When clinicians or consumers ask the American Psychiatric Association's managed care help line what to do when they believe a health plan's denial of coverage is wrong, they are usually given three words of advice: "appeal, appeal, appeal!" (personal communication, Sanders K, 2002).
Appeals generally must go first to the health plan itself. In two large health maintenance organizations in California, 36 to 70 percent of the appeals led to overturning of the initial coverage denial (1). With increasing frequency, the 30 to 64 percent of appeals that fail have a further alternative—independent external review.
Independent external review of denials of health plan coverage is an idea whose time has come. As of 2002, a total of 42 states and the District of Columbia had mandated external review as a form of consumer protection (2). All but eight of these external review programs started in the past five years (3). In 2001 the enterprises that had sprung up to provide independent review formed a trade association—the National Association of Independent Review Organizations (4). Advocacy groups ranging from the American Association of Health Plans (5) to the National Mental Health Association (6) champion the concept of independent review.
All health systems—whether U.S. managed care, the Canadian single-payer system, or the British National Health Service—must find ways to set limits that are clinically informed, ethically justifiable, and politically acceptable. To achieve this kind of accountability—which we call "accountability for reasonableness"—the basis for policies on coverage must be publicly available, policy rationales must be relevant to the needs of both individual consumers and the population being served, and there must be opportunity for appeal, revision, and improvement of limit-setting policies and decisions (7).
Independent external review is not simply the latest health-system bureaucratic fad. It is, potentially, a key component in the quest for fair and accountable health care limits. In a larger sense it contributes to the democratic process itself by enabling stakeholders to understand how an important social good is distributed and to influence the distributive process.
In this column, the sixth in a series on strengthening the consumer voice in managed care (8,9,10,11,12) and the first report from a larger study of the impact of external review on the quality of behavioral health services nationally, we present initial lessons from Massachusetts and suggest steps to help the process of external review live up to its promise.
The Massachusetts Managed Care Reform Bill, signed into law on July 21, 2000, created an office of patient protection within the Massachusetts Department of Public Health (13) and established the right of insured persons who receive a final adverse medical-necessity determination from their insurer to request binding independent external review (14). Between January 1, 2001, and September 30, 2002, the office of patient protection sent 126 mental health appeals for external review. Close study of 30 reviews showed that the reviewers implicitly identified three highly practical areas in which managed mental health care in Massachusetts could be improved.
Treatment plans must be feasible
The biopsychosocial perspective asks clinical formulations and treatment plans to include biological, psychological, and social considerations. In some of the appeals, reviewers found the insurer's coverage recommendation consistent with the first two domains but not the third. In these cases, stable medications ("bio") and stable symptoms ("psycho") led the insurer to conclude that a higher level of care—usually inpatient care—was not needed. However, the reviewers determined that the lower intensity of care was not feasible ("social") and overturned the insurers' denials of coverage on that basis.
In one case the insurer concluded that acute inpatient treatment was not "medically necessary" and approved care at the partial hospital level. The external reviewer reversed the insurer's coverage denial because—in his view—limitations in the family's ability to provide the needed support at home and the fact that the nearest partial hospital program was two hours away made the plan impractical. In another situation, the external reviewer agreed with the insurer that a man with chronic impairments had reached a stable plateau and no longer required inpatient care. However, the reviewer approved one additional day of acute hospitalization to cover the day on which the staff met with the family and arranged for a discharge plan. The review chided the hospital by commenting that "discharge applications to a residential treatment center and day programs could have started earlier in the patient's stay, given his chronic history of poor functioning."
Hospitals are for more than crisis management
Many observers of the mental health system believe that the pendulum has swung too far with regard to use of the hospital. In an earlier era, living in a hospital sometimes replaced living in the ordinary world (15). Today, hospital care is sometimes limited to persons who are acutely and severely psychotic, suicidal, or homicidal. In some of the appeals, reviewers applied a wider range of indications in deciding whether the acute level of care was medically necessary.
In one case, a reviewer overturned denial of coverage for continued inpatient care for an elderly patient who had been admitted for electroconvulsive treatment of severe recurrent depression. The reviewer noted that although the patient did not have suicidal or homicidal ideation, the record documented continued depression and anxiety. A urinary tract infection was present, and the reviewer commented that an infection in an elderly person, even if not severe, can often complicate the course of treatment in a cognitively compromised person. In the reviewer's opinion, these facts, combined with very impaired mental status, indicated a need for full inpatient care.
Networks must provide adequate choice
Limited networks are common in managed care. Many appeals contested denial of coverage for treatment with an out-of-network provider. In one case, a person for whom English was not the first language had seen two in-network therapists who spoke her language. The patient felt unable to work with these therapists in psychotherapy and requested coverage with a clinician outside the network whom she felt she could be comfortable with. The health plan denied coverage on the grounds that the patient had been offered options within the network. However, the reviewer concluded that two choices were not enough. Because the therapeutic relationship is so central to successful psychotherapy, the reviewer overturned the denial.
The national push for independent external review is fueled largely by public distrust of managed care. Independent external review is generally conceptualized as "consumer protection." However, it is more promising to consider external review as an opportunity to promote accountability for reasonableness and quality improvement as well.
The potential for improving accountability and quality starts with the reviews themselves. Some of the reviews we studied were essentially "verdicts." Verdicts rule on the appeal but present little or no rationale for the finding. At the other extreme, some reviews were written as "educative consultations." Educative consultations present the insurer's clinical thinking, its own interpretation of the data, and the basis of that interpretation in guidelines, research, or clinical experience.
Verdicts resolve appeals but contribute nothing to system learning. Reviews that provide educative consultation, however, can be used to foster deliberation, debate, learning, and improvement within the system. The 42 states that provide independent external review can promote accountability and quality by requiring reviews to articulate clear rationales in the manner of educative consultations.
Given our national reluctance to acknowledge the ethical imperative to set health care limits, it is not surprising that the reviews we studied avoided direct discussion of fiduciary responsibilities (16,17). Cost was most clearly the elephant in the room in appeals of coverage denials for higher—and more costly—levels of care.
Massachusetts does not ask reviewers to consider costs but rather to determine "the most appropriate available supply or level of service for the insured…considering potential benefits and harms to the individual" (14). In one case the reviewer upheld an insurer's denial of coverage for inpatient care because he concluded that further care at that level was clinically contraindicated. In other cases, however, reviewers upheld denials of coverage when they believed that the desired clinical outcomes could be achieved through partial hospital or outpatient treatment, with no suggestion of any contraindication to further inpatient care.
If a patient prefers inpatient care and there is no reason to believe that inpatient treatment would be less effective than the alternatives, cost containment is the only basis for denying coverage. Containing costs without significant disadvantage to individuals in order to provide greater benefits to a covered population is a relevant rationale for coverage policy (7). But if independent external review evades the issue of managing costs in a clinically and ethically informed manner, the process will not foster public engagement with this crucial task.
By creating the framework of independent external review of denials of insurance coverage, the states have launched a promising experiment. If the experiment is managed wisely, independent external review will promote a more accountable and effective mental health system.
The authors thank Barbara Leadholm, M.S.W., M.B.A., Dan Rome, M.D., Karen Sanders, M.S., and Tim White, J.D.
Dr. Sabin who is editor of this column, is clinical professor of psychiatry a Harvard Medical School and director of the ethics program at Harvard Pilgrim Health Care in Boston. Ms. Granoff is director of the office of patient protection in the Massachusetts Department of Public Health in Boston. Dr. Daniels is professor of ethics and population health in the department of population and international health at the Harvard School of Public Health in Boston. Send correspondence to Dr. Sabin at the Department of Ambulatory Care and Prevention, 126 Brookline Avenue, Sixth Floor, Boston, Massachusetts 02215 (e-mail, email@example.com).