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



The complaints reports produced by the New York Department of Insurance are among the most comprehensive of any of the states included in this study. Attachments 2 & 3 provide copies of the 1999 and 1998 reports respectively, which each include data for the previous calendar year. Both the 1998 and 1999 reports are examined as they differ in format. The key differences between these reports are:

  • The 1998 report includes substantial trend data examining patterns of complaints over the three years from 1995 to 1997, while the 1999 report presents annual 1998 data only; and
  • The 1999 report includes for the first time HEDIS performance measures reported by HMOs to the New York State Department of Health, in addition to complaints data.

These reports also provide advice for consumers on how to choose a health insurer, background information explaining the key differences between managed care and fee-for-service health insurance, and information on new consumer protections enacted by the legislature.

In addition to publishing comparative complaints reports, the Department makes available plan- specific information to consumers.

In what follows, the key features of the reports are described, the major findings from data analysis are identified, and the usefulness of the reports is assessed from both the perspective of consumer friendliness and their value in monitoring the implementation of patient protection legislation.


Scope - As a result of their comprehensiveness, the New York complaints reports are highly complex. In particular, the reports break down complaints using two key variables, type of complaint and type of health insurance, as follows:

Type of complaint – the reports distinguish between the following different complaint measures:

  • Total complaints – complaints made by consumers and providers to the Department of Insurance;
  • Prompt pay complaints – complaints made by consumers and providers to the Department of Insurance about late payments under the Prompt Payment law. These complaints are a subset of the Total Complaints category;
  • Complaints to the Department of Health – complaints against HMOs made by consumers and providers to the Department of Health which typically involve quality of care issues. These data are not included in the Total Complaints category.
  • Grievances – these are internal complaints made by consumers directly to their health insurers challenging an insurer’s decision, excluding decisions made on the basis of medical necessity or on the basis that services are investigational or experimental; and
  • Utilization review appeals – these are internal complaints made by consumers directly to their health insurers challenging an insurer’s decision where the insurer cited the grounds of medical necessity or on the basis that services are investigational or experimental.

Type of health insurance – the reports distinguish between the following types of health insurance:

  • HMOs – offer HMOs products and HMO/POS plans that include an out-of-network option;
  • Commercial health insurers – offer indemnity insurance as well as managed care products such as PPOs, and may also insure the out-of-network benefits of HMO- POS plans; and
  • Nonprofit indemnity insurers – offer indemnity insurance as well as managed care products such as PPOs, and may also insure the out-of-network benefits of HMO- POS plans.

Given the evolution of different types of managed care products, the differences among these three groups of health insurers are not as clearcut as previously.

Justification of complaints – the reports include both total and "upheld" complaints. For complaints received by the Department of Insurance or the Department of Health, upheld complaints are when the respective Department decides in favor of the complainant. Complaint ratios are calculated using upheld complaints. Similar measure are used for utilization review appeals and grievances where the reversal rate is the percentage of decisions decided by the health insurer in favor of the consumer.

Complaints ratios – in the 1999 report these ratios are calculated on the number of upheld complaints divided by the health insurer's total annual premium, using complaints received by the Insurance Department only (not Health Department complaints). A 1.0 ratio indicates the Department upheld one complaint for every $1 million in premium. The report does not include any ratios for grievances or utilization review appeals.

Coverage – the reports exclude data on some low-volume premium plans. HMOs are excluded with less then $25 million in NYS premium, while non-profit indemnity and commercial insurers are excluded with less than $50 million in NYS premium.

Data Analysis

Some of the key aggregate findings follow.

Consumers are more likely to complain to their health insurer than to state government departments.

The 1999 report includes the HEDIS measure as to the proportion of health plan members who had called or written to their plan with a complaint or problem in the last 12 months. On average, 21% of HMO members had done so, noting that this measure is greater than the number of complaints which might actually result in a formal grievance or utilization review appeal with a plan.

A Californian survey (see California chapter) has indicated that there is a hierarchy of where people complain, with consumers being much more likely to complain to their health plan than to a state government agency. This is confirmed for New York in Figure 5.1 which sums the total closed complaints across HMOs, nonprofit indemnity and commercial insurers, regardless of whether the complaint was upheld. Figure 5.1 indicates that consumers are about three times as likely to formally complain directly to their plan than to state government departments. This is not surprising. All state insurance departments including New York advise consumers to first take advantage of the insurer's internal appeal process to resolve any problems.

 Figure 5.1: Where Complaints are Received, New York, 1999

Figure 5.1: Where Complaints are Received, New York, 1999

There are major differences in whether complaints are justified or upheld according to where the complaint was lodged and the type of health insurance plan.

Table 5.1 shows the proportion of complaints that were upheld in favor of the complainant by where the complaint was lodged and the type of health insurance plan. The 1998 Report notes that interpreting reversal rates is complex. For grievances and utilization review appeals, low reversal rates may mean that plans are initially making determinations in compliance with contracts, regulations and laws, or it could mean that plans are incorrectly affirming some of their determinations. High reversal rates may reflect the poor quality of plans' initial determinations or may reflect a responsive internal grievance process.

In the context of these qualifications, it is notable that non-profit indemnity insurers have much lower rates of upheld complaints than HMOs and commercial insurers for complaints lodged with the Department of Insurance, suggesting that they have a better complaints record in being less likely to receive unwarranted complaints.

This difference for non-profit indemnity plans may partly be a function of the type of complaints - prompt pay and other complaints. If, for example, prompt pay complaints were more likely to be upheld and non-profit indemnity plans received a lower volume of such complaints, that might account for their lower reversal rate for total complaints. In fact, prompt pay complaints comprise 79% of all HMO complaints to the Department of Insurance, 62% of commercial plan complaints, but only 43% of non-profit indemnity complaints. However Table 1 also shows that prompt pay complaints are upheld at only a slightly higher rate than total complaints for HMOs and commercial insurers, suggesting that there are other factors behind the relatively good performance of non-profit indemnity plans.

Table 5.1: Share of Complaints Upheld, New York, 1999

Where complaint lodged Type of complaint HMOs Non-profit indemnity insurers Commercial insurers
Department of Insurance Total complaints 40% 16% 40%
Department of Insurance Prompt pay complaints 43% 13% 50%
Department of Health Quality complaints 21% NA NA
Health plans Utilization review appeals 51% 47% 21%
Health plans Grievances 48% NA NA

Non-profit indemnity plan members are much less likely to complain than members of HMOs or commercial health insurance plans.

Figure 5.2 shows the complaints ratios (total upheld complaints divided by the premium volume of plans), indicating that HMOs and commercial insurers are two to three times more likely to receive upheld complaints than non-profit indemnity insurers.

Figure 5.2: Complaints Ratios for Complaints Lodged with the Insurance Department, New York, 1999

Figure 5.2: Complaints Ratios for Complaints Lodged with the Insurance Department, New York, 1999

There have been quite large increases in the rates of all types of complaints between 1997 and 1998.

Table 5.2 shows the growth in complaints between 1997 and 1998 for the different types of complaints. Ideally, it is best to use complaints ratios when examining trends as this adjusts for changes in the volume of health insurance business. However neither grievance data nor utilization review appeals are expressed as ratios, meaning that only changes in the total volume of such complaints can be examined. The very large increase in grievances and utilization review appeals between 1997 and 1998 may therefore partly reflect growth in these market shares.

Table 5.2: Growth in complaints, New York, 1997-1998

Complaint measure Health insurance type 1997 1998 % increase
Complaints ratio (total complaints to Department of Insurance) HMOs 0.162 0.302 86
  Non-profit indemnity insurers NA 0.119 NA
  Commercial insurers 0.112 0.329 194
Number of utilization review appeals (closed) HMOs 4,439 14,427 225
  Non-profit indemnity insurers 801 5,606 600
  Commercial insurers 1,371 5,979 336
Number of grievances (closed) HMOs 10,657 18,741 76

Note: In 1997 complaints ratios for non-profit indemnity insurers were calculated using claims, rather than premiums, and are therefore not included given the lack of comparability with the 1998 calculation.

Assessment of the Report

Consumer friendliness - The length and comprehensiveness of these reports may deter some consumers. The 1999 report recognizes this potential problem, noting that the amount of information "can appear to be intimidating", and proposes a strategy for consumers to navigate the report through a series of steps according to their type of health insurance. The series of questions about choosing a health insurer and the explanation of managed care options are also helpful in providing consumers with some context for the complaints data.

The style and layout of the 1999 report is more consumer-friendly than the 1998 report. In part, this is a result of including HEDIS data using a graphical presentation format (colored circles denoting average, above average and below average performance). The presentation of the complaints data is also simplified in the 1999 report, with easier-to-read tables that include some bar charts and the complaints ranking prominently displayed in the table. Also helpful from a consumer perspective is the deletion of the detailed policy analysis material found in the 1998 report which examined three-year trends in complaints and differences in complaints by geography, profit status and premium volume.

Despite these improvements, the 1999 report still presents the consumer with a significant analytical challenge - to understand the importance of the different types of complaints measures (total complaints, prompt pay complaints, UR appeals, grievances, complaints to the Department of Health), to compare the performance of relevant plans across these measures using either rankings or complaints ratios, and then to make a balanced judgement as to the most suitable plans.

Monitoring patient protection implementation - The data in these reports do not provide sufficient disaggregation of the types of complaints, grievances or utilization review appeals to be useful in monitoring the implementation of specific patient protections. However it is likely to be of use to regulators, particularly in assessing differences among plans in reversal rates for grievances and utilization review appeals.

Future plans - Under the recent external review legislation, the Department will be required to include external review data in its 2000 report to the legislature.