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

06/01/2000

DaimlerChrysler offers its U.S. employees and retirees (hereafter referred to as participants) a range of health insurance options including traditional indemnity insurance and PPO packages (both self-funded) and HMOs (fully insured, with DaimlerChrysler paying on a capitated basis).

While all participants have access to these three options during an open annual enrollment, there is a fundamental difference in the design of the plans depending upon whether participants are covered by collective bargaining (represented) or are non-represented participants. About 75% of existing participants are covered by collective bargaining. Non-represented participants have access to a flexible benefits program, whereby they can spend credits across a variety of different benefit plans (e.g. life insurance, health insurance, disability insurance).

The current participation rates for health insurance options are as follows:

  • Represented, active employees - 40% PPOs, 40% HMO, 20% indemnity;
  • Represented retirees - 69% indemnity, 18% PPO, 12% HMO;
  • Non-represented, active employees - 55% PPO, 25% HMO, 7% indemnity, 6% POS;
  • Non-represented retirees - 45% PPO, 38% indemnity, 11% HMO, 2% POS.

The higher share of indemnity insurance among retirees is a function of age, plan availability and limited out-of-network coverage, with less incentive among represented employees to opt for managed care plans. Also, many older retirees during their working years did not have the same exposure to managed care that newly retired individuals now have. For non-represented employees, the flexible benefits package incorporates incentives such as price tags and credits (operating similar to the incentives in the FEHBP), which encourage greater use of managed care options.

Complaints management may vary according to the nature of the complaint, the actual plan, and whether a participant is represented or non-represented. For most complaints, participants will generally contact the plan directly themselves (e.g. payment issues). When the DaimlerChrysler corporate benefits staff receive a complaint, they will investigate and respond to the participant. Represented participants may also choose to contact their union benefit representative at their local facility, who may call the DaimlerChrysler corporate benefits staff.

DaimlerChrysler currently has contracts with about 117 plans (including stand-alone plans for dental, vision and other services). For all major contracted plans, DaimlerChrysler requires them to have a dedicated service area for DaimlerChrysler with its own account manager and staff. Plan staff in these dedicated areas answer questions about the coverage, claims and handle complaints and appeals. DaimlerChrysler also conducts annual overall audits for all major managed care plans, including customer satisfaction.

Appeal mechanisms will vary slightly based on whether participants are represented or non- represented. The internal appeals process for HMOs will also differ according to the relevant state regulation. Union benefit representatives will play a role in the appeals process for represented participants. Once the participant has gone through the plan appeal process, the local union may involve the international union which can then discuss the issue with the DaimlerChrysler corporate benefits staff if it so desires.

For non-represented participants, after they have gone through the internal appeal process of the insurance plan, they can appeal to the DaimlerChrysler Health Care Review Committee, comprising three DaimlerChrysler senior level benefits staff employees.

In terms of the types of complaints and appeals, the most frequent are probably about emergency room coverage denials and retrospective payment rejections. Other frequent complaints include denials for certain ambulance charges and ambulatory surgery centers coverage. However recent provisions which improve ambulance coverage for represented participants and expand coverage for ambulatory surgery centers are likely to see a reduction in these complaints. There are also complaints about non-covered items such as birth control drugs and devices. There are occasional complaints about coverage availability in out-of-network areas, which is only provided by HMOs in an emergency.

Some complaints may also be about denials which are valid denials under the benefits package. For example, some participants may use emergency rooms when they do not meet the criteria that would qualify as life-threatening. DaimlerChrysler tries to monitor such utilization and clearly communicate the criteria necessary for coverage to be applicable. In an appeal, ER medical notes including patient comments will be reviewed. Sometimes a participant's physician will incorrectly advise the participant to use an emergency room in a non life-threatening situation which subsequently results in coverage denial.

There is no readily available data on the volume of complaints. The corporate benefits staff at DaimlerChrysler does not maintain records of the number of complaints or appeals by represented participants which go through insurance plans. For non-represented participants who appeal to the Health Care Review Committee, there may be two or three cases per month maximum, although presumably there would again be a higher volume of appeals going through the plan.

DaimlerChrysler stressed that clear communication was essential in helping to prevent complaints. This includes explaining the provisions of coverage; reminding staff of plan differences during the open enrollment process; maintaining personnel offices at all plants; and affirmatively providing information on a regular basis. DaimlerChrysler also provides complete summary plan descriptions and updates as required.

In terms of patterns of complaints, DaimlerChrysler will contact the plan and seek a specific response. If similar complaints volume persists, DaimlerChrysler may go to the plan and do an on-site audit including checking whether the plan is meeting required program criteria (e.g. coverage requirements, customer satisfaction, payment timelines). The volume of complaints that might generate the need for an audit depends upon the plan and the DaimlerChrysler population in the plan, but as few as half a dozen complaints on one issue could trigger an audit or review. On-site audits by DaimlerChrysler arising from participant complaints are an unusual occurrence and may more likely occur for smaller plans or out of state plans. The majority of plans which have contracted with DaimlerChrysler understand that the company can cease to do business and work hard to fix any problems. DaimlerChrysler has never had to drop a plan due to recurrent high volumes or seriousness of participant complaints. In addition the UAW has staff at DaimlerChrysler facilities and the majority of participants are not shy in identifying any problem about their health insurance plans. Plans are thoroughly investigated before DaimlerChrysler enters into a contract, with the requirement for NCQA certification for all plans.

DaimlerChrysler is currently paying over $1 billion annually for health care and wants its participants to be satisfied. They cover 400,000 lives in total, which includes approximately 105,000 active employees and 94,000 retirees, together with their dependants.

Disenrollment rates would be quite low, with retirees especially unlikely to switch plans in order to maintain physician loyalty. An estimate would be well under 10% annually.

In terms of complaints or appeals data held by plans, plans do keep files on complaints but DaimlerChrysler does not require them to provide any type of annual report on them.

In considering aspects of complaints and appeals management at a national level, it would be important to maintain good internal appeals processes by both employers and insurance plans and not escalate all complaints up through an unwieldy, costly external appeals process. External review should not be used for routine cases, but should be reserved for experimental procedures and high cost/low volume cases (and not, for example, denial cases if there was an expanded emergency room benefit). DaimlerChrysler stressed the need to maximize funding to improve patient care and minimize funding to pay for administrative costs. Maximizing up-front communication is essential.