A health insurer may deny coverage on “medical necessity” grounds either (a) on a pre-certification or initial admission basis or (b) in the middle of a course of a program of in-patient or other treatment (after one or more days or other sessions of a particular service have been provided on a covered basis).  In either case, prompt action challenging the denials will, in my view, increase the chances of the decision being overturned by a review panel, since a case where the file is “stale” and the attending physicians may no longer be available (or interested) in being consulted on the case will be much harder to argue.

The policy of health insurance will have a definition of “medical necessity” which of course will apply and needs to be carefully reviewed in each case.  In addition, may companies will publish guidelines for determination of medical necessity in behavioral health matters.  Anthem Blue Cross and Blue Shield, for instance, has published guidelines for varying levels of care specifically relating to eating disorders as part of its overall behavioral health medical necessity guidelines.

In my experience, however, the stated reasons given by a health insurance company to support a determination that a particular service is not medically necessary will often have no relevance to the standards created by that insurer’s own guidelines, even though the determination letter will often state that the decision has been made in accordance with the published guidelines.  Further, the reasons given by a review panel in upholding or reversing an initial determination likewise will often not track the tests established by the guidelines.  Therefore, although the guidelines will be important to argue in the course of challenging a medical necessity denial by a health insurance company, it may be even more important to develop a compelling “story” of medical necessity through the report of the appropriate staff of the provider and the representatives of the patient to the review panel that is based on common sense on the particular patient’s facts and history, rather than strictly focusing on the guidelines.

In any case, it will be important to determine whether the particular health plan that covers your claim has been “grandfathered” from the protections afforded patients by recent health reform laws, or is a “non-grandfathered” plan (meaning that it must abide by the protections of the new laws and regulations).  The new laws may entitle you as the patient or representative of a patient to have an *external* review by an independent panel of experts of a coverage denial based on medical necessity, so being a member of a “non-grandfathered” plan may be very advantageous.  Further, if the patient remains in the care of a provider and the insurer has rejected continuation of coverage on medical necessity grounds, the patient may be entitled to demand an *expedited* (typically within 72 hours) external independent review of the coverage decision in lieu of, or in addition to, an expedited internal review by an insurer panel.

Regardless of whether the appeal is internal or external, or expedited or not, success in challenging the denial will be dependent, in my view, primarily on the willingness of the provider’s physicians and other care providers to “go to bat” for the patient. A disinterested provider, or one  that is not available to spend time with the review panel, will diminish the patient’s chances of prevailing upon appeal, no matter how persuasive the patient and her representatives may feel that they are when making any written submissions to the review panel.  At root, this is a matter of medical judgment, and lack of medical support for the case will play into the insurer’s hands.

Therefore, the patient and her representatives need to be pro-active with the provider and its professionals and care and insurance staff in making sure that the provider is diligently pursuing all opportunities to initiate appeals and are making the necessary medical records and reports available to the insurer in connection with appeals.  And, most importantly, to solicit the support of the attending physician so that the physician is made available to the review panel when called upon to make the patient’s case.

Bringing a lawsuit to fight a coverage denial based on medical necessity may be a possibility if all internal and other avenues have been pursued to no avail, but in most cases litigation will not be cost-effective.  Much more cost effective, if available, is the external independent review panel (expedited wherever possible) appeal route.  If pursued diligently with the active support of the professionals under whose care the denied services are being provided, a patient will have  fair chance of prevailing upon an external review, thanks to the safeguards provided by the recent reform laws.


When a person (typically a woman but not always) becomes ill with an eating disorder, she (and perhaps her parents or guardian) may well have two battles on their hands – the battle to get well, and a battle with the health insurance company.  This two-front battle is aptly described in one of the entries in the blog of a California law firm, Kantor & Kantor, that is at the forefront of legal issues in this area, in one of its blog postings here.

I am a lawyer in private practice in Indianapolis, Indiana.  I am currently battling Anthem Blue Cross and Blue Shield of Indiana over the types of coverage issues described by my blog and felt that my observations could be of some help to individuals who are faced with coverage denials by Blue Shield or other insurance companies in Indiana.

I can’t promise anyone success in battling with their insurance company.  I can only hope that, by writing this blog, those who have been surprised by their insurance company’s attitude toward eating disorder claims might benefit by understanding that the insurance company’s word is not the last word and that there are options that might be available to overturn coverage denials.

Some health insurance policies include exclusions that purport to authorize the health insurance company to deny treatment for services provided to an insured by a “residential treatment center or facility.”  Blue Cross and Blue Shield plans are notorious for this kind of exclusion.  Under this type of exclusion, the health insurer may claim that services provided at or by the facility are not covered in whole simply because of the nature of the facility.  If an insurer successfully defends its claim for exclusion of the billings of a particular facility for coverage, it need not also disprove that the services are medically necessary.  In other words, the insurer’s position may be that, “we don’t disagree that this patient is sick and could benefit from the types of services offered at this facility; we simply don’t cover this type of facility so we won’t pay for the patient’s stay there.”

Within the last 12 months, there has been an important legal development in a case involving a California woman (Jeanene Harlick) that may provide health insurance beneficiaries with ammunition to battle the application of this exclusion in certain cases.  In the case of Harlick v Blue Shield of California, the United States Court of Appeals for the Ninth Circuit (applying a California state mental health parity law) held in August 2011 that Blue Shield of California was required to cover residential treatment facility services for the treatment of anorexia nervosa on a parity basis with treatments for physical illnesses, even though residential treatment facility services were expressly excluded by the policy language. In rejecting Blue Shield of California’s arguments as to why such services were not required to be covered, the federal appeals court stated that “Blue Shield’s argument … lacks any support in common sense. Some medically necessary treatment for severe mental illnesses have no analogue in treatments for physical illnesses. For example, it makes no sense in a case such as [plaintiff’s] to pay for 100 days in a Skilled Nursing Facility — which cannot effectively treat her anorexia nervosa — but not to pay for time in a residential treatment facility that specializes in treating eating disorders.”

This is an evolving area, and Blue Shield has filed a petition for rehearing which is still pending.  Further, Harlick is not directly relevant to disputes arising outside of California. Nevertheless, as noted by an article in The New York Times here, the decision in Harlick potentially offers hope nationwide for sufferers of eating disorders who need help at facilities that their insurers may regard as within this type of policy exclusion.

Many states besides California have enacted mental health parity laws, however, and those state parity laws might be applied like they were by Ms. Harlick in her case to challenge this type of exclusion.  Further, federal law (including without limitation, the Paul Wellstone Pete Domenici Mental Health Parity and Addiction Equity Act of 2008) may prevent a health insurer in a given case from applying such a residential treatment facility exclusion to mental health benefit claims like eating disorder claims.

A health insurance plan or contract generally obligates a health insurer to provide benefits to the insured individuals for services within the coverage of the policy.  This obligation is protected both as a matter of contract law (the insureds have contracted with the health insurer directly or indirectly to obtain the benefit of the coverage in return for the payment of an agreed premium) and by certain federal (and possibly state) statutory provisions that are designed to assure the parity of treatment for mental health disorders with treatment for physical illnesses.

An insurer is not obligated to cover all claims, however, and may in a given case deny that coverage exists for services that a doctor has deemed necessary or appropriate.  Two of the principal grounds for denial of coverage by a health insurer of claims for treatment for eating disorders are:

  • a “residential treatment center or facility” exclusion in the policy
  • a determination by the insurer that, under its clinical guidelines, a particular stay at a particular facility is not “medically necessary”.

An “exclusion” from coverage generally means that the health insurer is not obligated to cover a claim within the scope of that exclusion even if the services covered by the claim are medically necessary or appropriate.

A “medical necessity” coverage denial states that, while the services are of a type and nature that could be covered, they nevertheless are not covered in the particular case because the health insurer believes that the services are not medically necessary.

So, an insured person or her or his parent or guardian should obtain the most comprehensive description of benefits that is provided to the health plan’s members to determine what exclusions might apply under the policy.  Sometimes this is called a “Summary Plan Description” or a “plan booklet.”  You need more than the simple tri-fold chart or table that explains in bullet point format the types of coverages that exist and the deductibles and co-pay amounts that may apply.

Then, separately, the insured person or her or his parent or guardian should obtain any medical necessity guidelines that may have been issued by the health insurer concerning mental health or behavioral health matters.

I will post separately my observations (and link to third-party resources that I have found helpful) regarding each of these types of coverage denials. While the result to the patient and her or his supporters is the same (no coverage will be provided and it will be necessary to battle the insurer to gain coverage), the strategies for contesting the coverage denial will differ greatly between the two types of denials.  Therefore, it is important at the outset to have a clear understanding between these two types of denials.