What Can I Do If My HMO Refuses to Cover a Service that My Doctor Wants Me to Have?
People who have health insurance through a managed care plan in New Jersey (such as an HMO) have the right to appeal if their plan decides to deny, terminate, or limit their ability to get necessary care. All insurance plans list services in their member handbooks that they will not cover. One example of a service that is often not covered by an insurer is any procedure that is provided for only cosmetic reasons. But the most common reason for an HMO to deny coverage is usually because the HMO decides that a covered service is not medically necessary, even though the enrollee’s health care provider recommends it. Such HMO decisions can be appealed, and the process is described below.
Each enrollee in a managed care plan in New Jersey also has the right to file a complaint with their plan if they are dissatisfied with the quality of their care, their ability to see a provider or get prompt treatment, and for most coverage-related issues. With the enrollee’s written consent, the provider may file the complaint. The plan must respond in writing within 30 days of receiving the complaint. (Note: A Dental Plan Organization must respond to a complaint within 15 days.) The state’s Office of Managed Care, part of the NJ Department of Banking and Insurance, may address the complaint if the enrollee is not satisfied with the HMO’s solution. See Managed Care Complaint (from the NJ Department of Banking and Insurance) for more information.
How to File a Managed Care Appeal
New Jersey law requires licensed HMOs and other managed care companies in the state to provide their enrollees with a two-step internal appeals process and information about the third-step external appeals process, which is binding on the managed care company. However, some insurers are self-funded or self-insured, and their claims and appeals processes are regulated by federal law and not subject to state law.
If you are enrolled in a self-funded insurance plan and want to appeal a decision affecting your care, you can read a good summary of the appeals section of the federal law (ERISA) that regulates self-funded plans at Families USA, a national health care advocacy organization. You may also contact your nearest Legal Services office or call LSNJ-LAW™, Legal Services of New Jersey’s statewide, toll-free legal hotline, at 1-888-LSNJ-LAW (1-888-576-5529) to see if you are eligible for free legal assistance. Hotline hours are Monday through Friday, 8:00 a.m. to 5:30 p.m. If you are not eligible for assistance from Legal Services, the hotline will refer you to other possible resources.
Please also note that both Medicaid and Medicare managed care plans (HMOs, etc.) have additional protections in their appeals processes that are required by federal law. For more information about Medicaid and Medicare appeals, please see the Medicaid and Medicare topics.
New Jersey law provides an appeal process for managed care enrollees who are denied or delayed care. The appeal process has three levels or stages. Using HMO as the example of a managed care organization, the first two levels of appeal are internal appeals, decided by the HMO’s staff. The third level of appeal is decided by an independent decision-making organization that works for the state and not the HMO.
Please note: Medicaid and NJ FamilyCare enrollees in a NJ Medicaid HMO may also use this three-level appeal process and/or request a Fair Hearing or a Grievance. See the Medicaid and NJ FamilyCare topics at for important details.
Level One: The enrollee must appeal within 180 days of receiving an unfavorable HMO decision about his or her medical care. (Medicaid and NJ FamilyCare enrollees have only 20 days to seek a Fair Hearing or a Grievance.) An HMO doctor who is not your treating physician will make the decision and notify you in writing, usually within five business days. If the appeal concerns emergency or urgent care, the HMO must respond within 72 hours for both Level One and Level Two decisions.
Level Two: The enrollee must appeal within 180 days of receiving a Level One unfavorable decision. The HMO has 20 days to respond unless an extension is approved by the NJ Department of Banking and Insurance (72 hours for emergencies and urgent care situations). The Level Two decision will be made by a panel of HMO medical staff who have not been involved with the case but who have expertise with the medical care at issue.
Level Three (Independent Health Care Appeals Program): The enrollee or his or her health care provider must submit a form with accompanying documentation to the state to request this third level of the appeal process within 60 days of receiving a Level Two unfavorable decision. See How to File a Utilization Management Appeal (from the NJ Department of Banking and Insurance) for more information. There is a filing fee of $25, which can be reduced to $2 for low-income enrollees.
This level of the appeal is decided by an Independent Utilization Review Organization (IURO) which is not connected with the HMO. If the HMO has not responded on time to the enrollee’s appeals, the enrollee may request to skip Level One or Level Two and have a Level Three appeal. The IURO will respond in writing within five days (or sooner if the case is urgent) whether the appeal has been accepted for its full review and decision. A Level Three decision, which upholds, reverses, or modifies the HMO’s decision, must be made within 30 business days. The IURO’s decisions are binding on the HMO, and the HMO must comply.
What Can I Do if I Lose the Level Three Appeal?
New Jersey’s Health Care Carrier Accountability Act gives managed care enrollees the right to sue their insurer for the denial or limitation of their health care. However, the Act requires enrollees to first complete the three levels of appeal that are described above unless “serious or significant harm to the covered person has occurred or will imminently occur.”
If you decide to bring an action in court against your insurer, you should seek legal counsel. You may contact your nearest Legal Services office or call LSNJ-LAW™, Legal Services of New Jersey’s statewide, toll-free legal hotline, at 1-888-LSNJ-LAW (1-888-576-5529) to see if you are eligible for free legal assistance. Hotline hours are Monday through Friday, 8:00 a.m. to 5:30 p.m. If you are not eligible for assistance from Legal Services, the hotline will refer you to other possible resources.
This information last reviewed 10/26/11