. And of course, payment will be based on whether or not medical necessity is established by these IROs.

So how do these IROs work?

  • The health plan chooses the IRO! Yes, the IROs which must be used are ONLY those chosen by the health insurance company. The hospital or patient then chooses from a list of IROs that the plan approves as being eligible to determine medical necessity of treatment rendered to patients.
  • Your doctor’s opinion becomes virtually irrelevant. The treating doctor who physically examined you and actually made the decisions about what care you needed is silenced by these IROs. IRO reviewers base their decision solely on a review of the medical records; with no examination or interaction with the patient, and many months, if not years after the treatment is provided; all with the benefit (and arrogance) of hindsight.
  • From an economic standpoint, IROs have a significant incentive to err in favor of the insurance company in order not to be blackballed from the list. Remember, the health plan chooses the IROs!
  • Generally, the only requirement for the IRO reviewer is that the person be a physician licensed in the United States. Thus you could have a general practitioner reviewing the records of specialists such as cardiologists.
  • The IRO contractual language indicates that the review of the claim will be limited to only those medical records that were submitted to the insurance company when it made its denial. Thus unless all of the documentation is submitted as part of the medical records at the appeal stage, it will not be considered. However, consider if the issue is whether the care involved treatment that is experimental or investigational. Shouldn’t the issue be decided by, at minimum, a review of the appropriate peer reviewed articles and literature as well as other appropriate sources of information?  Supplemental documentation is generally critical to getting a claim properly resolved.
  • No hospital review may be available at all if the patient seeks review first. While individual patients may and should challenge decisions that deny benefits, often an individual patient does not have the expertise or resources to launch a sufficient challenge to a medical decision. Thus the hospital may be cut off from challenging a denial if the patient has previously requested an IRO review of a medical necessity decision. The facility is bound by that decision. Thus a hospital is at the mercy of whatever the patient submitted in support of the medical necessity of the treatment during the patients’ review because the documentation cannot be augmented by the hospital after that point.
  • The IRO clauses also create new and shorter deadlines for the hospital to act. These new deadlines, or as we refer to them “traps for the unwary” are built into the new language. Most importantly, if the deadline is not met, the insurance denial is considered final and there is no further challenge available.
  • Now, if the above points were not enough to illustrate the unfairness of this process, let’s talk costs. The contract language we have seen does not indicate specifically how much the IRO will charge nor does it place a limit on how much they may charge. In addition, this is a winner take all proposition. If the IRO decides the insurance company was correct in denying the claim based on medical necessity, level of care or investigative treatment, the provider is solely responsible for paying the IRO’s fee.  With the stacked deck created by the language this will be a common result.  The insurance company pays only if the IRO reverses the denial completely.  If there is a split in the decision, such as where several days are denied and a few are overturned, the fee is split.

It is apparent that hospitals give up substantial rights when they agree to this language.  This can only be described as a coup for the health plan.

Let us know how you feel about these IROs in the comments below..

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