More states providing independent appeals to consumers in managed care plans
Managed Care Appeals
September 30, 1997
In the flood of managed care legislation at state capitols, one piece of regulation that consumer groups hold dear is an independent appeal mechanism for managed care decisions.
"This is a top-tier issue for us," said Anthony Wright, program director for New Jersey Citizen Action. A managed care plan’s decision to deny payment is tantamount to a denial of services, he said. When negotiations over an omnibus managed care law in New York led to the elimination of a provision for independent appeal, Citizen Action’s New York chapter pulled its support, Mr. Wright said. "That’s the level of concern for this issue."
Often, a denied treatment is recommended by the patient’s physician, so it is important to be able to go outside the plan to have the decision reviewed, he said.
Among the states that have or are about to have mechanisms for an independent review are: Rhode Island, Florida, New Jersey, Texas and Tennessee.
Decisions binding in Rhode Island
While the scope of decisions that can be appealed is broad in some states, in Rhode Island only a decision by a utilization review company made on the basis of medical necessity can be appealed. Rhode Island consumers have had access to independent appeals since the passage of the Utilization Review of Health Care Services Act of 1994.The decision of the reviewing agency is binding.
There were 104 external appeals in 1996, according to Allison DeBlois at the Rhode Island Department of Health. Many of them concern mental health and substance abuse services. Rhode Island uses two agencies for external appeals, the MassPro Network Design Group, Pittsfield, MA. and the New York-based Center for Health Dispute Resolution, which handles Medicare appeals. Ms. DeBlois said 68% of utilization review decisions were overturned in the last quarter of 1996 and 50% in two previous quarters.
Cost a barrier
Kate Coyne McCoy, executive director of the Rhode Island chapter of the National Association of Social Workers, believes independent appeals have not been more widely used in Rhode Island because the cost is a barrier for many consumers. Ms. Johnson estimates the consumer’s cost to be about $75 to $100.
Besides the filing cost, consumers are also charged copying costs by their providers, said Ms. Coyne-McCoy. While it’s reasonable to ask people to pay a fee, she believes low-income individuals should pay on a sliding-scale basis.
Furthermore, Ms. Coyne-McCoy believes many consumers remain unaware that they have a right to appeal decisions. Few know they can appeal decisions internally, let alone externally, she said. A new Rhode Island law on disclosure of information to consumers (see story p. 5) will increase awareness, she said. "In the absence of a significant public education campaign, this is the next best thing."
For states considering legislation on external review, Linda Johnson, chief of the Office of Managed Care for the Department of Health, advises: "Don’t forget retrospective review." The Rhode Island statute clearly excludes claims under retrospective review. Except for emergency care, only claims under prospective or concurrent review are subject to external appeals. Ms. Johnson believes plans could easily avoid outside appeals by bringing claims under restrospective review.
Deterrent effect
New Jersey’s external appeals mechanism went into effect in March. Since then, said Natan Szapiro, director of the Office of Managed Care for the New Jersey Department of Health and Senior Services, there have been fewer than a dozen appeals. Mr. Szapiro attributed the "less than expected" response to the lack of awareness of the new mechanism among consumers, providers and even health plans.
He said the independent appeals mechanism also may be affecting how managed care plans handle grievances internally, although it is impossible to know for sure what influence this is having.
Mr. Wright, of Citizen Action, hopes independent appeals are having a deterrent effect. The appeal process is "an emotional and tiresome process and not ideal.The real hope is that it will serve as a warning and we won’t have to use the process because plans will do the right thing from the beginning."
The state has been using the New Jersey peer-review organization to handle external appeals, but it soon will issue a request-for-proposal (RFP) to create a stable of agencies to review appeals.
Non-binding decisions
Decisions are non-binding in New Jersey, although the state has the power to sanction plans that show a pattern of non-compliance. Mr. Wright said while his group advocated binding decisions, state officials were concerned about the accountability of the reviewing agencies and, also, that decisions on individual cases could set precedents.
While managed care plans do not need to comply with the independent appeal decision, they must state their clinical reasons for not complying, according to Mr. Szapiro. He noted that giving plans the opportunity to respond "keeps the level of independent utilization review high because it is not unchallengeable." In some cases, a plan could have legitimate clinical reasons for not accepting a decision.This process avoids capricious and arbitrary decisions by the review agencies, he noted.
Tennessee, which recently passed a bill that will give consumers the right to external appeals beginning Jan. 1998, also decided to made decisions by the Commissioner of Insurance non-binding. Brian McGuire, state director of Tennessee’s Citizen Action, which actively lobbied for the bill, said the sponsor was a veteran insurance litigator who believes the property and casualty insurance provides a good example of how effective non-binding arbitration can be. In virtually all cases, Mr. McGuire said, insurers have complied with non-binding decisions.
Tennessee consumers will be able to file an appeal at no cost to them. Cost of appeals in earlier versions of the bill would have been a "huge barrier," Mr. McGuire said. One concern for his group is the expertise of those involved in the reviews.
Neil Nevins, assistant commissioner of insurance said state officials are now meeting to discuss how to implement the law. Under the statutes, the insurance commissioner or his designee is responsible for the external appeals. The commissioner may consult with Department of Health staff for questions of medical appropriateness. Mr. Nevins said using outside agencies has not necessarily been ruled out, but "as I understand it, it’s not in the plan." He noted that the scope of issues subject to external appeals appears to be broad.
Florida has the Statewide Provider and Subscriber Assistance Panel to intervene in unresolved conflicts between health plans and consumers. The six-member panel is staffed by personnel from the Department of Insurance and the Agency for Health Care Administration (AHCA), which oversees the Medicaid program. Health plans must send the state quarterly reports of unresolved grievances, according to Colleen David, spokeswoman for AHCA. So far this year, the agencies have received 170 cases.
Many cases have been handled administratively, with only some of them getting referred to the panel, which typically meets bimonthly. However, Ms. David said the agencies are moving toward having all cases brought to the panel because a "hearing date accelerates the delivery of information" by subscribers and the plans.
The panel has the power to impose fines and sanctions and also has the authority of the two regulatory agencies behind it, according to Ms. David. The state is seeking legislation that would require the panel to act on grievances within 60 days, within 45 days in urgent cases and within 24 hours in cases of "urgent jeopardy." The legislation largely would "codify" current practice, said Ms. David, who noted that, of seven requests for emergency review in the last quarter only one request qualified.
At the June meeting of the American Association of Health Plans, Florida’s Gov. Lawton Chiles said the most common cases reaching the panel are on denial of care, disputes over authorization of care and over pre-existing conditions. Of some 135 cases heard, the governor said, "interestingly enough, the panel has found in favor of consumers 52 times, HMOs in 65 cases with 18 pending."
The Connecticut, Department of Insurance soon will release a RFP for peer review organizations, utilization review companies, academic centers, physician groups and others who can serve as external appeal agents. Pat Levesque of the Connecticut Department of Insurance, said bidders will have to meet 10 qualifications including ability to meet turnaround time and to ensure confidentiality of patient records and neutrality of reviewers. External appeals will be available to consumers beginning Jan. 1.
Ms. Levesque said decisions by the Connecticut insurance commissioner will be binding. One question, as the state works to implement the law, is whether a binding decision opens the commissioner to liability if a consumer pursues a lawsuit on the issue, for example. In Connecticut, external appeals will be limited to denials for services based on medical necessity or on the experimental or investigational nature of the treatment. Consumers will have to pay a $25 filing fee, which can be waived for those who cannot pay. The rest of the costs will be borne by the state. The commissioner must render a decision within 30 days of the consumer’s application for an external appeal.
Under Texas’ landmark law allowing medical malpractice suits against health plans, consumers will soon be able to have an independent review of denials on the basis of medical necessity. Consumers will request the independent review through the utilization review agent making the denial. The Department of Insurance issued proposed regulations Sept. 5.
After screening reviewers for potential conflicts of interest, the Department of Insurance will randomly assign to the case one of the independent review organizations (IROs) it has certified for this purpose. The cost of the independent review is borne by the IRO, although it can be passed along to the payer. Proposed fee is $650 for medical and surgical cases and $460 for cases in podiatry, optometry, dentistry, physical therapy, chemical dependency and other subspecialties.
Reid Allen from the HMO/UR Group at the Department of Insurance said the IRO’s decision is binding. Under the regulation, the IRO is not liable for damages as a result of its determination, unless it was made in bad faith or with gross negligence.
The independent review also plays a part in impending lawsuits under the state’s new liability law. Plans may request an independent review if they receive a notice to file suit by an enrollee. Insurers must be notified of an impending suit 30 days before the suit is filed.
California has one of the most limited vehicles for external appeals. Beginning Jan. 1, California residents can appeal denials of experimental treatments recommended by their physicians. Only patients with a terminal disease who are expected to have only two more years of life can appeal. The California legislature recently passed an amendment which extends the right to breast cancer patients whose physicians recommend autologous bone marrow transplants and who have more than two years of life. Supporters said breast cancer is life-threatening but it also can progress slowly. Also, autologous bone marrow transplants are not always considered experimental in treating breast cancer. The governor has not signed this bill or other managed care bills passed this year because he said he wants to wait until the Managed Care Improvement Task Force submits its report to the legislature in January on regulating the industry.
Contact Ms. Levesque at 860-297-3859; Mr. McGuire at 615-297-2494; Mr. Szapiro at 609-633-0660; Mr. Allen at 512-322-4266.
More states providing independent appeals to consumers in managed care plans
- Award-winning Medical Content
- Latest Advances & Development in Medicine
- Unbiased Content
