Are there any generally recognized standards utilized by the Insurance Department in determining whether and how an insurer should cover the treatment of a congenital anomaly of an insured dependent child?

2004 DFS Industry Guidancei:
There are no generally recognized standards that are utilized by the Department of Financial Services (formerly the NYS Department of Insurance and the NYS Department of Banking) concerning treatment for a congenital dental condition. However, insurance companies and health maintenance organizations are required to follow the procedures established in New York Insurance Law Article 49 (McKinney 2000) or New York Public Health Law Article 49 (McKinney 2002).

In 1972, minimum standards were established for the “form, content and sale” of health insurance policies.  While cosmetic plastic surgery did not have to be covered, following were deemed to be covered:

  • congenital anomalies of a covered dependent child,
  • reconstructive surgery because of a congenital disease or anomaly resulting in a functional defect, and
  • dental care or treatment necessary due to congenital disease or anomaly.

These were all specified as exceptions to what was not covered under cosmetic plastic surgery.ii

A regulatory change regarding congenital anomalies that was effective September 1, 1975, revised the regulationiii in order to strike a reasonable balance between allowing an insurer unfettered discretion to deny coverage for necessary dental care or treatment due to congenital disease or anomaly and obligating an insurer to cover each and every condition which can be identified as a congenital disease or anomaly.

The revision to the regulation uses the term “necessary.”  The inclusion of this term was intended to allow an insurer to provide coverage for only those services deemed medically necessary.

New York health insurance companies are compelled to only provide coverage for the types of services stated in individual contracts. New York claims that any regulation affecting the contract should be reasonably interpreted in such a fashion.

This is where New York’s regulation has failed patients and families and has created delays and denials in treatment.  Whether a particular service is appropriate is a question involving medical necessity. However, the question of whether a condition is congenital is not. Although carriers may provide coverage for the initial procedures, they resist coverage of the later stage procedures. They claim they are cosmetic and not medically necessary.

Denial or delay of these procedures – which by definition are reconstructive – can lead to long-term physical, functional, and psychological injuries.  Regulators need to hold health insurers accountable. Regulators must be clear that misconstruing medical treatment guidelines as an opportunity to label rehabilitative and reconstructive services as not medically necessary, experimental or investigational is unethical.

The recourse for patients and families?
Both the Insurance Department and the Health Department expect insurance companies and health maintenance organization to use generally accepted medical standards to determine the appropriateness of medical/surgical procedures.

However if the patient (or parents of the patient is a minor) believes that his or her insurance company or health maintenance organization is wrong in denying coverage for a congenital anomaly, the patient has no access to the insurer’s internal review process.

If an insurer denies coverage based on the “appropriateness of the treatment,” New York Insurance Law calls for a utilization review plan and opportunity for an external appeals process. Health care providers also have the right to an external appeal when health care services are denied.

How the appeal process works
After a patient receives a denial letter, they have up to 45 days to submit an appeal.  An independent reviewer has up to 30 days to process the appeal and the patient (or their parents if the patient is a minor) may incur fees to process the appeal.  Expedited appeals can be completed in 3 days but only under the circumstance of imminent or serious threat to life. The decision should be based on whether the insurance company and/or health maintenance organization acted reasonably—with both sound medical judgment and in the best interest of the patient.

While the appeal is proceeding, the patient is not receiving the treatment as scheduled and identified as necessary by his/her physician. The patient continues to suffer.

New York has recognized that coverage should be required for congenital anomalies – let’s not permit insurance companies to deny patients their rights.

  • Y. Comp. Codes R. & Regs. Tit, 11, § 52.16(c) (2002)
  • Y. Comp. Codes R. & Regs. Tit. 11, § 52.16
  • New York Insurance Law § 4904 (McKinney 2000) (insurers other than Health Maintenance Organizations) and New York Public Health Law § 4904 (McKinney 2002) (HMOs), and external review, New York Insurance Law § 4910 (McKinney 2000) and New York Public Health Law § 4910 (McKinney 2002).
  • New York Insurance Law Article 49 or New York Public Health Law Article 49. New York Insurance Law § 4900(j) (McKinney 2000) and New York Public Health Law § 4900(10) (McKinney 2002).