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


While the Department of Health handles quality of care complaints and licensing, the Department of Insurance still has regulatory responsibility for all types of health insurance including: indemnity insurance, HMOs and POS plans). Moreover, self-insured plans are outside the Department's jurisdiction, with some of these plans contracting with PPOs.

New York, like some other states in this study, has experienced problems because of the lack of direct regulatory authority over independent practice associations (IPAs). In 1999 Wellcare HMO experienced financial difficulties due to losses by its primary IPA capitation contract. Proposals to enhance regulatory authority over IPAs which are under current consideration by the Department of Insurance include:

  • A requirement on IPAs to make a security deposit, similar to the financial reserve requirements already applied to HMOs; and
  • Promoting the use of "stop-loss" insurance for IPAs to protect against excessive and catastrophic claims.

The Consumer Services Bureau (CSB) provides detailed monthly complaints reports to the Life, Health and Property Bureaus. The CSB views itself as the "eyes and ears" of the Department and may recommend market conduct exams on the basis of consumer problems. It may also advise the Life, Health and Property Bureaus if there are delays in payment of claims, indicating potential financial difficulties for a plan. The CSB participates in quarterly meetings which the Life, Health and Property Bureaus has with all plans.

Grievance Data

HMOs are required to submit internal utilization review (UR) and grievance data to the Insurance Department, which are then included in the Department's published annual complaints reports. This requirement applies to all HMOs, as well as insurers offering a contract that meets the definition of a managed health care insurance contract. Section C on Complaints Reports discusses the type of data submitted by plans in more detail. However, in summary, the Department defines UR appeals as when a consumer seeks to overturn an insurer's decision to deny a medical service on the grounds of medical necessity or that services are investigational or experimental, while grievances are defined as all other challenges to decisions made by an HMO.

To ensure consistency in grievance and UR data submitted by plans, the Department released a circular letter in 1999 specifying what should be included in these reports (Attachment 1). Regulators commented that, following the issuing of this circular, they were confident about the comparability of data coming in from plans. Regulators also noted that while the relevant legislation is quite clear in distinguishing between UR appeals and grievances, sometimes insurance plans will have a combined department which manages both types of complaints. The Department has established a single point of contact for each plan to deal with UR and external review.