The Claim Denial Appeal
Sarah was diagnosed with stage 3 breast cancer and underwent a mastectomy followed by reconstructive surgery. Her health insurance policy is an individual major medical plan with a $5,000 deductible and 20% coinsurance up to a $10,000 out-of-pocket maximum. The policy includes a pre-existing condition exclusion for 12 months, but Sarah had continuous creditable coverage for 18 months before enrolling. The insurer denied the reconstructive surgery claim, stating it was cosmetic and not medically necessary. The cost of the reconstructive surgery was $30,000. Sarah appealed the denial internally, but the insurer upheld the denial. She then requested an external review. The external reviewer is an independent organization. Sarah's oncologist and plastic surgeon provided documentation that the reconstruction was to restore symmetry and address physical and emotional effects of the mastectomy. The plan's criteria for reconstructive surgery after mastectomy include that it must be performed within 12 months of the mastectomy, and Sarah's surgery was 14 months after. The plan also requires that the reconstruction be on the same side as the mastectomy, which it was.
1. Was the insurer's denial justified? Explain the legal and policy considerations.
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Under the Women's Health and Cancer Rights Act (WHCRA) of 1998, group health plans and insurers that cover mastectomy must also cover reconstructive surgery, including surgery on the other breast to produce symmetry, prostheses, and treatment of complications. WHCRA does not specify a time limit for reconstruction, but the plan's 12-month limit may be a restriction. However, WHCRA applies to group plans and individual plans? Actually, WHCRA applies to group health plans and health insurance issuers offering group coverage. For individual plans, state laws may apply. But the ACA also requires coverage of reconstructive surgery as essential health benefits. The plan's 12-month limit may be a violation if it unduly restricts access. The external reviewer must determine if the plan's criteria are consistent with generally accepted medical practice. The denial based on cosmetic is likely unjustified because reconstruction after mastectomy is considered medically necessary. The timing issue: if the plan has a 12-month limit, it may be a permissible plan provision if disclosed. However, Sarah's surgery was 14 months after, so the plan might deny based on that. But WHCRA does not allow time limits? Actually, WHCRA requires coverage for reconstructive surgery 'in connection with' a mastectomy, and regulations do not impose a time limit. So the plan's 12-month limit may be unreasonable. The external review should consider WHCRA and state law. The insurer's denial may be overturned.
2. What steps should Sarah take next if the external review upholds the denial?
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If the external review upholds the denial, Sarah may have the right to sue the insurer under ERISA (if group plan) or state law for breach of contract. She can file a complaint with the state insurance department. She may also seek assistance from a patient advocate or attorney. She could also request that the insurer cover the surgery as an exception. If the plan is individual, she may be able to sue for bad faith. She should also consider whether the plan's time limit is a violation of WHCRA and file a complaint with the Department of Labor. She may also pursue coverage through a different plan if possible.