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Are out-of-network (OON) denials assessed for benefit coverage or medical necessity?

The answer: it depends.

MHR has observed ongoing confusion surrounding OON denials and appeals. This confusion can jeopardize an organization’s score on UM denial and appeal file reviews, and it can affect performance on other NCQA standards. Frequently, organizations assume these are a slam dunk. Benefit denials do not belong in the denial file universe, only in the appeal file universe. According to NCQA, UM 1A specifies that for OON care, medical necessity reviews are required “If the decision to approve coverage is based on clinically appropriate situations”.

An OON request is considered a benefit denial if the member does not contend that there is a medical reason for going to an OON practitioner or facility. Something that would fit in this category is, “My friend George went to them and says they’re great doctors.”  Now, if the member said, “My condition is so specialized that upon my research and my physician says that only three doctors in the US can treat my condition and they are not in your network”, that is clearly medical necessity and must undergo medical necessity review.

This article outlines common reasons for OON denials, file review requirements, required actions, and the analysis of utilization management (UM) data and related standards (remember – no standard is an island, they’re all inter-related) and should provide some clarity on when OON care is a benefit or medical necessity denial. The guidance applies to organizations accredited for health plan, managed behavioral health, and utilization management programs.

Common Reasons for Out-of-Network Denials

Healthcare delivery is complex, and members may face challenges accessing care. They may seek care outside their service area, pursue treatment from top facilities not in-network, or believe their situation is an emergency and bypass prior authorization.

Regardless of the reason, OON requests and claims are often denied—and many are appealed.

The most common reasons for denials include:

•  OON services not covered under benefits, except for emergencies as defined in the benefit contract. If the member contends it was a true emergency (make sure your policy uses the definition in your summary of benefits for support), documentation must reflect that and a physician must review the documentation.
  
  
•  Services determined not medically necessary because in-network providers could deliver the same care. Frequently this is contended by the health plan without any support except citing the benefit manual language.
  
  
• Lack of prior authorization before OON care or services were obtained. This is usually ignorance of requirements.
  
  
•  Insufficient or missing clinical notes from the request explaining the need for OON care
  
  
•  Claims submitted by the OON provider after the filing limit
  
  

Action:

• Develop a policy for Out-of-Network Utilization Review. Include the definition of an emergency.
• Use every opportunity to educate members on the requirements of the organization.
  
•  Code or tag denial reasons to enable detailed quantitative and qualitative (Q&Q) analysis of access and network issues
  
  

Requirements for OON Denials

UM 1A: Program Description

The UM Program Description must outline the process for prior authorization (PA) requests (new UM 1A, Factor 6). In general for most organizations, OON requests for services that are clinically appropriate require PA.

Medical necessity reviews are required when:

•  OON services are covered only in clinically appropriate situations;
  
  
•  A request indicates a specific clinical need that cannot be met in-network.
  
  

Medical necessity reviews are not required when:

•  Coverage documents specify OON services are never covered (Note: the MHR CEO in submitting hundreds of submissions and surveying hundreds has only seen this prohibition ONCE);
  
  
•  Requests do not show a specific clinical need for OON coverage (see George’s example above).
  
  

Action:

•  Develop a policy for OON utilization review
  
  
•  Update the Program Description as needed
  
  
•  Ensure consistency between Program Description and coverage documents for OON requests
  
  

NET 3A: Factors 3 and 4

OON requests and utilization (claims) must undergo Qualitative & Quantitative (Q&Q) analysis to assess network adequacy. Organizations must clearly identify all OON requests, claims, approvals and denials, and separate non-behavioral (medical) from behavioral. Without capturing the full volume within the organization and delegates, it is impossible to determine if members’ needs are being met.

Action:

•  Work with IT to code and tag OON denials and appeals for drill-down Q&Q analysis for NET 3A
  
  

When analyzing UM denial data, ask:

•  Are OON services repeatedly requested at certain specialty centers?
•  Are certain zip codes reflecting a higher than average request rate?
  
•  Are members frequently balance billed for OON services?
  
•  Are clinical notes for OON PA requests consistently insufficient? (Pro tip: dig down to see if that is really the case. Frequently that is the plan’s position but not necessarily true.)
  
•  Are urgent OON requests escalated appropriately for medical necessity review?
  
•  Are financial-risk denials because of OON correctly included in file reviews?
  
•  Do complaint data or CAHPS survey results reflect dissatisfaction with OON denials? (ME 7 should include that data).
  
  

UM 4 BEH & UM 9D, Factor 2: Reference to UM Criteria

COMMON ISSUE: No criteria set for distance.

Denial and appeal notices must reference criteria specific to OON requests, as defined in member benefit documents and organizational policies. NET 1CD standards for drive time can be codified into a UM policy for OON care and provides a definitive measurement. For example, if there must be X practitioners for high volume and high impact practitioners (non behavioral and behavioral) within 50 miles, and there are two within that distance of the member, the criteria for establishing that there are practitioners within that distance that can be used for the denial criteria.

We frequently see in file reviews that there is no measurable distance criteria used, that denial keeps you from meeting notice requirements and sets you up for an appeal that will most likely be overturned.

 COMMON ISSUE: Rationales do not relate to the request.

We frequently find that a member will contend that the type of care that they need is very specific and limited to a few practitioners that are not in the network. If the member’s contention is not specifically addressed, the bar for the rationale is not met.

To summarize, notices must:

•  Support the rationale for the decision
  
  
•  Relate directly to the member’s or provider’s request
  
  
•  Address whether or not the services can be obtained within the organization’s network while meeting accessibility standards for urgent requests
  
  

Best Practice: Include specific in-network provider names in denial notices or refer members to Member Services for assistance.

Action:

•  Use network standards when referencing access and availability and codify it into a UM policy.
  
  
•  Train and audit staff on required notice language
  
  
•  Create customizable denial rationale templates
  
  

Creating Templates for OON Denials

MHR has found that mapping denial codes to pre-developed letter templates promotes greater compliance and efficiency.

Example Template:
 Decision: Out-of-Network Services Denied

We have reviewed your request for behavioral health treatment at [Facility Name], which is located outside of our state and is not part of our network.

You requested care for [X] and stated you needed to receive care at this specific facility because of [X]. We have reviewed the documents you provided and your history and are denying this request because the level of care or service being requested is available from providers/practitioners who are part of our network. Specific providers/practitioners that meet our availability standards, where this care can be received, are:

• [Facility A]
•  [Facility B]
  
  

Our decision was based on our Out-of-Network Policy and the criteria outlined in your benefit booklet, Section [X], which states that out-of-network services are only covered when they are not available in-network.

If you choose to get care at an out-of-network facility, it may not be covered, and you may have to pay the full cost yourself.

Your Next Steps:

•  Call the customer service department for assistance in locating an in-network facility
  
  
•  Appeal this decision within [X] days, following the attached instructions
  
  
•  If your provider believes OON care is medically necessary, they may submit documentation to support the request at [insert instructions].
  
  

Key Points

•  Address PA for OON services in the UM Program Description
  
  
•  Develop an OON medical necessity review policy
  
  
•  Per NET 5C, audit provider directories regularly for accuracy
  
  
•  Provide members with explicit denial and appeal instructions in their primary language
  
  
•  Code denial reasons in sufficient detail for identifying network issues
  
  
•  Review member complaints and CAHPS survey results for dissatisfaction related to the provider network or availability of care.

MHR Support

Healthcare delivery and network structures are constantly evolving. Protect your accreditation standing with targeted training, regular audits, and tools that improve efficiency.

•  Training: Schedule training with MHR on UM standards, including 2026 updates, customized to your organization’s needs
  
  
•  Auditing: Use MHR’s File Review tools to audit denial and appeal files for categorization, coding, timeliness, and explicit language
  
  
•  Templates: Need compliant denial notice templates? MHR can help design them
  
  

MHR ensures accuracy and quality in every resource. This blog includes insights from MHR Clinical Consultant Sheila Petras, RN.

Learn more about MHR’s independent consultants at managedhealthcareresources.com/AboutOurConsultants, and follow us on LinkedIn for updates.