Idaho, Illinois allow external review of insurance denials

New laws ensure independent review when claims are denied on grounds of medical necessity or because treatment is "experimental" or "investigational."

By Emily Berry — Posted Jan. 25, 2010

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New laws in two states, Idaho and Illinois, will give patients the right to an independent review of health insurance benefit denials.

Only five states now have no laws mandating external review of denials: Mississippi, Nebraska, North Dakota, South Dakota and Wyoming.

Idaho's new law, which went into effect Jan. 1, allows an insured person to appeal the denial of payment for a treatment on the grounds that it is either medically unnecessary or investigational.

The member may appeal to an accredited independent review organization after exhausting an insurer's internal appeal process.

The insurer must notify the person of his or her right to appeal, and the person may appeal any time within four months of the final denial from the company's internal grievance process. The law requires that the review be completed within 42 days under a standard review or 72 hours if the person's treatment is urgently needed and he or she qualifies for an expedited review.

The independent review board is required to take into consideration the person's medical record, recommendations and consulting reports from physicians and other health care professionals, appropriate practice guidelines, and other medical and scientific evidence.

Idaho State Rep. Max Black, a retired insurance agency owner from Boise, is chair of the House Business Committee, which sponsored the bill. He said the new law was based on legislation drafted and presented to the committee by both the state's health plans and its insurance department, who worked in cooperation to develop new rules that both sides could live with.

"I don't think there was a single person who testified against it," Black said.

Stewart Johnson, spokesman for Blue Cross of Idaho, the state's largest private insurer, said the company "fully supports the external review program."

Illinois' new law takes effect July 1. Claims denied on grounds of medical necessity, appropriateness, care setting, level of care or effectiveness will be eligible for external review. If payment for a treatment is denied on grounds that it is experimental, the person's physician must certify that the treatment is medically necessary.

The law requires that the member exhaust the internal grievance process unless waiting to do so would "increase the risk to a person's health or significantly reduce the treatment's effectiveness."

The law requires the review to be completed within 20 days after the request for review is received, or within 120 hours in the case of an expedited review.

Illinois Insurance Director Michael McRaith called the new rules a "landmark improvement" in the state's consumer protections. BlueCross BlueShield of Illinois also said it supported the law.

Two other recently adopted laws in Illinois require standardized health insurance applications and a new requirement that insurers file annual statements detailing their spending. McRaith recently announced he would require more detailed documentation from insurers as part of his department's review of policy rescissions.

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