PREPARING FOR FAIR HEARINGS
RE: SCOPE OF SERVICES
COVERED UNDER THE MEDICAID PROGRAM
Sections I-III originally prepared by Michele Melden,
Managing Attorney, San Fernando Valley Neighborhood Legal Services, CA and updated 3/23/04 by the Health Assistance Partnership and Consumer Center for Health Education and Advocacy[1]
I. OVERVIEW
Many clients request assistance overturning denials of particular services they believe they need. This handout provides orientation to several key principles and strategies for advocates preparing for fair hearings, including:
II. Application of federal and state law
III. Fair hearing procedures
IV. Utilizing a managed care organization’s complaint procedures
This is just an overview, and is not intended to serve as a substitute for the necessary legal research of federal and state law and regulations and managed care contracts.
II. FEDERAL AND STATE LAW
Medicaid is a program that falls under both federal and state law and is sometimes referred to as a "cooperative" federal-state program. In accepting federal matching funds, the state ties itself to a host of federal legal requirements. In addition, states adopt statutes and regulations to administer their programs. In each state, a single state agency must administer the Medicaid program. Different agencies have this responsibility in different states, and some states subcontract some of their responsibilities. Medicaid agencies may reside, for example, in the state’s Department of Health Services, the Department of Human Services, or the Department of Social Services. For a listing of State Medicaid agencies see http://www.cms.hhs.gov/medicaid/allStateContacts.asp
A. Under federal law, there are several key principles that apply:
1. Services are either "mandatory" services which states must cover or "optional" services which states may cover. By choosing to cover an optional service, the state has the advantage of receiving federal matching funds to help pay for the service. However, once a state covers an optional service, it must provide that service under all the same requirements that otherwise apply to mandatory services. For example, a state may not arbitrarily choose to cover an optional service for one Medicaid beneficiary, but then not cover such a service for another beneficiary. (Exceptions to this rule include individuals in “expansion populations” under 1115 waivers.)
2. Federal law allows states to set "utilization" controls on services, meaning that each service may have certain restrictions which will result in not providing that service. However, there are limitations on such utilization controls:
a. A service must be sufficient in amount, duration, and scope to reasonably achieve its purpose for most people requiring the service. (For example, eyeglasses must be covered for most people with vision problems, not just for individuals who have vision loss resulting from diabetes.)
b. The restrictions must not discriminate on the basis of medical condition. (For example, certain expensive drugs required by individuals with HIV-related conditions must be covered, because other expensive drugs are covered for all kinds of other conditions.)
3. Federal law and regulations impose other limitations that prevent states from arbitrarily denying services
a. Comparability rulesrequire that different groups of recipients are entitled to the same scope of services, with limited exceptions (such as options to cover certain groups of pregnant women only for pregnancy-related services). Categorically needy recipients cannot be given less services than medically needy recipients. Individuals in the categorically needy group must all have services equal in amount, duration and scope available to them; similarly, individuals in the medically needy group must have equal availability of services. (42 CFR §440.240)
b. Statewidenessrequires that recipients throughout the state must receive the same scope of services. (For example, it would be illegal to have recipients receiving different levels of service, depending on where they live in the state.) (42 CFR §431.50)
4. Children under 21 are in a special category, which makes them entitled to any service which is medically necessary, as determined by their treating physician, under the "Early and Periodic Screening, Diagnosis and Treatment" ("EPSDT") program, regardless of whether the state otherwise covers that service for adults. These children are entitled to screening exams at periodic intervals, exams to determine the presence of a suspected illness or condition, diagnostic services, and services to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services, whether or not such services are covered under the State plan. (42 USC §1396d(r))
5. States must ensure that all services covered by their Medicaid State plan are available and accessible to Medicaid managed care enrollees. Medicaid managed care plans must have adequate provider networks to serve their enrollees and must provide for timely care according to state-set standards. (42 USC § 1396u-2 and 42 CFR §438.206 and 438.207.)
B. State law
1. State Medicaid statutes and regulations may outline specific services to which recipients are entitled. State Medicaid plans, which must be approved by CMS, also list services to which recipients are entitled.
2. Within those categories, the standard for coverage is "medical necessity." As mentioned above, under federal law, a service is "medically necessary" for persons under age 21 as part of the EPSDT benefit when services are necessary “to correct or ameliorate defects and physical and mental illnesses and conditions discovered by the screening services.” However, there is no federal definition of “medically necessary” care for adults. States set standards for this, and, for example, must specify what constitutes medically necessary care in their managed care contracts (42 CFR 438.210).
3. States have the option to adopt specific utilization controls. For example, California’s Medicaid benefit, called Medi-Cal, has the following:
a. The Department of Health Services has adopted prior authorization procedures for certain services, called "Treatment Authorization Requests" ("TARs"). Doctors submit TARs to Medi-Cal Field Offices, and the Medi-Cal field offices determine whether the service is coverable. In making determinations, the regulations require the Medicaid field offices to follow guidelines set forth in the "Manual of Criteria" which are incorporated explicitly by reference in the regulations. (We highly recommend
that advocates get section of the Manual of Criteria that applies to the service in dispute.)
b. California caps the number of visits per month for certain categories of services. These include, for example, caps on visits to psychologists.
4. Managed care plans: In many states, the Medicaid agency contracts with managed care plans to provide some or all services to Medicaid beneficiaries. Contracts define the services that plans must provide, the populations they must serve, and the definition of medical necessity to which they must adhere. Except for specific services that are “carved out” and not provided by the plans, plans are required to provide services in the same scope that otherwise is required of the Medicaid program. As a result, the only restrictions on care that plans are allowed to impose are those that otherwise exist in the Medicaid program. The same standards related to medical necessity must apply. Any stricter standards are illegal.
Note: In some states, a managed care plan’s contract may limit the plan’s services to, for example, 30 days of inpatient hospital care but if a beneficiary needs longer term services or more intensive services that are within the state’s Medicaid plan, the state is required to provide them under the fee-for-service system. In this example, the state is “carving out” longer term hospital care.
- States may have contract and consumer fraud laws or general Managed Care protection laws.
III. PREPARING FOR FAIR HEARINGS
Once a fair hearing is scheduled, advocates should do the following:
A. Determine who will represent the state and contact the representative to determine whether advance exchange of position papers and declarations would be feasible. In
the case of managed care plans, the state often is represented by the plans. Under federal law, the Medicaid beneficiary or his or her representative must be given an opportunity to examine the case file “at a reasonable time before the date of the hearing and during the hearing” (42 § CFR 431.242). Check your state regulations to see if there is more specificity regarding how to examine the file. In California, regardless of any agreement among opposing advocates, the state's (or managed care plan's) position statement is due at least two full business days prior to hearing.
B. Begin the factual preparation as soon as possible:
1. Most important, contact the treating physician. Find out why the physician is recommending the treatment, and request medical records to support the claim tying the request for services to the Medicaid definition of medical necessity. Where doctors, nurses and social workers’ testimony would support the claim, ask that they testify. If they cannot appear in person, it may be possible to arrange for them to testify telephonically. If this is not possible, consider getting letters or declarations from them. Frequently, the advocate must prepare the first draft of the letter or declaration based only on a telephone conversation with the physician and/or a nurse. However, the advocate should explain to the physician and/or nurse upfront that s/he will have a full opportunity to provide necessary changes, and that s/he will not be asked to sign a letter or declaration until s/he is comfortable.
HINT: Many physicians would prefer to devote as little as possible to the fair hearing preparation. Therefore, try to work through nurses or social workers that may be available. They can even help you begin to draft a declaration on behalf of the physician, and they can explain medical terms to you.
2. Collect all documentation, including the denials, the basis for the denials, and the standards applied in making those determinations. In managed care plans, this will involve contacts with office that makes utilization review decisions, typically under the Medical Director, but also under legal counsel.
- Develop a declaration on behalf of the beneficiary. HUMANIZE the person, as much as you can. What are the symptoms, what are the effects on day-to-day living, what are the fears about the future, are they taking care of children, are they being cared for, are they worried about losing their independence. The client’s participation at the hearing is almost always essential.
4. In cases where your client lacks access to necessary medical opinions, there is federal law allowing the advocate to request the Administrative Law Judge to require the state to pay for a second medical opinion. Consider this carefully. Assist the client in getting appropriate medical care as soon as possible.
5. Collect other documents and information that might help or hurt you, and determine whether you will use them after a careful analysis.
a. For health plan denials, obtain the contract and the Evidence of Coverage. Check carefully sections regarding exclusions, covered services, definition of medical necessity, second opinions, and grievance procedures.
b. Find out who was involved in making the decision. The denial may have been from the doctor, the medical group, the Utilization Review office, or the Medical Director. Where applicable, obtain any written authority or guidelines regarding the basis for the denial, as well as any written authority or guidelines regarding utilization review procedures.
c. Create your own log regarding all communications and efforts to resolve the problem.
C. Prepare a position statement:
1. While the Administrative Law Judge is most concerned with applying state regulations and law, it is also helpful to include federal authority, where applicable. If the two are in conflict, it may be helpful to point this out for the record.
2. The position statement should provide a preview of the facts that will be entered into evidence at the hearing.
D. Get the facts on the record:
1. Remember it is important to get all the necessary facts into the record because any appeal is based on that record. The standard for reviewing the decision of the Administrative Law Judge does not actually allow a revisiting of the record, unless it is clear that there was an abuse of discretion. This is a very difficult standard to meet. Therefore, it is worth investing time upfront in collecting records and documentation to support your arguments, so that they are ready to present at hearing.
HINT: Because the facts involve difficult and sophisticated questions calling on medical expertise, it is important to make your record as complete as possible. Therefore, once the hearing is requested, begin the factual work. DON'T WAIT FOR WHEN THE HEARING IS SCHEDULED, BECAUSE THIS WILL ONLY GIVE YOU 10 DAYS. YOU WILL WANT TO BEGIN PREPARING DECLARATIONS AND COLLECTING MEDICAL RECORDS RIGHT AWAY!
2. You also can ask the Administrative Law Judge to keep the record open for
some time after the hearing to submit a supplemental position paper and/or to
provide more facts. While this is a safety valve, it is important not to rely on this because the Administrative Law Judges may not grant the request. There also may be some advantages to you in closing the record right away since leaving it open also allows the state or managed care plan to submit additional information.
i. If there is an unfavorable decision issued following the fair hearing, request the transcript as soon as possible if you are planning an appeal.
ii. As advocates, it is helpful to maintain office files and documentation by plan, in order to develop more general complaints regarding patterns of inappropriate denials, if they exist.
E. For more help on gathering medical evidence for a fair hearing, go to HAP’s guide to free online medical resources at http://www.familiesusa.org/issues/medicare/research-tools/medical-research/index.html
IV. UTILIZING A MANAGED CARE ORGANIZATION’S COMPLAINT PROCEDURES
A. Managed care organizations are required to have an internal grievance procedure, or in other words, a process where an enrollee can appeal or file a grievance within the health plan. In some states, enrollees have the choice of whether to appeal first with their managed care plan or whether to go straight to a fair hearing. In other states, enrollees must go through the plan’s internal process before requesting a hearing with the state. Preparation for an internal appeal involves many of the same steps of collecting medical evidence that are involved in preparing for a hearing, so this section describes federal rules concerning plans’ internal appeal processes and timeframes.
1. The distinction between a grievance and an appeal:
a. Appeal: A request for a review of (1) the denial or limited authorization of a requested service; (2) reduction, suspension, or termination of a service; (3) failure to provide services in a timely manner as defined by the state; and (4) failure to allow use of out-of-network providers for rural beneficiaries. Managed care plans must give written notice of any of those four types of actions, and the notice must explain appeal rights. An enrollee can file an appeal, or a provider can appeal on the enrollee’s behalf with the enrollee’s written consent. Though they can initially file orally, they must eventually put their appeal in writing.
b. Grievance: An expression of dissatisfaction concerning, but not limited to, the quality of care or service provided or aspects of interpersonal relationships between the client and provider. An enrollee can file a grievance either orally or in writing. States can determine whether grievances are to be filed with the Managed Care Organization (MCO) or Prepaid Inpatient Health Plan (PIHP), or with the state.
Note: This term is also used to refer to the overall system that includes grievances and appeals handled at the MCO or PIHP level and access to the State fair hearing process. (42 CFR § 438.400)
B. When a managed care plan denies or limits a service; reduces, suspends or terminates a service; delays service; or refuses to authorize out-of-network service, the plan must notify the enrollee in writing of the action the plan has taken or plans to take, how to appeal, how to get an expedited review, and how to request continuation of benefits that are being discontinued. (42 CFR § 438.404 and 438.10)
An enrollee who appeals has a right to continued benefits on request if s/he files an appeal either with the MCO or PIHP or through a state fair hearing, as long as:
1. The claimant files the appeal within 10 days of the time the MCO or PIHP mailed them a notice of denial, reduction, suspension, or termination or before the MCO’s or PIHP’s proposed action goes into effect, whichever is later;
2. The course of treatment was previously authorized and was ordered by an authorized provider;
3. The authorization has not yet expired; and
4. The enrollee asks for continued benefits.
Note: If the enrollee loses the appeal, the MCO or PIHP “may recover the cost” of disputed services that were furnished while the appeal was pending (42 CFR § 438.420).
C. States can set a deadline for filing appeals that is no less than 20 days and no more than 90 days after the MCO or PIHP notifies the beneficiary and provider of its action (42 CFR § 438.402). Although as stated above, the appeal must be filed within 10 days to get continued benefits, the appeal must still be heard if it is filed within the state-established timeframe of 20 to 90 days.
D. During the appeal process, the plan must: (a) give reasonable assistance to the enrollee, including interpreter services; (b) assure that the reviewers were not involved in previous decision-making and have “appropriate clinical expertise” as defined by the state; (c) provide the enrollee with a reasonable opportunity to present evidence and allegations of fact or law, in person and in writing; and (d) provide the enrollee or representative the opportunity to examine the case file. (42 CFR § 438.406).
E. The plan must decide on an appeal within state-established timeframes. States set a time limit of up to 45 calendar days for MCOs/PIHPs to decide on a standard appeal. If it is an expedited appeal (involving services that are needed immediately or quickly), the MCO/PIHP has up to 3 working days to make a decision.
F. The state fair hearing is the external appeals procedure. That means that an enrollee who is dissatisfied with a managed care plan’s action, besides appealing to other reviewers within the plan, can appeal outside of the plan to the state. Some states require that the enrollee exhaust the internal appeals process before the state fair hearing process begins. In this case, the states state can specify a time limit that is not less than 20 calendar days and not more than 90 calendar days of the MCO/PIHP decision for the enrollee to request the fair hearing. Other states allow an enrollee to go directly to a fair hearing, bypassing the internal appeals process, or to file an internal appeal and a fair hearing request at the same time (42 CFR 438.402(b)(2)(ii)).
G. Regardless of whether the state requires that the internal appeals process be exhausted before an external hearing or allows the beneficiary to file for a fair hearing at the outset, the entire process from the time the beneficiary first appeals with either the managed care plan or the state to the time the state issues its final hearing decision must be completed within 90 days. The following are the exceptions (42 CFR § 438.210-438.211; 42 CFR § 438.400-438.424):
1. The timeframes for an MCO/PIHP to decide on an internal appeal can be extended up to 14 calendar days on the enrollee’s request or if the MCO/PIHP shows that there is a need for additional information and a delay will be in the enrollee’s interest. If the timeframe is extended at this level, the entire appeal and hearing process can take longer to complete.
2. If the MCO/PIHP decides against the enrollee in an appeal, the enrollee can request a state fair hearing within the state’s specified time frames. The days that elapse between the date of the MCO/PIHP decision and the date of the enrollee’s request for a hearing are not counted as part of the 90 day maximum for completing the entire appeal and hearing process.
H. If the MCO/PIHP (in an appeal) or the state (in a fair hearing) decides in favor of the enrollee, the MCO/PIHP must furnish services “promptly, and as expeditiously as the enrollee’s health condition requires.”
