IMPACT
Volume III Issue 3
January/February 1998
Copyright 1998,
Neighborhood Legal Services, Inc.
Newsletter of the Assistive
Technology Advocay Project
A Project of Neighborhood Legal Services, Inc · 295 Main Street, Room 495
· Buffalo NY 14203
(716) 847-0650 · (716) 847-0227 FAX · (716) 847-1322TDD · NLS01@sprynet.com ·
http://www.nls.org
Supported by NYS Office of Advocate for Persons with Disabilities,TRAID
Project, a Project
Funded by The National Institute on Disability and Rehabilitation Research, U.S.
Department of Education.
Opinions expressed herein are not necessarily those of either TRAID or NIDRR
In this issue
PRIVATE INSURANCE CONTRACTS, PART II
Introduction
Is the AT device covered by the policy?
Is the AT Device Medically Necessary?
What if the Policy's Language is unclear?
Appeal Rights
Appeals Directly to Insurance Co.
Court Appeals
Filing a Complaint with the State Insurance Department.
The impact of ERISA
The Americans with Disabilities Act
Conclusion
special features
Administrative Hearings
AT and the Courts
New SSI Rates for 1998
PRIVATE INSURANCE CONTRACTS AND
ASSISTIVE TECHNOLOGY: PART II
In our November/December 1997 newsletter, we stated that to determine whether an individual is entitled to private insurance coverage for assistive technology (AT), one must address three issues:
1. Is the child or adult in question covered by the
insurance policy?
2. Is the item being sought one that is covered by the policy?
3. Is the item being sought medically necessary?
If the answer to each question is yes, the insurance policy will pay for the AT device, subject to any policy limits, co-payments or deductibles.
Our last newsletter focused on issue one. We explained who is covered by a private health insurance policy, how pre-existing conditions are now defined and applied since implementation of the Kennedy-Kassenbaum Law and the right to continuing coverage under COBRA after a job termination or layoff.
In this article we will
address issues two and three. First, under issue two, we will discuss special policy
provisions, such as a durable medical equipment provision, which determine what AT items
are covered under an insurance policy. Next, under issue three, we will discuss what
criteria must be met for the insurer (i.e., the insurance company or other entity
providing insurance) to determine that an AT device is medically necessary. We will then
discuss how one appeals a denial of AT by a private insurer. We will close with a limited
discussion of the applicability of the Americans with Disabilities Act to private
insurance companies.
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IS THE ASSISTIVE
TECHNOLOGY DEVICE
IN QUESTION COVERED BY THE POLICY?
Private health insurance policies are governed in New York by the New York Insurance Law and the Public Health Law. Indeed, it is common to see a clause in a health insurance policy stating: "this Contract shall be governed by the laws of the State of New York." If an issue is not covered by either the state Insurance Law or the Public Health law, and there is no relevant federal law, the issue will be governed by the common law of contracts.
It is difficult to generalize about the contents of health insurance policies because there are so many companies offering policies. Individual companies typically offer more than one kind of policy and those policies often vary in their terms depending upon the part of New York in which the policy is offered.
As we stated in the previous newsletter, analysis of who is covered and what is covered starts with reviewing the provisions of the insurance policy or contract. Make sure that you obtain the actual contract and not some summary or handbook which describes its provisions. We stress again that it is important to obtain copies of any amendments, riders and supplemental policies for which the individual or employer is paying.
In private health insurance policies, AT is commonly referred to as durable medical equipment (DME). DME is usually not available in what is commonly termed a "basic" plan, the least costly of group plans. DME is provided, in most cases, in what is labeled a "major medical" plan which is often an adjunct or a rider to a basic plan. Major medical riders often cover items such as hospital stays, diagnostic testing and DME. In addition to the DME clause, AT might be covered by a clause which addresses prosthetics, orthopedic appliances, medical supplies, or vision services and equipment. One should review the entire policy and all the riders in search of any language that can be relied upon to fund AT.
You also need to look for "exclusions," i.e., provisions that specifically mention items that are not covered. It is common for a policy to list various types of DME or other AT categories that the insurer will not cover. Examples of items which are commonly excluded from coverage are:
Even if a DME clause or a similar clause would appear to cover an item, the policy may specifically limit the funding that is available. Some policies contain provisions that place a dollar limit on what will be spent on a particular item. For example, one policy we reviewed had a $1,500 limit on DME coverage. It is also common for insurers to require a co-payment for the purchase of DME (one major insurer sets it at 20 percent while another at 50 percent). An insurer with a 50 percent co-payment requirement would pay $5,000 towards the purchase of a $10,000 power wheelchair while the insured or beneficiary would be responsible for payment of the remaining $5,000.
Each policy will contain its own definition of DME. Most often the definition is similar to the following:
1. is able to withstand use by more than one person;
2. is primarily and customarily used to serve a medical purpose;
3. is not useful in the absence of illness or injury.
Some policies also include a statement that the DME is for use in the home.
Any part of this
definition can give rise to disputes over what is covered. For example, many insurance
companies interpret the statement, "is able to withstand use by more than one
person," to exclude anything but standard equipment. Therefore, some insurers have
refused to fund customized wheelchairs by invoking that clause. They may limit payment to
the normal cost for a standard wheelchair, which is usually far less than the cost of the
customized wheelchair. That coupled with the co-payment requirement may make the
particular wheelchair or other piece of DME unaffordable. It is an unresolved question
whether that clause, or the restrictive interpretation of it, violates the
anti-discrimination clause of Section 2606 of the Insurance Law and/or the American with
Disabilities Act (see discussion p. 112).
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IS THE ASSISTIVE
TECHNOLOGY DEVICE
IN QUESTION MEDICALLY NECESSARY?
Like Medicaid and Medicare, private insurance policies will only pay for DME that is "medically necessary." New York requires that health insurance policies contain a definition of the term medical necessity. N.Y. Insurance Law §§ 3217-a(a)(1) and 4324(a)(1). How that term is defined is determined by the individual insurance contract. Most policies use language such as the following in defining medical necessity:
1..is consistent with the symptoms or diagnosis and treatment of
a condition, disease, ailment or injury;
2. is in accordance with standards of good medical practice;
3. is not for the insured's convenience.
Determinations of medical necessity are made by a utilization review agent for the insurer. Effective April 1, 1997, an insurer must appoint a medical director who is a licensed physician and who must oversee and supervise the utilization review process. N.Y. Insurance Law § 4902(a)(1). This process is the equivalent of the prior approval process we detailed in our article about Medicaid. See IMPACT (January 1996). Where the review performed is for a discrete category of health care, the utilization review agent may appoint a clinical director who is not a physician but is a licensed health care professional who typically manages that category of service.
The utilization review
agent must also develop written policies and procedures that govern all aspects of the
utilization review process. He or she must maintain and make available to insurance policy
beneficiaries and health care providers a written description of such procedures including
procedures to appeal an adverse determination. N.Y. Insurance Law § 4902(a)(2).
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WHAT IF THE POLICY'S LANGUAGE IS UNCLEAR?
Where the language in an insurance policy is clear, that language determines what is available under the policy. What if a particular provision is unclear or ambiguous?
The general rule is that insurance contracts must be liberally construed, with ambiguities in the policy language resolved in favor of the insured (i.e., the beneficiary). Westchester Resco Co., L.P. v. New England Reninsurance Corp., 818 F.2d 2 (2nd Cir. 1987); Government Empire Ins. Co. v. Kligler, 42 N.Y.2d 863, 397 N.Y.S.2d 777 (1977)(a decision from New York's Court of Appeals.
This general rule for
interpreting insurance contracts should be helpful to attorneys pursuing AT-related
appeals in court. Since insurance policy provisions governing DME and medical necessity
are often written in very general language, it is encouraging to know that those terms
will be interpreted in favor of the person seeking the item in question.
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There are two ways to
appeal an adverse determination by an insurer: through an insurance company's internal
appeal process; and through a court appeal. There is also a complaint process available
through the State Insurance Department.
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Appeals Directly to Insurance Company
As stated above, insurers are required by law to develop written policies through which an individual can appeal a denial. These appeal processes are most often referred to as a grievance procedure in health insurance policies. How one appeals an adverse decision is determined by the grievance procedure established in that individual's insurance policy.
It is important to determine both the method of filing an appeal and any time limits for doing so. Sometimes a telephone call to the provider initiates the appeal. Other policies may require that an appeal be in writing. We always recommend that a person file a written letter to appeal and follow up that letter with a phone call. The Insurance Law requires that appropriate personnel of the utilization review agent are reasonably accessible by toll-free telephone. N.Y. Insurance Law §§ 4902(a)(6)(i) and (ii).
Since there will be a time limit imposed for filing an appeal or grievance, it is important to find out what the time limit is and file any appeal letter within the time frame imposed. Since information about how to appeal is not always readily available, we suggest filing an appeal letter with the insurance company as soon as possible after an adverse decision is received.
In almost all cases we
recommend using the appeal or grievance procedure established in the insurance contract
before proceeding further. If an attorney or advocate is available to help with this
appeal we advise it. In our experience, a significant percentage of AT-related appeals can
be favorably resolved in this manner. During the past several years, we have successfully
resolved several cases involving private insurance funding of augmentative communication
devices and several others involving wheelchairs. One large insurer agreed to pay for a
power wheelchair with power tilt and space after we intervened, conceding that our
client's was the first such wheelchair they had approved. One former client obtained a
standing wheelchair after writing a very strong and well-reasoned appeal letter.
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The second option for appeal is a lawsuit in a court of competent jurisdiction. For most counties, that court is New York Supreme Court. This method of appeal is by far the most costly because of filing fees and attorney fees.
A growing number of Legal Services, Legal Aid and Protection and Advocacy offices are willing to handle AT-related appeals. Their services are free. We have also identified many private attorneys who will handle AT-related appeals, without charge, if their client is poor. The AT Advocacy Project may be able to assist individuals either directly or through referral to one of our cooperating attorneys throughout the state.
Private insurance appeals are generally filed under New York's common law of contracts. In specific cases, there may also be claims that arise under either the Insurance Law or the Public Health Law.
New York's usual statute of limitations for suing under a contract is six years. However, if the claim arises under a health insurance contract, the statute of limitations is three years. N.Y. Insurance Law § 3216(d)(1)(K). New York law also permits parties to a contract to agree on a shorter statute of limitations. One major insurer has a one year statute of limitations in its standard policy. It is critical to carefully read the contract provisions to learn what the statute of limitations is for any particular insurance policy.
If an individual pursues
an appeal or grievance through the insurance provider it is critical to know if that
grievance tolls or stops the running of the statute of limitations for filing a lawsuit.
When a lawsuit is likely, it is important to consult with an attorney who is familiar with
the appropriate law and the particular contract involved to ensure the statue of
limitations does not expire and to properly prepare the case for litigation.
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Filing a Complaint with
the State Insurance Department
An individual who is unhappy with an adverse determination by an insurer can also file a complaint with the New York Insurance Department. The toll free number for the Insurance Department is 1-800-342-3736. You can also contact them through their regional offices which are listed in the government section of your phone book.
An Insurance Department complaint can be filed with a letter to the agency or by using one of their complaint forms. You can obtain a complaint form through the Insurance Department or by calling the AT Advocacy Project at 716-847-0650.
The authority of the
Insurance Department is generally limited to an investigation of the complaint and some
attempt at mediation. There is no right to a hearing on the complaint and the Insurance
Department is not likely to order that an insurance company provide funding for a
particular AT device.
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The Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq., is a complicated set of federal laws which protects employee pensions by creating vesting rights and placing controls over the administration of pension funds. ERISA also applies to certain self-insured employee benefit health insurance plans. Although the complications of ERISA are well beyond the scope of this article, we will make some very general comments about it.
Attorneys who are
contemplating a court appeal involving health insurance need to be aware of ERISA. When it
applies, the defendant has a right to have the case removed from state court into federal
court. Once in federal court, the ability to pursue state-related claims becomes very
limited and may change the complexion of one's case. Anyone who wishes to discuss the
impact of ERISA on a potential or pending lawsuit involving health insurance is encouraged
to call the AT Advocacy Project.
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THE AMERICANS WITH DISABILITIES ACT
The provisions of the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12100 et seq., took effect in 1992. The ADA prohibits discrimination, on the basis of disability, in a wide range of private and governmental activities. Titles I and III of the ADA apply to private health insurance.
Insurers routinely limit the availability of AT through their policies. This is done through outright exclusion, though reimbursement limits and through high co-payment requirements. Many insurance policies will pay for expensive surgery, doctor visits, medication and physical therapy to allow a person to recover from a knee injury and regain mobility. The same policy will often limit wheelchair coverage to the standard wheelchair costing under $500 even though a more expensive light weight or power wheelchair is required for independent mobility.
Similarly, many policies will cover a course of surgery and after care to remove a cancerous growth from the vocal cords in order to restore speech. The same policies often exclude coverage for an augmentative communication device which accomplishes the same thing -- providing the ability to speak -- through electronic means.
If the policy in question does not specifically exclude coverage of the item in question, the best argument will generally be that the contract should be interpreted liberally to include the power wheelchair, augmentative communication device or other AT device. (See discussion above regarding the interpretation of contracts.) If the item in question is specifically excluded or excluded under the interpretation of the contract, this raises the question of whether such denials violate the ADA's provisions.
Title I of the ADA applies to employment and would apply to most health insurance policies provided as a term of employment. Title III of the ADA applies to public accommodations including insurance companies. Although it still may be an open question, we believe the proper view of Title III is that it applies to both the physical offices of the company and to the insurance policy itself. The question then arises as to whether an insurance company can limit its coverage to individuals based upon their illness or disability.
In the examples above, does the insurance company violate the ADA when it pays for surgical intervention to restore "normal" mobility or speech, but refuses to pay for the mechanical device that can accomplish the same thing? What if the AT device is less costly than the surgery and after care? What if the policy provided funding for power wheelchairs for those who cannot walk, but excluded augmentative communication devices for persons who cannot speak?
These are just some of
the many questions which the ADA leaves open for interpretation. They are questions that
have not been specifically addressed by the courts but probably will be during the next
several years. In a future issue of IMPACT we will discuss in more detail the ADA
and how its provisions affect private insurance. For now, attorneys and advocates should
consider the ADA as a potential advocacy tool for obtaining AT through private insurance.
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Those persons who are in need of AT and receive health insurance coverage should familiarize themselves with the services available through their policy. If an employer offers its employees several options for insurance coverage, each should be investigated to determine which services are available, what kinds of AT can be provided, what co-payments are required, what kind of appeal mechanism the policy contains and whether a particular policy meets all the health needs of an individual or family.
Because so many New
Yorkers are covered by health insurance policies, private insurance is one of the most
important funding sources for persons seeking AT. Despite the widespread coverage,
however, very few attorneys and advocates have been involved in appeals challenging the
decisions of insurance companies. We hope that our two-part article on insurance will
serve to encourage more individuals to look to insurance as a source of funding for AT and
encourage more attorneys/advocates to consider working on insurance-related appeals.
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Arizona' Medicaid Agency to Pay for Cochlear Implant
Matter of Anonymous (Arizona Health Care Cost Containment System, on petition for rehearing, Sept. 1997): The state's Medicaid program denied coverage of a cochlear implant, a surgical implant to restore hearing, contending that the item was a hearing aid which is specifically not covered under the state's Medicaid program. The Arizona Center for Disability Law lost a fair hearing on the issue. They then filed a petition for rehearing, a procedure available in only some states (not in New York). On rehearing, the state director approved funding noting that the Medicaid decision maker conceded that the cochlear implant was needed and that the sole basis for denial was a finding that the item was precluded as a hearing aid. Since the state director found that the cochlear implant is not a hearing aid, he reversed the hearing decision and awarded funding.
Call Vivian at 716-0847-0655 ext. 271 if you would like a copy of
the decision or the brief filed by the Arizona Center for Disability Law.
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MINNESOTA'S STATE APPELLATE COURT APPROVES
MEDICAID FUNDING FOR HiRIDER WHEELCHAIR
Although the hearing decisions and court decisions of other states are not binding on New York's Medicaid agencies or its courts, a well-reasoned decision from another state will sometimes persuade the court or other decision maker. Reference to an out-of-state decision can be particularly effective when there are no more than six or seven relevant court decisions from New York as is true for Medicaid funding of AT. Therefore, we will from time to time report on decisions from other states.
In Forest Johnson v. Minnesota Dept. Of Human Services, 565 N.W. 2d 453 (Minn. App. June 1997), attorney Steve Elliott of the Minnesota Protection and Advocacy Program successfully represented this 39 year old man with multiple sclerosis. The state's Medicaid program had denied funding, claiming that the HiRider wheelchair &emdash; which combines a power wheelchair with a passive standing device - was neither medically necessary nor the least costly alternative to meet his needs. Despite his severe disability, Mr. Johnson was capable of moving between sitting and standing, using the HiRider, by touching two buttons. The evidence in the case showed that during a three-month trial of the HiRider there was noticeable improvement in balance, muscle tone, digestion and diaphragm function. The evidence also showed that Mr. Johnson could not safely and effectively use a less expensive, passive standing aid to accomplish the same thing. Accordingly, the court found that the HiRider was medically necessary and the least costly alternative and affirmed the decision of the lower court.
For copies of the court's decision or Steve's brief, contact
Vivian at 716-847-0655 ext. 271.
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The listed rates include the federal benefit
rate and
New York's state supplement
Status Individual Couple
Living Alone: $580.00 $843.50
Living with Others: 517.00 786.00
Living in Household of Another:
329.24
539.00
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Welcome to Neighborhood Legal Services' data bank!
Do you have decisions of
interest relating to assistive technology in the following areas? Medicaid, Medicare,
Vocational Rehab, VA, Special Education, Physically Handicapped Children's Program,
Private Insurance, etc.
Other advocates can benefit from your experience. If you have
fair hearing decisions or are involved in or have completed litigation in these areas, we
want to know about it.
Please send information to:
FAX: (716) 847-0226
Attn.: Marge Gustas
Handsnet:
HN0627
Neighborhood Legal Services e-mail:
nls01@sprynet.com
Ellicott Square Building Web
Site: www.nls.org
295 Main Street Room 495
Buffalo, NY 14203
(716) 847-0650
(716) 847-1322 TDD
In our Upcoming Issues...
- Report Writing: How to Satisfy the AT Funding Source
- AT Related Resources on the Internet