This report was prepared under contract #HHS-100-97-0013 between the U.S. Department of Health and Human Services (HHS), Office of Disability, Aging and Long-Term Care Policy (DALTCP) and the Mathematica Policy Research, Inc. For additional information about this subject, you can visit the DALTCP home page at http://aspe.hhs.gov/_/office_specific/daltcp.cfm or contact the ASPE Project Officer, Hunter McKay, at HHS/ASPE/DALTCP, Room 424E, H.H. Humphrey Building, 200 Independence Avenue, S.W., Washington, D.C. 20201. His e-mail address is: Hunter.Mckay@hhs.gov.
The opinions and views expressed in this report are those of the authors. They do not necessarily reflect the views of the Department of Health and Human Services, the contractor or any other funding organization.
Since the 1970s, federally mandated, state-administered “fair hearings” have been the primary mechanism with which Medicaid beneficiaries address disputes over Medicaid-covered health care services. More recently, the Federal Government has also required plan-level grievance and appeal procedures in all states that run Medicaid managed care programs.1 To address perceived shortcomings of fair hearings and in-plan procedures, many states have voluntarily introduced, in addition to these federally required activities, other mechanisms designed: (1) to be easy for beneficiaries to use, (2) to provide impartial review, and (3) to provide timely decisions.
This report presents the findings from a “Study of Medicaid Fair Hearing Adaptations,” which Mathematica Policy Research, Inc. (MPR) conducted for the U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation (ASPE). The study was commissioned to assist ASPE in identifying, describing, and understanding innovative attempts by states to make Medicaid grievance and appeal procedures more effective, as well as more relevant to needs that have arisen as a result of broad-scale implementations of Medicaid managed care.
States’ increased focus on Medicaid grievance and appeal procedures stems from several factors. First, the nature of disputes that commonly arise under managed care is fundamentally different from that of fee-for-service disputes. While fee-for-service disputes typically involve retrospective denials of claims for services that have already been rendered, managed care disputes are more likely to arise over prospective denials of health care services (Perkins 2000; and Annas 1997). Second, because they are subject to restrictions--such as mandatory enrollment and lock-in provisions--Medicaid managed care beneficiaries are less free than fee-for-service consumers in their pursuit of health care services (Annas 1997). Third, Medicaid managed care beneficiaries may face greater physical, financial, and social disadvantages than their non-Medicaid counterparts. As a result, they may be less able to fend for themselves in disputes related to managed care (Rawlings-Sekunda 1999; and Molnar et al. 1996).
Given these circumstances, state governments have begun to recognize that alternative mechanisms may also be needed. The most important such mechanisms or adaptations are:
Ombudsman Programs, which provide guidance and advice as Medicaid managed care beneficiaries navigate fair hearings, in-plan procedures, and less formal dispute-resolution options.
External Review Programs, which make use of impartial, expert reviewers to evaluate and resolve disputes between managed care consumers and managed care organizations (MCOs).
Expedited Review Procedures, which give accelerated consideration to prospective denials of health care services that consumers and/or their providers believe to be urgently needed.
ABOUT THIS STUDY
MPR studied these three adaptations to provide federal and state policymakers with an understanding of state efforts to adapt federally required grievance and appeal procedures to the particular circumstances of their Medicaid managed care programs. We also sought to provide information about the design and operation of the three adaptations, and to identify the relative advantages and disadvantages of each.
We reviewed recent literature on fair hearings and state adaptations, and progressed to in-depth case studies of the adaptations as they work in five states. Our case study states--Colorado, Florida, Minnesota, New York, and Oregon--were selected, in part, because they run mandatory Medicaid managed care programs, use one or more of the adaptations but had not recently been the focus of similar research, and (in four states of five) enroll beneficiaries with disabilities or chronic illness into their Medicaid managed care programs. Table ES-1 identifies the adaptations we studied in each of five states.
|TABLE ES-1. Adaptations by States Selected for Case Studies|
|Ombudsman Programs||Minnesota, Colorado, and Oregon|
|External Review Programs||Florida, New York|
|Expedited Review Procedures||Oregon, New York|
THE ADAPTATIONS AT WORK
The adaptations in our study offer rich material to compare and contrast the decisions that states make regarding the design and operation of Medicaid grievance and appeal procedures that are not federally mandated. Nonetheless, it is difficult to say whether the adaptations in our study represent those in other states. No comprehensive inventory of all adaptations exists, no central authority encourages their implementation, they may be implemented with or without legislation, some exist more “on paper” than in practice, and they may be located almost anywhere in the configuration of state and local governments. As of this writing, our literature review and contact with selected states indicates that:
Roughly 31 states run ombudsman programs primarily for Medicaid managed care enrollees.
Thirty-nine states run external review programs, fewer than five of which are available to Medicaid beneficiaries.
Approximately 14 states operate state-level (as opposed to plan-level) expedited review procedures, including expedited fair hearings and expedited external reviews.
Key Findings About Ombudsman Programs
The ombudsman programs we studied in Minnesota, Colorado, and Oregon succeed in making it easier for Medicaid managed care beneficiaries to navigate complex grievance and appeal systems. However, because the states have committed only minimal resources to the programs, ombudsmen believe they are not nearly able to reach all the beneficiaries who may need their assistance. Though states regard them as the “eyes and ears” of their Medicaid managed care programs, the ombudsman programs in our study contribute to systemic quality assurance efforts to a very limited extent. Stakeholders credibly blame a lack of well-developed feedback mechanisms and resource constraints for this shortcoming.
Through our case studies, we identified four key determinants of the accessibility and effectiveness of ombudsman programs. The first is geography. In areas where an ombudsman program has a physical presence, the use of program services by beneficiaries appears to program staff to be higher. A second determinant is the use of effective outreach mechanisms. For example, putting information about an ombudsman program in MCO denial notices and on Medicaid identification cards--and not only in managed care enrollment materials--increases the likelihood that beneficiaries will see the information when they need it. Third, beneficiaries will use ombudsman programs only when they view them as being on their side or at least neutral with regard to their disputes with MCOs or the state. Neutrality, in turn, is partly dependent on whether the ombudsman is an independent actor, rather than a government employee. Finally, ombudsman programs are utilized when they achieve results, an impossibility if the program is not accepted by MCOs. MCOs cooperate with ombudsman programs when it is clear to them that: (1) the ombudsman program analyzes issues in an impartial manner, and (2) it understands the constraints and purposes of managed care.
Key Findings About External Review Programs
Unlike most states’ external review programs, those in Florida and New York are available to commercially insured managed care enrollees and Medicaid beneficiaries (whom other states exclude because of their access to fair hearings). The Florida and New York programs differ greatly in the types of disputes they adjudicate and the review formats they use. These differences have important implications for the Medicaid beneficiaries who must decide whether to use the programs, and for other states that may be interested in implementing external review programs themselves. Despite their differences, the Florida and New York programs are both viewed as impartial and fair by consumers, MCOs, and other stakeholders.
Making external review available to Medicaid beneficiaries expands their state-level dispute-resolution options beyond fair hearings. This expansion of options works to the advantage of a beneficiary who is informed about the tradeoffs between the two processes (such as whether the benefit in question will continue while a decision is pending, and the decision-maker’s area of expertise). Our studies in Florida and New York, however, suggest that Medicaid beneficiaries may not be well informed with regard to such tradeoffs, and may not even be aware of the external review option in the first place.
Key Findings About Expedited Review Procedures
Of the three types of adaptations we studied, expedited reviews are the most straightforward in their purpose and implementation. Oregon offers expedited reviews to Medicaid managed care beneficiaries in the form of foreshortened fair hearings, while New York offers expedited versions of fair hearings and external reviews. In both states, only very small percentages of hearings and/or external reviews are expedited. This may be a true reflection of the infrequency of disputes over urgent medical cases, but it probably also results from the way the states design and implement their expedited review policies. The accessibility of expedited review procedures depends largely on who has a say in deciding whether a case is urgent. Beneficiaries, attending physicians, fair hearings officials, and state medical directors all play a role in such decisions (depending on the state). Outreach activities that would publicize the existence of such review policies are minimal, which might explain their infrequent use. Finally, although they are seldom used, the expedited review procedures we studied do effectively reduce the length of the dispute-resolution process, typically from months to weeks, or even days.
As states design ombudsman programs, external review programs, and expedited review procedures, they make choices that affect the flexibility, accessibility, and impact of these adaptations to federally mandated grievance and appeal procedures. The most important choices pertain to: (1) whether the adaptation will be operated by a government agency or an independent organization under contract to the state; (2) the scope of disputes the adaptation is designed to address; and (3) where the state wishes to resolve most Medicaid managed care disputes--at the plan level, at the state level, or in less formal venues.
Programs based in state agencies offer expertise in Medicaid managed care regulations and experience with the policies of individual Medicaid MCOs, while independent organizations provide neutral ground for dispute-resolution, unshadowed by stakeholder interests. Broad definitions of the scope of eligible disputes give many beneficiaries a chance to press their interests but can overburden dispute-resolution systems with idiosyncratic issues, while narrow definitions of scope reduce access to the system and eliminate useful flexibility in policy and practice. Finally, an emphasis on resolving disputes at the level of state agencies can magnify and formalize disputes into entrenched conflicts, while an emphasis on resolution at the plan level creates a need for intensive state monitoring of in-plan grievance and appeal processes.
Promising Elements and Areas for Improvement
The states in our study made different decisions with regard to these tradeoffs, but their adaptations each reap important benefits for stakeholders:
They make grievance and appeals systems adaptable to a wide range of disputes, including those involving quality concerns and appealable access issues such as service denials, reductions, and terminations.
They ensure that Medicaid managed care beneficiaries have a “voice” in the managed care decisions that affect them personally.
They help improve ongoing quality assurance efforts.
In light of these benefits, it seems unfortunate that so few Medicaid beneficiaries use the programs we studied. Our case studies suggest that the low usage is due, in part, to shortcomings in the way the adaptations are implemented. In particular, we found that:
Not all states use the most effective outreach activities to promote their adaptations.
The procedures that some states use for accessing their programs can limit beneficiaries’ access to the adaptations and to fair hearings.
The adaptations lack some of the resources they need to be effective.
States do not take full advantage of the grievance and appeal data generated by the adaptations.
Acting in their traditional role as laboratories for social policy, the states in our study have fashioned several promising dispute-resolution alternatives within the Medicaid program. More fine-tuning of outreach activities could generate greater utilization of these new systems. Improvements in the collection, analysis, and dissemination of data on the numbers and types of disputes could lead to greater understanding of the trends in Medicaid managed care and provide information for better state management of the Medicaid program.
See section 1932(a)(4) of the Social Security Act and, analogously, 42 U.S.C. 1396(u)(2).