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An analysis of the external review process, the formal dispute resolution process established by state or federal agencies, independent of disputing parties, that has the capacity to evaluate and resolve at least those disputes involving medical issues. This paper identifies critical features of external review systems in thirteen states and in the Medicare program.
External Review of Health Plan Decisions:An Overview of Key Program Features in the States and Medicare
External Review of Health Plan Decisions:An Overview of Key Program Features in the States and Medicare
Prepared for the Kaiser Family Foundation by:Karen Pollitz, M.P.P., Geraldine Dallek, M.P.H., and Nicole Tapay, J.D.Institute for Health Care Research and Policy, Georgetown University
Executive Summary
In 1978, the state of Michigan established a system to call on independent medical experts to help resolve disputes between health plans and patients about the medical necessity and appropriateness of care. Since then, twelve other states and the Medicare program have established similar kinds of external review programs. In the first half of 1998, five more states enacted external review laws (and two states passed laws modifying or expanding existing programs).
The term “external review” means different things to different people. In this paper, “external review” refers to a formal dispute resolution process, established by a state or federal agency to be independent of disputing parties, that has the capacity to evaluate and resolve at least those disputes involving medical issues. State health plan regulators have other responsibilities that are sometimes characterized as external review. For example, virtually all state insurance departments, and many state health departments, accept, investigate and help resolve consumer complaints about their health plans regarding marketing behavior, premiums, and contractual terms of coverage and exclusion of benefits. However, these complaint resolution processes were not included in this study unless they also incorporate a formal process for resolving disputes over medical issues.
Using this definition, this research identified and studied external review programs in thirteen states and in the Medicare program. Medicare’s external review system, established in 1989, is one of the oldest-behind Michigan (1978) and Florida (1985). Unlike state programs, which require consumers to affirmatively request an appeal, Medicare requires that all denials upheld by the health plan’s internal review process must automatically be forwarded for external review. Only in three states and Medicare are external review systems set up to resolve all types of consumer disputes – whether or not they involve clinical issues. The other ten study states have established a separate external review process for disputes involving issues of medical necessity or appropriateness; other disputes not about clinical issues must be pursued through a different process. Based on a review of these programs and interviews of experts involved with them, this paper identifies critical features of external review systems and how they vary. (See Table 1.) State and federal policymakers contemplating creation of new external review requirements may benefit from the lessons learned by the states and Medicare.
Major Findings
Consumers seek external review of health plan decisions on a wide range of health care services based on issues that are medical, legal, or both. Disputes arise in all types of health plans, over denials of health services ranging from routine to life-saving. (See Table 1, Scope of External Review.) Such denials might be justified on the grounds that services are not medically necessary or appropriate. Or, they might be denied based on other coverage limitations in the health plan contract. Some external review programs hear all types of disputes. Experts from these programs believe their broad scope affords consumers the most comprehensive protection. Other external review programs limit their scope only to disputes over medical issues. Experts from these programs acknowledge that it can be difficult to disentangle clinical issues from other contractual and coverage issues in some cases. State programs that try to separate disputes by type tend to rely on regulatory staff experts to distinguish cases and steer non-clinical issues to other appropriate forums for resolution.
The types of cases for which consumers seek external review are varied and often complex. For example, Rhode Island reviews a significant number of mental health and substance abuse cases relating to the need for inpatient services. In Texas, the largest number of cases has been for pain management and substance abuse treatment, followed by oncology cases. Approximately half of the prospective review cases in Texas have been for “life-threatening” conditions. Cases reaching external review in Missouri included questions of whether speech therapy is restorative, whether hysterectomy or hormone therapy is appropriate treatment, whether a heart bypass surgery patient should receive cardiac rehabilitation, and whether therapy following knee surgery was medically necessary. Consumers also seek external review of health plan decisions involving less expensive care. For example, 20 percent of Medicare’s external reviews in 1997 involved denials of medical equipment and supplies, averaging $124 per case.
External review upholds health plan decisions about as frequently as it overturns them. The disposition of cases under external review splits fairly evenly. Across all programs studied, external review overturned health plan decisions between 32 and 68 percent of the time (See Table 1, No. and Disposition of Cases.)
Consumers seek external review infrequently; certain program features may further limit the use of external review. To date, the volume of cases under external review programs is small. In Medicare, external review is performed at a rate of about two cases per 1,000 managed care enrollees per year. (See Figure 1.)
By contrast, even in large states with long-established external programs, external reviews are performed at a rate that is only a tiny fraction of Medicare’s. In Pennsylvania, for example, the external review rate in 1997 was less than 0.04 cases per 1,000 enrollees-less than one-fortieth the rate in Medicare in the same year. In several states, the rate is much lower than had been predicted at the program’s outset. Rates of external review per covered enrollees are not presented for all the study states because the scope of external review programs varies and not all health plan regulators were able to provide estimates of the number of consumers covered by their programs. However, the volume of cases in states is uniformly low – less than 250 cases per year in the largest states and even fewer in smaller states. For three states whose scope of external review is similar, Michigan had 49 cases from 1995 through June 1998, Florida had 403 cases from 1993 through April 1998, and Pennsylvania had 729 complaints from 1991 through June 1998. (See Table 1, No. and Disposition of Cases.)
Managed care industry representatives suggested that the small number of cases reflects the generally high quality of care provided by plans and the effectiveness of their internal appeals systems in resolving consumer disputes. However, several state regulators expressed concern over the infrequent use of external review. They cited lack of consumer awareness as a principal reason, followed by the burden of illness, which may prevent consumers from pursuing external review. Some states are exploring new strategies for consumer outreach to expand awareness of external review protections. In Medicare, consumers do not have to request external review. It is automatic for all denials upheld by a managed care plan’s internal review process.
Some state external review programs include features that were designed to deter frivolous cases or otherwise keep caseloads manageable – application fees, limits on the types and/or size of claims eligible for review, and imposition of filing deadlines, after which external review is no longer available. However, appeals volumes have been small and the problem of frivolous appeals has not materialized in states, with or without these features. While some health plan regulators did not view these features as impeding consumer access, others expressed concern that they might do so.
This report is also available in PDF format.
The Kaiser Family Foundation is an independent health care foundation and is not affiliated with Kaiser Permanente or Kaiser Industries.
External Review of Health Plan Decisions: An Overview of Key Program Features in the States and Medicare
Fact Sheet Part 1 Part 2 Library Index
Medicaid Managed Care: An Analysis of the Health Care Financing Administration’s Notice of Proposed Rulemaking
A fact sheet summarizing data from a survey conducted between January and March of 1998 with 1,583 firms with 200 or more workers. The survey, which is conducted annually, focuses on the characteristics of the health benefit plans sponsored by employers.The supplemental questions discussed in this brief were developed jointly by staff from the Kaiser Family Foundation and KPMG and funded by the Foundation.
Managed Care Consumer Protections Offered by Medium and Large Employers
November 1998
Background
During the past year, Congress and the states considered a number of proposals that would have provided additional protections to consumers in health insurance plans, particularly managed care plans. Among the key issues raised in these debates was how much the protections would increase health insurance premiums, which depends in part on the extent to which these proposed protections are already in place.
A survey of medium and large employers conducted earlier this year by the Kaiser Family Foundation and KPMG Peat Marwick finds that some medium and large employers say they already offer their employees the protections found in these proposals. This national survey of employers with 200 or more employees also finds that a majority of employers surveyed support a number of the proposed provisions, though that support does not extend to granting employees expanded rights to sue their health plans.
Protections Now Offered by Medium and Large Employers
The survey asked employers about whether they currently offer to employees a variety of the consumer protections considered in the policy debate, including:
Views on Consumer Protection Legislation
Employers were also asked their views on several of the consumer protection measures considered by Congress and by many states:
Conclusion
While the details of the consumer protections provided by larger employers may differ from the provisions of proposed legislation, it remains important to understand the extent to which certain employers in the private sector are acting to extend these protections on a voluntary basis. Where some protections are already in place in the private sector, there may be less need for legislative action, though the cost of imposing a legislative requirement might also be lower than expected. The survey of medium and large employers found that significant numbers offer a variety of consumer protections to their workers. It is important to note, however, that smaller employers–with less leverage over health plans–might not be as likely to provide consumer protection guarantees.
A majority of employers say they would support legislation to make it easier to get emergency room claims covered and to provide for an independent external appeal of health plan denials, though most also oppose expanding the rights of consumers to sue their health plans. Support for consumer protections is higher among employers that offer only HMO or POS plans than among those who offer only conventional or PPO plans.
Survey Methodology
The KPMG Peat Marwick survey was conducted between January and March of 1998 with 1,583 firms with 200 or more workers. The survey, which is conducted annually, focuses on the characteristics of the health benefit plans sponsored by employers. The supplemental questions discussed in this brief were developed jointly by staff from the Kaiser Family Foundation and KPMG and funded by the Foundation.
Managed Care Consumer Protections Offered by Medium and Large EmployersFact Sheet Report
National Survey Suggests Need for Broad Public Debate About Medicare Reform:Americans Know Medicare Faces Problems, But Not Ready To Make Hard Choices
Future Options Not Well UnderstoodFew Know About Medicare+Choice
Embargoed For Release Until: Noon, Tuesday, October 20, 1998
For further information contact: Matt James or Tina Hoff (650) 854-9400 or Sara Knoll (202) 347-5270
Washington, DC – A new survey by the Kaiser Family Foundation and Harvard School of Public Health highlights the challenges for policymakers as they consider ways to shore up the Medicare Trust Fund and finance care for the growing number of seniors. While most Americans know Medicare faces fiscal problems, they are not ready to support changes that would produce major savings, according to the new survey. In addition, generational differences and low levels of public knowledge about the proposed options for reform will present more hurdles for policymakers when the debate over Medicare’s future comes before the Congress. The National Bipartisan Commission on the Future of Medicare is scheduled to make recommendations on reform to Congress in March 1999.
“This process could end in a train wreck when the debate turns to specific proposals and their consequences if the public is not more informed about the problems facing Medicare and the options for reform,” said Drew Altman, PhD, President of the Kaiser Family Foundation.
Public Opinion on Policy Options
Most Americans do not believe Medicare is headed for a “crisis,” though they do think the program has financial problems (40% “major” and 26% “minor”). Cutting across generations and political affiliation, the large majority (77%) say it is “very important” to them personally that the program is preserved for future retirees.
“Overall, the public trusts Democrats — 43 percent — more than Republicans — 27 percent — to deal with the problems facing Medicare,” said Robert J. Blendon, Sc.D., Professor of Health Policy and Political Analysis at Harvard University. “As a result, if the Republicans remain the majority party in Congress, they will need bipartisan support in order to make any major reforms in the Medicare program.”
Even though almost seven in ten Americans (68%) think fraud and abuse in Medicare is a “major reason” the program is likely to face financial difficulty, only two in ten (20%) think that better management alone is enough to save the program. While they recognize that there are no painless answers, when presented with the arguments for and against specific options to reform Medicare, there is only one proposal that is currently favored by a majority of the country: having higher-income seniors pay more (65% support and 32% oppose).
Experts say this option alone will not produce sufficient savings to assure the solvency of the Medicare Trust Fund in the future, but the public rejects most other options when the arguments for and against each are weighed:
Not only are most Americans unprepared to accept painful measures to reduce future spending, but across age and party lines most want expansions of the program to address gaps in coverage even when told their taxes or premiums would go up: 68 percent favor expanding Medicare to cover prescription drugs, and 69 percent favor covering long-term care. Almost as many Americans (60%) also favor the proposal to expand Medicare by letting people nearing the age of eligibility, 62 to 64 years old, buy into the program early.
Medicare Managed Care
Moving Medicare beneficiaries from the traditional program to managed care plans is a goal of many reformers. If more seniors were in HMOs and other managed care plans, half of Americans (50%) think it would be “harder” for Medicare patients who are sick to see medical specialists, as compared with just nine percent who think it would be “easier” (34% say “it would not make much difference”). More think the quality of care for Medicare patients who are sick would suffer (31%) than improve (14%) under managed care, but almost half (47%) think there would be no change as compared to the quality of care under the traditional program.
Medicare and the Budget Surplus
While keeping taxes down is important to the public as an election year issue (67% say “very important” to their vote), just 18 percent would use the government surplus to cut taxes. A larger share of the public would like the surplus to be used to protect Social Security and Medicare (42%). When forced to choose between the two programs: 24 percent of Americans pick Social Security and 15 percent Medicare. Almost two-thirds (65%) of those 65 and older say the extra funds should be used to protect Social Security and Medicare. If the money were to be used for only one program preserving Social Security remains the higher priority for seniors: 30 percent say Social Security and 25 percent Medicare.
The Need for Public Education on New Medicare+Choice, and Reform Options
Seniors, in general, are more knowledgeable than those under 65 about the basics of Medicare: 63 percent know the program does not pay for prescription drugs (vs. 22% of those under 65), and 44 percent know it does not pay for long-term nursing home care (vs. 34%). But, as the Federal government gets ready to launch a campaign to educate the public about Medicare+Choice, a new federal program designed to expand the range of health plan options available to Medicare beneficiaries, only one in five (20%) Americans, including 24 percent of seniors, say they have seen, heard, or read anything about this program. Furthermore, only 9 percent of seniors correctly say that the new program gives beneficiaries a choice of health plans.
Most Americans also say they know little to nothing about the options being considered to change Medicare (50% say “only a little” and 25% say they know “nothing” at all). Even among seniors, relatively few consider themselves well informed about the options under consideration (43% “only a little” and 20% know “nothing”). Two in five Americans (39%) know the Medicare Commission exists, and only 13 percent say they are following news stories about its work even “fairly closely.” Seniors are no more aware of the Commission or its activities than younger Americans.
Generational Perspectives: Rating Medicare
There is a striking difference between older and younger Americans when it comes to rating Medicare: 74 percent of those 65 and older say Medicare is doing a “good job,” compared with 44 percent of those under age 65. However, Medicare is rated better by young and old alike (49% of all Americans say “good job”) as compared to health insurance companies (36% “good job”) and HMOs and other managed care plans (30% “good job”). When it comes to evaluating their own health plan, seniors (41%) are more likely to give an “A” grade than are those under age 65 with private insurance (29%).
The survey also found that 60 percent of those 65 and older say they trust the current Medicare program to provide health insurance to seniors, compared to less than a third (38%) of those under age 65. Younger generations are more likely to trust privately-run health plans to provide insurance (46%), compared to 14 percent of those age 65 and older.
Methodology
The Kaiser/Harvard National Survey on Medicare is a product of the Kaiser-Harvard Program on the Public and Health/Social Policy, which regularly conducts surveys on health and other national issues. It was designed and analyzed by researchers at the Kaiser Family Foundation and the Harvard School of Public Health. The survey was conducted by telephone by Princeton Survey Research Associates with 1909 adults (age 18 or older) nationwide between August 14 and September 20, 1998. The margin of sampling error for the national sample is plus or minus 3 percent. The margin of sampling error may be higher for some of the sub-sets in this analysis.
The Kaiser Family Foundation, based in Menlo Park, California, is a non-profit, independent national health care philanthropy and is not associated with Kaiser Permanente or Kaiser Industries.
Copies of the questionnaire and top line data for the findings reported in this release available by calling the Kaiser Family Foundation’s publication request line at 1-800-656-4533 (Ask for #1442). These documents are also available on the Kaiser Family Foundation website at http://www.kff.org.
A survey of Americans on their knowledge and opinions about the proposed options for Medicare reform finds that most Americans know Medicare faces problems, but are not ready to make hard choices and are not well informed on the options, including Medicare+Choice. The Kaiser/Harvard National Survey on Medicare is a product of the Kaiser-Harvard Program on the Public and Health/Social Policy, which regularly conducts surveys on health and other national issues. It was designed and analyzed by researchers at the Kaiser Family Foundation and the Harvard School of Public Health. The survey was conducted by telephone by Princeton Survey Research Associates with 1909 adults (age 18 or older) nationwide between August 14 and September 20, 1998.
A public education brochure describing basic facts about the current Medicare program and how it works. This fact sheet is included in a full packet of information as part of a joint public information project between Kaiser Family Foundation and League of Women Voters of public meetings held across the United States in October 1998 (#1427 – available in print).
A fact sheet on HIV, how it is transmitted, how to protect yourself against HIV, and information on testing and treatments for HIV. This fact sheet is available as part of a partnership with BET Teen Summit Town Hall specials.
This report presents the results of eight focus groups conducted in several languages throughout California to explore the knowledge and opinions of parents of potentially eligible children about the Medi-Cal program, California’s Medicaid program. The study found that participants were confused about eligibility requirements, found the enrollment process onerous and demeaning, and had suggestions about how they could be better educated about the program.