Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. C. Complaints Reports


Definition of Complaints

The NAIC proposes that best practice would incorporate including both written and oral complaints, with the distinction between complaints and inquiries being that a complaint includes the expression of a grievance.

Consistency with NAIC Database

In some of its strongest language, the NAIC states that "it is imperative that states adopt the uniform data standards used for the NAIC Complaints Database System (CDS)". The CDS was "established to facilitate uniform data standardization, complaint analysis and the sharing of complaint data by multiple states".

Appendix B of the Draft White Paper comprises the NAIC Standard Complaint Data form. The form captures data using the following categories:

  1. Type of coverage by line of insurance - under accident and health insurance the categories relate generally to the purchaser (e.g. Medicare supplement, individual) and some health condition/service groups (e.g. mental health, cancer/dread disease);
  2. Reason for complaint - the first level categories are underwriting, policyholder service, claim handling and marketing & sales. Within these four categories, the following subcategories may have some broad relevance to the implementation of patient protection legislation:
  3. Experimental;
  4. PCP referrals;
  5. Utilization review;
  6. Quality of care;
  7. Medical necessity; and
  8. Denial of claim.

However compared with the complaints and grievance data collected by many of the states in this study, this database is much higher level (consistent with it being required to apply to all lines of insurance business rather than health insurance alone). It is therefore less likely to yield major insights into patterns of complaints relevant to understanding the implementation of patient protection legislation.

Disposition - The database allows up to 3 responses to be selected from a field of about 40 options as to the outcome of the complaint.

The Draft White Paper notes that states should submit closed complaints data.

Complaint Indices

The NAIC suggests that it is best practice that "aggregate complaint information should be provided in complaint index ratio format and should include well- documented definitions and explanations of calculation methodology". It also notes that it is "more accurate to have complaint index ratios based upon the number of policies in force instead of premium volume", but concedes that this information is often not readily available. The NAIC notes that complaint indices may be developed in a number of different ways and that it is important to base them on reliable data and to adequately define all categories and terms.

Justified Complaints

The NAIC is not prescriptive as to whether states should make a final determination as to whether complaints are justified or not justified. It notes that some states such as California make such a determination, but offers no advice as to whether this is desirable or not, simply noting somewhat ambiguously that the final disposition of the complaint should be "consistent with the administrative appeal procedures in the state". In discussing state submission of data to the CDS, the NAIC also notes that some states submit only "closed complaints that the department determines are justified", but again, makes no recommendation as to the preferred option.

Provider Complaints

The NAIC notes that regulators "struggle" with provider complaints, given the volume of consumer complaints. While recognizing the legitimate concern of state insurance departments about "being used as collection agencies", the NAIC cautions that providers play an integral role, citing an example relating to health insurance consumer protection standards. In particular, it acknowledges that provider education on "medical service authorization timelines, appeal rights, prudent layperson emergency services standards, and the like, is a key element of any strategy to promote compliance and improved health plan performance".

Analysis of Patterns of Complaints

The NAIC stresses the importance of a complaints database in tracking patterns of complaints. While noting that complaint trends may be used to trigger a referral to the market conduct or enforcement areas, the Draft White Paper does not provide any guidance on what level of complaints might constitute a pattern leading to further action, referring alternatively to "a large influx of complaints" and "a certain level" of complaints. Once a pattern has been identified, the NAIC suggests that "Department staff may want to meet with the company to review adverse trends and require that the company establish a compliance plan". It also notes that complaints patterns "should be considered in the selection of companies for examination and in the determination of the scope of an examination". Another proposal is that complaint patterns may be assigned to a single analyst or team of analysts to allow increased scrutiny and understanding.