Q&A: Determining financial responsibility

Q: How do we determine financial responsibility for denied services?

A: Managed care denials are complicated by the division of financial responsibility. In some cases, the service that was denied is the financial responsibility of the health plan, and in others, it’s the responsibility of the medical group. One of the largest issues contributing to managed care denials is the failure of the provider/facility to provide timely notification to the plan or medical group of an admission. Establishing a process for ensuring timely notification will significantly reduce denials or delays in payment. Often, payers or medical groups will not respond to the provider’s initial notification in a timely fashion which then denies post-stabilization care.

In California, guidelines for timely notification and payer response are outlined in the California Health and Safety Codes, Article 5, otherwise known as the Knox-Keene Healthcare Service Plan Act of 1975. Section 1371.36(a) of the Act states the following:

A health care service plan shall not deny payment of a claim on the basis that the plan, medical group, independent practice association, or other contracting entity did not provide authorization for health care services that were provided in a licensed acute care hospital and that were related to services that were previously authorized, if all of the following Article 5, §§1367— 1374.195 Knox-Keene Act 2016 277 conditions are met: (1) It was medically necessary to provide the services at the time. (2) The services were provided after the plan’s normal business hours. (3) The plan does not maintain a system that provides for the availability of a plan representative or an alternative means of contact through an electronic system, including voicemail or electronic mail, whereby the plan can respond to a request for authorization within 30 minutes of the time that a request was made. (b) This section shall not apply to investigational or experimental therapies, or other non-covered services.

Section § 1371.4(d) states the following:

If there is a disagreement between the health care service plan and the provider regarding the need for necessary medical care, following stabilization of the enrollee, the plan shall assume responsibility for the care of the patient either by having medical personnel contracting with the plan personally take over the care of the patient within a reasonable amount of time after the disagreement, or by having another general acute care hospital under contract with the plan agree to accept the transfer of the patient as provided in Section 1317.2, Section 1317.2a, or other pertinent statute. However, this requirement shall not apply to necessary medical care provided in hospitals outside the service area of the health care service plan. If the health care
service plan fails to satisfy the requirements of this subdivision, further necessary care shall be deemed to have been authorized by the plan. Payment for this care may not be denied.

Although the Act is specific to the state of California, there may be similar statutes in other states. Research and understand your own state regulations, and do not accept a payer’s or medical group’s denial in blind faith.