The Problem of Insurance Company Physicians Blocking Medical Care

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Synopsis: What is really happening behind the scenes at insurance companies to block patients from more expensive (and sometimes more effective) medical treatments? This article discusses the need for transparency and reform of the involvement of “hired gun” physicians in routine denials of medical coverage.

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BY LEN LANTZ, MD / 11.30.22; No. 62 / 8 min read

Disclaimer: Yes, I am a physician, but I’m not your doctor, and this article does not create a doctor-patient relationship. This article is for educational purposes and should not be seen as medical advice. You should consult with your physician before you rely on this information. This post might also contain affiliate links. Please click this LINK for the full disclaimer.

Imagine the following scenario

Your treating physician has to contact your health insurance company because it’s denying or blocking their treatment recommendation for you. The insurance company might require your doctor to send more records, write more letters, and fill out more forms. You need your doctor to fight for you because of something really important, such as:

• You need access to an expensive brand-name medication

• Your child needs another day in the hospital

• You need approval for a medical procedure

Eventually, your doctor needs to do a “doc-to-doc” call with a physician who works for the insurance company, either as an employee or under a contract with the company (a.k.a the “hired gun”). The insurance company doctor gets paid hundreds of dollars to perform the call but your doctor receives no compensation for their time. The insurance company requires your doctor to block their schedule at three separate times so that this insurance company doctor can call your doctor randomly at one of those times. When the insurance doctor finally calls, the conversation might go something like this:

Dr. Good (your doctor): Hi, I need to get ____________ [something you desperately need in your medical care] approved.

Hired Gun, MD (works for the insurance company): I see. Well, what can you tell me about this case?

Dr. Good (confused): Well, I sent you everything that was required as part of the appeals process. I even wrote a summary letter to save you time and it includes all of the details unique to my patient, the rationale for what is needed medically, the harm that will come to my patient if you do not approve it, and that your company will actually save money over the course of their care if they receive this treatment, which is the correct treatment. Didn’t you read my letter and all the records we sent over?

Hired Gun, MD (did not read any records): Just go ahead and tell me anyway.

Dr. Good: [Sums up the case and then says] So, can you approve this treatment?

Hired Gun, MD (planned to decline approval before the call started): It’s not clear to me that your patient meets the medical necessity criteria of the insurance company. I have to follow the written contract of the insurance plan to approve the patient’s care.

Dr. Good: Wait! I just explained to you exactly – with data – how my patient does meet the medical necessity criteria of your company.

Hired Gun, MD (prepares to claim that the sky is green, not blue): This patient does not need the treatment that you claim they do. The data you provided cannot be definitively proven.

Dr. Good (getting exasperated): How can you say that? I’m the treating physician! I know exactly what treatments my patient has received and not received. You’ve never even assessed my patient. How could you make a medical determination about a patient you have never examined? Hmm…where are you even located? Do you have a medical license in our state?

Hired Gun, MD: I do not have the authority to approve this treatment based on the contract language of the insurance company.

Dr. Good (getting mad): Hang on! Before I set up this call, I checked with the insurance company and they said you do have the authority to approve my recommended care. C’mon! You’re a doctor! Why did you go into medicine if not to help patients? You have the authority to say yes! Don’t tell me that you cannot use medical judgment. You know that medically, the care I have recommended is the right course of action. If your only job on this call is to say “no” to whatever I say or say that there is something in a contract that makes you say “no,” then you wouldn’t need to be a physician for this call. You don’t need any kind of degree to do what you are doing right now.

Hired Gun, MD: Now you’ve crossed the line and are being rude. I’m ending this call.

Dr. Good: Wait! At least tell me now if you are approving or denying care.

Hired Gun, MD: It’s our policy not to tell the treating physician our decisions at the time of the call. There are other steps in the appeals process if you disagree with the outcome of this call. [ends call]

Dr. Good (says to self): And everybody wonders why doctors are getting burned out!

Can you guess the outcome of this “doc-to-doc” call? There is a big economic incentive for the “hired gun” to deny care. The hired guns will stop getting work from insurance companies if they decide in the patient’s favor too often. Unfortunately, at the end of the conversation, your doctor typically loses, and so do you.

First, do no harm

All physicians have taken some type of oath in medical school to “first do no harm” (attributed to the ancient Greek physician Hippocrates). So, why are insurance company doctors allowed to harm the crap out of you in the medical appeals process? I believe that medical professional associations, like the American Medical Association (AMA), and specialty organizations, like the American Psychiatric Association (APA), have not done enough to investigate and provide ethical leadership on the relationships that some physicians have with insurance companies. If insurance physicians are essentially puppets in the medical appeals process and are only hired/rehired if they routinely side with the insurance company’s interests, then the appeals process itself is a sham and the role of the insurance company’s physician is only to give the process the appearance of legitimacy. A harsh way of describing it is that the role of the insurance physician is to deceive the patient and the general public into believing that the review process is medical.

Over 2 years ago, I posed this inquiry to the ethics committee at the APA:

"Is it ethical for a psychiatrist to participate as an independent insurance utilization review consultant in a process that is constructed to deceive the public? In other words, is it ethical for physicians to work for insurance companies that require that the doctors make contractual, not medical, decisions – such as decisions based on “medical necessity criteria” that is defined contractually, not scientifically – while the insurance companies publicly state or imply that the review process is medical?"

I’ll bet you can guess my answer based on how I worded my questions. I don’t think it’s ethical. I got zero response from the APA ethics committee. Why wouldn’t an ethics committee address this issue? Is the organization afraid to clean up the actions of its members because too many of its members are participating in these roles? In full disclosure, I’m a Distinguished Fellow of the APA (and I do not perform utilization review services for insurance companies).

The ethical defense of the insurance company doctors

There are four main categories of ethics that all doctors pay attention to. These four ethical pillars are essentially considered to be duties to the patient:

• Beneficence (act in a patient’s best interest)

• Non-maleficence (do no harm to the patient)

• Autonomy (give the patient the freedom of choice in care)

• Justice (ensure fairness in care)

First, the insurance company doctors would argue that they do not have a duty to the patients. They would say that their duty or fiduciary responsibility is to the insurance company. And the primary aim of an insurance company is to contain costs. My response to that is that I think these doctors also have a duty to the patients whose lives they are affecting. Shouldn’t these physicians take the time to personally assess these patients if they are making such critically important decisions about their medical care?

Next, the doctors working for the insurance company would argue that they are following the ethical guideline of “justice” as they are ensuring appropriate resource allocation for the companies they work for. Their argument is, “If we said, ‘yes’ in every appeal, it would bankrupt the company, and then no patients would receive payments for medical care.” I would counter that argument by saying that only a small fraction of medical care makes it to the appeals process. Also, effective medical care in many cases is the most cost-effective. I do not believe that it would bankrupt insurance companies to listen to and trust treating physicians who are appealing an insurance company denial. Separately, your insurance premiums are paying the salaries of these care-denying doctors. Insurance companies routinely cite the appeals process as an excuse for their yearly rate increases.

Finally, insurance company doctors argue that their decisions do not cause harm. They would reason that, “A decision to not approve insurance coverage for a medical treatment does not stop a person from getting the treatment. Therefore, a payment denial is not a medical treatment decision.” This isn’t true. Healthcare insurance coverage is necessary for the care itself for the vast majority of patients. Even people with health insurance and approval to proceed with medical care sometimes cannot afford their copay, deductible, and out-of-pocket requirements.

Here are the likely outcomes if your insurance company denies payment for treatment:

• You pay for the brand-name medication with coupons and cash or you go without the med

• The family or hospital foots the bill for another day in the hospital or the patient is discharged prematurely

• You delay or skip the medical procedure you cannot afford

What happens when insurance companies push patients to cheaper but less effective treatments?

There is a significant problem when insurance companies create many hoops for patients to jump through before they can access more expensive and sometimes more effective treatment. In the example of treating depression, an insurance company might require that a person fail many antidepressant medications before accessing more expensive treatments, such as Spravato (esketamine) or transcranial magnetic stimulation (TMS). In many cases, this forces patients to be sicker for longer. It creates worsened outcomes over the course of the depressive episode. Research clearly demonstrates that the faster you get rid of an episode of depression, the better the outcomes (Kraus, et al. Translational Psychiatry. 2019). This is likely also true for many other illnesses.

Knowing about these insurance games and ethical concerns can help you

You might be wondering how any of this information might help you. Well, if you know that the deck is stacked against you and your doctor when your insurance company denies needed care, that knowledge could benefit you in many ways:

• It could help you to trust yourself when you are advocating for something necessary in your medical care.

• It could motivate you to not delay in taking further steps to get approval for necessary treatment within your insurance company or under the supervision of your state’s insurance auditor.

• It could encourage you to identify violations of your rights in your health insurance plan, especially if they are violating state or federal mental health parity law (see my article, “The Strengthening Behavioral Health Parity Act (SBHPA): An Enormous Step Forward in Mental Health Parity”).

• It could inspire you to demand reform at the state and federal levels with greater transparency of how healthcare coverage denials are actually handled.

• It could lead to a greater expectation in our society of how physician ethical standards are upheld, even those for insurance company doctors.

Our communities and our physician workforce will be healthier by bringing these issues out into the light of day. Doctors serving in the role of denying insurance coverage are not doing what they were trained to do. Let’s not be confused about the ethics involved – our society sets our expectations of appropriate ethics, not insurance companies. We can advocate for a more just and equitable process when insurance companies and treating physicians disagree on what is appropriate as the next step in our medical treatment.

For further reading, check out:

• Len’s Article, “The Strengthening Behavioral Health Parity Act (SBHPA): An Enormous Step Forward in Mental Health Parity”

• Len’s Article, “Psychiatric Stigma and a 2018 Game Changer”

• Len’s Article, “The FDA’s Duty to Children’s Mental Health”

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