Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. B. Jurisdiction and Liaison with Health Plans


The MIA operates under two sets of legislation, one applying to the whole insurance industry and the other applying specifically to HMOs. These laws have different penalties, although there are moves under way to make the laws, including the penalties, more similar.

The MIA is currently responsible for licensing all health insurance plans including HMOs. As part of this process, and under the new Appeals and Grievances Law, HMOs are required to file details of their internal complaints processes with the MIA. This would generally occur at the initial issue of a license, but occurred for all existing HMOs when the legislation took effect on 1 January 1999.

In the 1960s when consumer protection laws were enacted, businesses that were otherwise regulated under existing legislation were exempted. This was the case with insurance plans which are therefore exempted from the operation of Maryland's consumer protection laws under the Office of the Attorney General.

Appeals and Grievances

The Maryland Insurance Administration's 1999 Report on the Health Care Appeals and Grievance Law provides a detailed analysis of the first 12 months of operation of the new legislation.

Under the new Appeals and Grievances Law, consumers who receive an adverse decision from their plan denying services based on lack of medical necessity have access to an internal grievance process through their health insurance plan. Similar to the Californian Department of Corporations, the MIA will not handle such complaints until the consumer has exhausted the plan's internal grievance process (unless there is an emergency or compelling reason). Health insurance plans generally have 30 days to respond to consumer grievances (1 day for emergencies, or 45 days for retrospective denials). However the HEAU will support and help consumers prepare their grievance during this period, and may also become involved in mediating disputes.

Within the MIA there are two separate units handling health insurance complaints. The Life & Health Complaints Unit handles all health insurance complaints that do not involve issues of medical necessity (e.g. coverage, premiums), while the Appeals & Grievances Unit handles grievances related to medical necessity. The Appeals & Grievances Unit in the MIA will become involved when consumers have exhausted the internal review process, at which time investigators will contact the plan, requesting a written response within seven days. The MIA may then refer the grievance for external review, using contracted Independent Review Organizations for medical review.

For general health insurance complaints MIA regulators noted that the vast majority of complaints are provider-driven, often arising from the Prompt Payment (30 days) requirement.

The Appeals and Grievances Law covers all health insurance plans (except those exempted under ERISA from state regulation, Medicaid and Medicare). Maryland did not attempt to define the appeals law as only applying to HMOs because of awareness that this would provide an incentive for new models of care to emerge which were not captured by a limited definition. The legislation deals with all commercial insurance plans including dental, catastrophic, medical and surgical etc.

When consumers are denied care, they must receive a letter including reference to the specific criteria on which the care is being denied. For example, payment for an emergency admission may require a patient to meet a specified number of criteria indicating their emergency status. Consumers often find out about the utilization review criteria used by the plan in denying care at the stage when they are required to seek pre-authorization. Sometimes this information can aid the health professional in more completely identifying patient characteristics and undertaking any other necessary tests to allow the patient to qualify for medical care.

Insurance plans are required to file their utilization review criteria with the MIA for approval. The MIA will examine the validity of these criteria, with the legislation requiring that these criteria are: objective, clinically valid, compatible with established principles of health care, and flexible enough to allow deviations from norms when justified on a case-by-case basis. Prior to the new legislation, the Department of Health and Mental Hygiene (DHMH) had responsibility for approving utilization review criteria of insurance plans. Staff at the HEAU commented that previous advice from DHMH staff was that plans that ran into difficulties in getting approval of their criteria tended to be those plans that developed criteria internally, rather than purchasing stock criteria. Now, the HEAU receives copies from the MIA of all plans' utilization review criteria which are often useful in the HEAU's informal assistance and mediation role during the internal grievance process.

HEAU staff noted that in order to keep denials out of the grievance process, insurance plans may attempt to find contractual reasons to deny care, rather than attributing it to the lack of medical necessity. For example, plans may attempt to deny jaw occlusions or plastic/reconstructive surgery on the grounds that these services are not covered. In recognition of this situation, the MIA's report on the operation of the Appeals and Grievance Law recommended that an appeal process also be established for coverage decisions. Legislation to expand the appeals and grievance process for coverage and contractual issues was passed by the Maryland General Assembly in 2000.