August 03, 2020


 External Review

As part of the 2010 healthcare reform, after the internal appeal is denied (and possibly re-denied as a second level internal appeal), you can then request an external review in which the claim goes before independent reviewer. If the insurance plan is fully funded, this is done through the state insurance department. If the plan is self-funded, it's through ERISA. The practice or facility is also subject to all the external review guidelines that the insured person encounters so providers need to be familiar with the external review protocol in the insured person section of this page as well as the steps immediately below:
Maintain a Follow-up Log  In case a health insurance appeal is denied, there is a master health insurer follow-up log that identifies each claim submitted and mispaid and also contains the health insurer’s reason for partially paying, delaying or denying a claim on first submission
The health insurer follow-up log should include:
  • Health insurer name
  • Rationale for originally partially paying, delaying or denying a claim
  • Dates of appeal attempts
  • Health insurer staff contact(s)
  • Outcome of collection efforts (such as fully or partially overturned)
The number of claims health insurers deny can be reduced by tracking routinely denied claims. This is especially true when health insurers deny claims as a result of incomplete claims submissions or insufficient supporting documentation. Tracking the reasons for health insurer claims denials definitely improves the claims management revenue cycle. To further achieve it:
Staff Follow-Up Denied claims should not be automatically written off – either by staff or the practice management system. Some claim denials are specifically annotated on the EOB (electronically or on paper) and some are line items with a zero payment and little other information.  Staff should be adequately trained on payment posting to make sure that denied claims are not being written off in error as a contractual adjustment.  The practice management system should have the ability to create electronic work files so the staff can organize and prioritize their work in a paperless environment.

Different types of denials require the right expertise to effectively get the claim paid. Consider all of the practice staff and not just the billing team as individuals who can rework a denied claim.  For example, certified coders could review all claims denied as a result of a coding issue.  They can evaluate whether the claim just needs to be corrected and resubmitted or if additional documentation is required from the patient’s medical records.  
Similarly, medical record staff or front desk staff can research referring physician names and correct denied claims where they were denied due to no referring physician.  With the efficient functionality of electronic work files, we can assign work files to different staff throughout our practices and monitor their progress day to day.
Since payers have slightly different appeal processes even with the advent of health care reform, staff can become internal experts on certain payers.  Assigning denials by the reason created can often be effective but for some types of payers it is best to have one person handle all of their claim denials. That one staff member will be knowledgeable about that payer’s appeal deadlines, what forms to utilize and how to submit appeals. 
Payer Appeal Protocols Insurance companies have unique appeal processes.  Someone in the practice needs to compile the appeal processes for the major payers into one reference document available to all staff.  These processes might include all or some of the following:
  • Submit a corrected claim
  • Appeal via the website
  • Appeal via a telephone call
  • Appeal via fax
  • Appeal via letter

Claims Processing Meetings  Claims management and audit team should hold weekly, monthly or quarterly meetings to discuss the reasons that health insurers have inappropriately denied, delayed or partially paid claims. When this information is used as an educational tool, the number of preventable claim-submission errors is reduced. This information can also help determine the appropriate action to resolve future errors. For instance, in the health insurer follow-up log, the practice’s claims management and audit team can reference how they were able to have the original underpayment or denial overturned to prevent the same issue from reoccurring.
The claims processing and review meetings can also help the practice Identifying common problems with claims payment that are a result of inaccurate or insufficient data. (For example, a health insurer might begin to use more stringent claims edits and downcode evaluation and management codes based on the ICD-9 submitted. Determine ICD-9 codes with greater specificity and educate staff and physicians on the value of using these more specific codes.)
They may also achieve a number of other valuable goals such as Identifying new problems with a particular health insurer that require more timely eligibility and benefits validation prior to procedures and services being performed, and identifying new problems with a particular health insurer that require the practice to change the way it collects co-payments or treat patient responsibility. 
External review is your chance to get an outside-or independent-look at your managed care plan's decision to deny your claim. It varies somewhat from state to state, but, in general, for fully-funded health plans, it goes through the state bureau of insurance. For self-funded health plans, you may request to your third party plan administrator (TPA) that your case be sent out for external review by an independent review organization (IRO).  How to tell? If your policy document is called a "certificate of coverage," it's a fully-funded plan; if instead you get a "summary plan description," it's a self-funded plan. More specifically, for:
Fully Funded Plans
Limited Issues - Your claim has to have been denied for: 
  • medical necessity  
  • pre-existing condition;
  • as an experimental or investigational service
That means that basically the dispute must involve a procedure, treatment, or prescription drug that you and your doctor believe is essential for your health, but your health plan disagrees. For example, your doctor believes that a new prescription drug is essential to treat your asthma, but your insurance plan's position is that the drug is experimental and hasn't been shown to help asthma patients. For the most part, you cannot obtain an external review of a coverage issue (like whether your fertility treatment falls within your plan's definition of covered procedures).
When You Request an External Review  You or your authorized representative may be dissatisfied with the outcome of a Level Two Appeal. The request for external review must be made within 12 months of the date you have received the final adverse decision of the Level Two Appeal panel.  
You may request by writing to the State Bureau of Insurance. You may also call the telephone number on the back of your health plan ID card. You are not required to pay a filing fee when requesting external review.  
How Decisions Are Made  The Bureau of Insurance will oversee the external review process and will contract with and select an IRO, The insurer pays the cost of the external review, but the insured is responsible for the cost of any outside representation. In making a decision, the IRO considers the appropriateness of the requested covered service based on:  
  • All relevant clinical information relating to the member's physical and mental condition;
  • Any concerns expressed by the member concerning his or her health status
  • All relevant clinical standards and guidelines, including those standards and guidelines relied upon by the insurer or their utilization review department.
The Insured Person May:
  • Submit and obtain any evidence relating to the adverse health care treatment decision under review
  • Attend the external review 
  • Ask questions of any representative of the insurer present at the external review. 
  • Use outside assistance during the review process at the member's own expense 
  • The external review decision is made in writing and must be based on the evidence presented by the insurer and the member or the member's representative. 
When External Review Decisions Are Made The Independent Review Organization is required to render a written decision within 30 days. However, an external review decision must be made as expeditiously as a member's medical condition requires. For instance, It must be made no more than 72 hours after receipt of the completed request for external review if:  
  • The 30-day time frame described above would seriously jeopardize the life or health of the member; or 
  • The 30-day time frame described above would jeopardize the member's ability to regain maximum function.  
The external review decision is binding. The member or the member's authorized representative may not file a request for a subsequent external review involving the same adverse health care treatment decision.  If the independent external review organization overturns the insurer's denial, they must will arrange for the processing of the denied claim(s) within 30 days of our receipt of all documentation necessary to process the claim(s).  
Self-insured Plans
In a self-insured plan, the employer generally assumes most or all of the cost of health insurance for their employees and pays for each claim as it is incurred instead of paying a premium to an insurer. For self-insured ERISA plans, a federal external review process applies, although plans may voluntarily comply with a state external review process, if available.
The external review will be handled by an accredited independent review organization (IRO) that is assigned by the plan. Accreditation of IROs is the responsibility of URAC, a nonprofit organization promoting healthcare quality by accrediting healthcare organizations.
  • The plan must contract with at least three IROs for these assignments, and must rotate claim assignments or use other unbiased methods for selection.
  • Claimants must be permitted to file external review requests within four months after the date they receive notice of an adverse benefit determination or final internal adverse benefit determination.  
  • The IRO must use legal experts, where appropriate, to make coverage determinations.
  • The IRO must provide timely written notice to the claimant of a request’s eligibility and acceptance for external review, and must inform the claimant that he may submit additional information within 10 business days following receipt of the notice.
  • The plan must submit documents and information to the IRO within five business days after the assignment of the IRO. Failure to do so may automatically reverse the decision reached in the internal review process.
  • The IRO’s decision notice must contain relevant information regarding the claim and the basis for the IRO’s decision,  
 Related Resources: 
1.  "Appealing insurance denials", (2007)
2.  "External Review Appeals", Community Health Advocates Q & A, (2010)

External Review Basics courtesy of the California Office of Patient Advocate and the Department of Managed Health Care. The goal is to explain to consumers California's health care policies and helpful services that are available and to make complex health insurance regulations and policies easier to understand.

Call Our Free 24/7