HANDLING MEDICAID DENIAL OF SERVICE CASES

Prepared by Barbara Fisher, Consumer Center for Health Education and Advocacy,
San Diego, CA, March 2004

A. Background

1. What is a Medicaid Fair Hearing?

   a. The most significant protection for Medicaid beneficiaries.

   b. Means by which a beneficiary can appeal an adverse decision including a denial of a request for services.

   c. Means by which an advocate can protect the client’s constitutional due process rights.

2. General requirements for a provider to be reimbursed for services under Medicaid:

   a. The patient must be a Medicaid beneficiary.

   b. The service provided must be a Medicaid covered service.

   c. The service must have been medically necessary.

3. Federal Medicaid rules on scope of services:

   a. Cannot deny (or reduce in amount, duration or scope) on basis of medical diagnosis, illness or condition 42 CFR 440.230(c).

   b. Entitled to the least expensive treatment adequate to achieve the purpose.

   c. Service must be sufficient in amount, duration and scope to reasonably achieve its purpose for most people requiring the service 440.230(b).

   d. Reasonable promptness.

4. Medical necessity standard under Medicaid:

   a. No definition in federal rules.

   b. California - reasonable and necessary to protect life, prevent significant illness or significant disability or alleviate severe pain.

   c. EPSDT Broader coverage for children.

   Services to correct or ameliorate a physical or mental illness or condition-whether or not such services are covered under the state Medicaid plan    42 USC 1396d(r)(5).

5. EPSDT rules:

   a. Eligibility those under 21 eligible for full-scope Medicaid.

   b. Requires developmental assessments, case management, and periodic screens according to set schedule and inter-periodic screens as medically necessary.

   c. Covers treatment for conditions diagnosed.

   d. Covers broad range of mental health services 
       42 U.S.C.  1396a(a)(43), 1396d(a) and (r).

   e. State must assure availability of required health resources and “[help] Medicaid recipients and their parents or guardians effectively use [the required health care resources].”  HCFA, State Medicaid Manual Section 5010B (Apr.1990). 

   f. Timely provision, reasonable standards
      42 U.S.C. 1396a(a)(8) and 42 CRF 441.56(e).

   g. Can provide services in the most economic mode as long as similarly efficacious.

6. Medicaid Benefits:

   a. Mandatory by federal law including hospital services, physician services, EPSDT and family planning.

   b. Optional those that the state can choose to include in their state plan and will be reimbursed.

7. Rules for Managed Care Organizations and PIHPs under the Balanced Budget Act:

   a. Accessibility must maintain network of providers sufficient to provide adequate access to all services covered under the contract. 42 CFR 438.206.

   b. Provides for second opinion within the network, or arranged for enrollee to obtain outside the network 42 CFR 438.206.

   c. Decision to deny a service authorization request be made by a health care professional who has appropriate clinical expertise in treating the enrollee’s condition or disease 42 CFR 438.210.

8. Analyzing a case the utilization review process:

a. Determine who is the client:

Be aware that teen may express different need than parents. Try to resolve conflicts.

b. Determine what procedure or service is needed/requested as well as alternative approaches to care and payment.

c. Determine the consumer’s coverage and whether the consumer is in fee-for service or managed care?

d. Determine whether a doctor requested the service. 

Were the proper papers and medical documentation filed? 

Can you help by providing additional information?

Note that June 14 preamble to BBA regs says that only denial by the PIHP, not denial by physician triggers an “action” that may be appealed.  

e. Determine who made the determination.

Was it a medical group, a health plan, the state agency or its designee or a mental health program (perhaps under the County)?     

f. Determine who is responsible for providing the services.  Some services are  “carved out “ and the plan is not responsible for these services.

Is there a MOU between the Medicaid health plan and that program? 

Who has the responsibility under the MOU?

NOTE: Due process rights are protected even if the state agency has not made the decision 
J.K. v. Dillenberg Due Process rights remain even if other agency does utilization review. 

g.Determine the organization’s rules and guidelines.

• Sometimes found in manuals of criteria. 
• Use Public Records Act request if necessary.
• Get published hearing decisions from State Hearing office or Legal Services office.
• Person is entitled to federally mandated Medicaid services and services enumerated in State statute. 

NOTE: At Admin Hearings generally follow State guidelines.

• If conflict, protect the record and challenge by writ.
• Need to exhaust administrative remedies.

B. Grievance Rights

1. Goal resolve at the lowest level possible.
   Keep aware of time frames to protect consumers’ right to a fair hearing.  Time is not tolled by filing a grievance.
2. Federal rules for Medicaid HMOs and PHPs—Contract must provide for internal grievance and prompt resolution and assure participation of individuals with authority to require corrective action. 42CFR 434.32.  
3. Rules under the Balanced Budget Act at 42 CFR 438.400.
   
   a. Plans must provide information to members on grievances, fair hearing rights, time frames for the processes and the availability of assistance.
   
   b. Time period for plans to process a grievance 

• 45 days.
• 3 working days from receipt of file for expedited hearings.

C. Protecting Right To A Hearing

1. Need jurisdiction to review.
   Decision must be one that can be appealed-
   Can appeal action to deny, delay, terminate or reduce.

   According to BBA:

   Action has to be an action by the plan, not just the doctor’s refusal to request a service.  
   Expiration of an approved number of visits doesn’t constitute a termination, BBA 42 CFR   438.404. 
   ALJ must have authority to determine & order action.

2. Appeal must be done timely.

   a. The date is measured from date of denial, not from date of grievance decision or Independent Medical Review action.

   b. Federal regulations say the request is to be within a reasonable time but no greater than 90 days from mailing. 42CFR431.221.

   c. Defense to a delayed appeal.

   Time is measured from date of mailing of an adequate and timely Notice of Action. Check the notice against those requirements. 

3. Protect Aid Paid Pending:

   Consumer has right to same level of benefits until a hearing decision if consumer appeals prior to date of termination or reduction in benefits.

   Appeal must be made within in 10 days or prior to action See exception at 42 CFR 431.230 and 231.

4. How to Appeal:

• Need Authorized Representative form
• Send appeal by verifiable means FAX 
• Fed regulations at 42 CFR 431.221 says agency may require that the appeal is in writing
• Identify issues for appeal broadly but do not need to specify details of the case
• Identify need for interpreters, home hearing 
• The consumer need not have received a written Notice of Action to appeal an adverse action.  It is helpful to get one.

D. Prehearing preparation:

1. Review the Utilization review request/postponing. 
   
   
   • Are there sufficient supporting documents?  Has medical necessity been addressed?
   • Weigh options of postponing the hearing to gather evidence vs. whether ALJ would just send additional documents to the agency to evaluate.  It may be better to submit a new request for services.  
   • What are the local rules regarding postponements?
     
2. Research the pertinent area of medicine.
3. Develop the record.
   • Need HIPAA compliant release-get ASAP.
   • Assist the client in getting the necessary treatment or assessment if possible.
   • You may want to request a second opinion. Weigh the pros’ and cons’ carefully.
   • Request a doctor’s report get diagnosis, symptoms, treatment history, explain the standards or requirements that have to be met, have the doctor explain how these requirements have been met and/or what would happen if services are denied.
   • Work with office staff.
   • Request subpoenas if necessary.
     
     
4. Review the file.
   • Notices of action.
   • Medical records.
   • Agency statements or decisions.
     
     
5. Review the State or plan’s position statement.
   
   
6. Prepare the client.
   
   
   • Explain the setting, oath, and what is at issue.
   • Gain the client’s confidence to encourage adequate testimony.
   • Ask questions about symptoms, treatment, daily activities, and elicit problems the client would have without treatment.
     
     
7. Prepare a position statement.

E. Hearing

1. Know your hearing rights. 
2. Provide an opening statement. 
3. Clearly identify the issue.
4. Bring and prepare witnesses if helpful.
5. Ask questions if something is unclear and encourage client to do the same.

   NOTE: Rules of evidence do not apply but hearsay evidence should be given less weight.

   • Get evidence into the record.
   • Try to get testimony by phone if an expert cannot attend the hearing.
   • Use a psychologist or social worker if a psychiatrist not available.
   • Hearing officer can order medical assessment 42 CFR431.240.
6. Cross-examination of adverse medical expert:
   • Never ask question when you don’t know the answer. 
   • Question experts with extreme caution, they can do more harm than good.
   • Listen carefully to the answers.
   • Ask closed questions (e.g. Isn’t it true that….).
   • Establish that the extent of the exam was limited.
   • Ask if it is a condition that can change from day to day.
   • Challenge if person is not an expert in the appropriate area.
     
     
7. Hold record open if needed.