KFF designs, conducts and analyzes original public opinion and survey research on Americans’ attitudes, knowledge, and experiences with the health care system to help amplify the public’s voice in major national debates.
This report describes and analyzes key Medicare+Choice provisions in the Balanced Budget Act and the accompanying regulations related to consumer protections. It explains how the BBA makes significant improvements for beneficiaries in the areas of access, appeals, and quality. It also explores areas that could be strengthened to better serve the needs of the Medicare population, including provisions pertaining to enrollment and disenrollment, information and education, Medigap coverage, and marketing.
Medicare Beneficiaries: A Population At Risk – Findings from the Kaiser/Commonwealth 1997 Survey of Medicare Beneficiaries
This report by the Henry J. Kaiser Family Foundation and the Commonwealth Fund, based on the Kaiser/Commonwealth 1997 Survey of Medicare Beneficiaries, highlights the challenges facing Medicare beneficiaries and the importance of addressing the needs of low-income and other high-risk segments of the Medicare population.
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.
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.
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:
Resolving employee disputes with health plans: 93% of employers report that they intervene to help employees resolve complaints with their health plans (7% do not). 67% of employers require health plans to provide for an internal mechanism for employees to appeal health plan decisions regarding denial of services or payment (25% do not), though many fewer (29%) require an appeals system that is external to the plan (61% do not). Employers report that they mediated an average of 6 complaints with health plans for every 100 covered employees in the last 12 months.
Emergency room care: A majority of employers (56%) require that health plans provide for a “prudent layperson” standard for emergency room care, which requires payment for emergency services when a patient reasonably believes that they need immediate medical attention even if the problem does not turn out to be serious (36% of employers do not).
Information provided to employees: 58% of employers provide written material that explains the mediation process available to employees who have complaints about their health plans (41% do not). 16% of employers provide data on the quality or performance of each plan offered to assist employees in their plan selection (78% do not)
Confidentiality of medical records: 89% of employers report that they require health plans to guarantee the confidentiality of employees’ medical records (7% do not). However, 30% of employers also report that they have access to medical records for case management or other similar situations (61% do not).
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:
Emergency room care: 65% report that their companies would support legislation requiring health plans to pay for emergency room visits when someone might reasonably believe they need immediate medical attention, even if the problem doesn’t turn out to be serious (26% oppose). Support is higher (74%) for those employers who offer only health maintenance organization (HMO) or point of service (POS) plans than for those that offer only conventional or preferred provider organization (PPO) plans (61%).
External appeals: 77% report support for legislation that would allow consumers to appeal a health plan’s decision to deny coverage for a particular medical treatment to an independent reviewer (17% oppose). Support is somewhat higher (83%) for employers that offer only HMO or POS plans than for those that offer only conventional or PPO plans (74%).
Right to sue: 53% say they would oppose legislation that would allow consumers to sue a health plan for malpractice, like they can now sue a doctor (28% support, 19% don’t know). Opposition is lower (42%) for those that offer only HMO or POS plans than for those that offer only conventional or PPO plans (60% opposition). During the Congressional debate over this issue, some business groups expressed concern that employers might also end up being sued in their role as health plan sponsors.
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.
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.
