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


Caterpillar provides health insurance through a self-funded, self-administered plan for about 40,000 employees or 150,000 covered lives in the U.S. Unlike many large employers, Caterpillar does not use tightly managed care gatekeeper plans. It provides a PPO plan for about 85% of its employees not in a HMO; the balance are in an indemnity plan. In Illinois Caterpillar developed its own PPO network with direct provider contracting. For employees located outside Illinois, Caterpillar contracts with a national PPO, First Health. Managed care HMO penetration for Caterpillar employees is less than 15%. HMOs are offered, sometimes in small locations which lack an adequate PPO network.

Given that Caterpillar is directly administering health benefits for its employees, it is closely involved in employee complaints. The types of issues that Caterpillar Employee Benefits handles includes:

Payment issues - While these are not a major source of employee complaints, there may be some complaints if employees choose to go outside the network. In this situation, providers are paid less than 100% benefit level by Caterpillar using either the network fee schedule or "usual and customary" fees, with the option of balance billing of employees.

Plan coverage issues - Employees may complain about non-covered services (e.g. infertility treatment, adoption benefits, over-the-counter drugs). Currently the most frequent complaint is about coverage for preventive services.

Quality issues - Employees will also contact Caterpillar if there are problems with providers in the network. In this situation, Caterpillar will advocate on the employee's behalf, requesting a written explanation from the provider. Caterpillar holds regular meetings with providers to seek how to improve practice, including consideration of employee complaints.

Caterpillar accepts both verbal and written complaints. While it does not keep a formal ledger or register of verbal complaints, it does keep documentation on written complaints, including any correspondence it has with providers. Caterpillar examines patterns of complaints and issues periodically to determine whether there is a business case for expanding coverage. For example, in response to employee issues about preventive services, there is currently a Taskforce on Clinical Preventive Health Care Services examining services including immunization, PSA testing, weight loss, etc. Similarly, if there was a pattern of complaints around the level of benefits for some services (e.g. the limits on spending or visits for dental services), Caterpillar would examine this to determine if there was a problem with the benefit structure. There is no specific level or threshold of complaints that triggers investigation or response by Caterpillar. Rather, the instincts of the benefits manager seem to prevail in determining when a complaints pattern is significant.

In terms of formal appeal processes for complaints concerning denial, Caterpillar follows the ERISA requirement and those contained in bargaining unit agreements for internal appeal processes.

Previously, Caterpillar was very active in pursuing utilization review, using federal PROs to undertake both pre-admission and concurrent reviews. Now, there is a more devolved structure with Caterpillar delegating utilization review to providers, with this monitored retrospectively. However retrospective denial of payment, in terms of medical necessity, is essentially a non- issue. Also, Caterpillar has never invoked day limits in utilization review.

Prospective utilization review undertaken by Caterpillar generally occurs at an aggregate level, rather than a case by case level, in conjunction with medical providers. Caterpillar undertakes prospective review of coverage decisions (e.g. cosmetic surgery) and medical efficacy of particular services, to determine whether a service is proven or investigational. In over 20 years there have been only two cases that went to litigation in federal court, both around bone marrow transplants for breast cancer patients, with one decision upheld and one decision overturned. As a result of these complaints, Caterpillar developed a plan outside of group insurance to provide coverage for bone marrow transplants for breast cancer patients within certain clinical trials. However participation in this plan and these clinical trials have been almost non-existent for Caterpillar employees.

Caterpillar has also monitored the extent of utilization review undertaken by PROs. In one example, a PRO had been involved with Caterpillar in helping to develop a standard for skilled nursing facility patients. This standard would have resulted in two-thirds of patients currently receiving care being discontinued. Caterpillar determined that the UR criteria were too aggressive and modified the standard.

Employees enrolled in HMOs have the opportunity to switch on an annual basis. However there is very limited migration (less than 2%) with HMOs being well-accepted in the population choosing to use them. For employees participating in PPOs, the rate of out of network provider utilization is less than 5%.

Similarly, the provider network is extremely stable with an annual loss of physicians and ancillary providers at less than 2%, mainly due to factors such as retirement or relocation. Employee complaints have not resulted in providers leaving Caterpillar's network.

The relationship between Caterpillar and the national PPO, First Health, is strictly a contractual arrangement, with the conditions for First Health's operation set by Caterpillar. First Health's role is simply to contract with hospitals and physicians across the nation. Caterpillar determines the coverage of benefits and utilization review protocols; First Health sets the criteria they use in selecting network providers. Given this, there is no need for First Health to maintain any internal grievance process. All complaints are received directly by Caterpillar who is responsible for paying for health care services.