Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. Department of Corporations Health Care Service Plan Complaints Data Annual Reports



Scope - The report includes all complaints (but see next dot point) filed annually with the Health Plan Division about Health Care Service Plans, commonly referred to as HMOs. The Division groups health care service plans into full service, dental, vision, psychological and other. The Division's term for complaints is "requests for assistance", defined as a grievance or complaint against a health care service plan which has been received by the Health Plan Division. All complaints are included, whether justified or not.

Internal plan grievances - Under the Knox-Keene Act health plan enrollees must first participate in the health plan's internal grievance process for at least 30 days before being eligible to seek assistance from the Department of Corporations (with exceptions involving an imminent and serious health threat). This means that the level of complaints handled by the Californian Department of Corporations is likely to be lower than in states which do not impose this requirement. The Department refers back to plans any complaints it receives where the member has not participated in the plan's internal grievance process and reports data on these "referral to plan" complaints in this annual report. However compared to some states which include HMO grievances in their complaints report, this "referral to plan" data comprises only a subset of internal grievances against plans. In summary, both complaints indicators reported by the Department of Corporations vary from those used in other states, and are likely to underestimate the real level of complaints.

Complaints index - The report includes summary tables comparing each plan on the total number of complaints and complaints/10,000 enrollees with breakdowns into four issue types: accessibility, benefits/coverage issues, claims issues and quality of care issues.

Plan specific information - In addition to the summary comparison tables, the report includes detailed information for every plan against which a complaint has been filed. The additional information disaggregates the complaint issues into 32 different issue types Some of these complaint categories are potentially relevant to understanding implementation of patient protections, including:

  1. Experimental/investigational procedure denied;
  2. In-area emergency/urgent service denied;
  3. Out-of-area emergency/urgent service denied;
  4. Plan denial of treatment;
  5. Plan refusal to refer;
  6. Provider entity denial of treatment; and
  7. Provider entity refusal to refer.

Data Analysis

Table 3.2 summarizes key trends in complaints about full service health care service plans or HMOs between 1997 and 1999.

Complaints about HMOs are increasing relative to enrollment - While the HMO complaints rate fell by 7% in 1998, preliminary data indicate an increase of 24% in the complaint rate in 1999. However, as with the number of consumer calls received by the Department of Insurance, the absolute volume of HMO complaints received by the Department of Corporations seems disproportionately low for such a populous state as California.

Quality of care issues are the major reason for complaints - The share of complaints mentioning quality of care issues has remained relatively constant over the last few years. The Department of Corporations allows multiple issues to be recorded for each complaint, meaning that the total issues recorded are greater than the number of complaints. In 1998 (the most recent year for which final data are available, the major types of complaints were:

  1. Quality of care complaints - 64%;
  2. Claims complaints (e.g. insufficient or slow payment, increases in premiums) -34%;
  3. Benefits and coverage complaints (e.g. rejection or cancellation of coverage) - 24%; and
  4. Accessibility (e.g. lack of primary care physician or specialist availability) - 7%.

Table 3.2: Complaints about Full Service HMOs, California, 1997-1999





Complaints (number)




Complaints/10,000 enrollees




Quality of care issues




Quality of care issues/10,000 enrollees




Quality of care issues as share of total complaints




Note: 1999 data is still draft, awaiting reconciliation and production of final consolidated 1999 report.

In order to understand the significance of patient protection issues in consumer complaints, detailed quality of care data were examined for a sample comprising the six largest HMOs. The six largest HMOs - Blue Cross of CA, Blue Shield of CA, Health Net, Kaiser Foundation Health Plan Inc., Medpartners Provider Network, Inc., and Pacificare of California had 75% of market share in 1998. Figure 3.2 provides some breakdown of quality of care complaints for these largest HMOs.

Nature of quality complaints - Summing complaints across plans, providers and different settings, "denial of treatment" and the related "refusal to refer" complaints comprised 52% of all quality complaints in 1998, while complaints about "inappropriate care" accounted for 43% of all quality complaints.

Understanding of "referrals to plan" data - It is difficult to know how to interpret the "referrals to plan" data, which result when consumers who ring the Department of Corporations are advised that they must have first exhausted the plan's internal grievance process. One option is that high levels of "referrals to plan" complaints suggest that consumers are not well informed of their plan's internal grievance process. Regulators may want to consider targeting plans whose members produce higher than average rates of "referral to plan" complaints relative to plan enrollment.

Levels of "referral to plan" complaints vary, with the rates for 1998 for the major plans being:

  1. Blue Cross of California - 0.70 referrals to plans/10,000 enrollees;
  2. California Physicians Service (Blue Shield) - 0.70;
  3. Health Net - 0.86;
  4. Kaiser Foundation Health Plan - 0.54;
  5. Medpartners - 0.02;
  6. Pacificare of California - 1.04;
  7. All full service plans - 0.62.

Figure 3.2: Major Reasons for Quality of Care Complaints, Six Largest HMOs, California, 1998 

Figure 3.2: Major Reasons for Quality of Care Complaints, Six Largest HMOs, California, 1998

Assessment of the Report

Consumer friendliness - The report is highly quantitative, including multiple measures (RFAs or complaints, referral to plans, an RFA complaint index, number of RFAs by issue categories, and RFA issue complaint indices). It is likely to be difficult for consumers (and indeed other stakeholders) to determine which of these measures is most meaningful and then how to assess the relative performance of individual plans.

The inclusion of data on the four complaints categories makes the tables highly complex with little guidance or interpretation. Consumers may simply look at plans with high absolute levels of complaints, without examining complaints rates in order to put plans on an equal footing. There is no graphical presentation of the complaints data, nor is there any interpretation by the Department to explain the relevance of the findings.

Another factor which may limit the consumer usefulness of this report is that the RFA data is based on all complaints, rather than justified complaints. In addition, the report contains a prominent disclaimer as follows: “THIS INFORMATION IS PROVIDED FOR STATISTICAL PURPOSES ONLY. THE COMMISSIONER OF CORPORATIONS HAS NEITHER INVESTIGATED NOR DETERMINED WHETHER THE COMPLAINTS COMPILED WITHIN THIS SUMMARY ARE REASONABLE OR VALID.” Such a disclaimer is likely to encourage consumers to discount the relevance of the information in the report.

The joint report by Consumers Union and the Center for Health Care Rights cited earlier (Attachment 2) analyzes the Department of Corporations complaints reports in some detail, including providing suggestions for how these reports could be improved.

Complaints data – As the Department redirects consumers back to their plans’ internal grievance process until the lesser of either their plan has reached a decision or they have spent 30 days in the internal grievance process, the Department of Corporations collects a smaller subset of complaints than other states which do not impose this requirement but instead accept all complaints. Comparisons across plans in the level of complaints/enrollees may reflect the extent to which plans advise members of their right to complain to the Department of Corporations, once they have gone through the internal grievance process.

Implementation of managed care protections - The disaggregation of complaints data into 32 issue categories allows greater examination of patterns of complaints related to particular patient protections. However because this data is available only at a plan-specific level, analysis can be time consuming to identify policy relevant trends, with these reports more likely to be useful for tracking individual plans than aggregate trends. One useful feature is the distinction in issue categories between complaints arising due to the action or inaction of the plan, physician, provider entity, etc.

Center for Health Care Rights 1999 Report


Scope – The report (Attachment 6) is a comprehensive policy analysis of complaints received by the Hotline, rather than simply a comparative complaints report card to help consumers in making health insurance plan choice decisions. The data in this report include:

  1. Comparative charts of problems across health plans and medical groups, identifying individual plans and medical groups, and ranking them on a simple 5-point diagrammatic scale as to how they performed relative to the average (Refer Chart 7, pg8);
  2. Quantitative data listing complaints rates/10,000 enrollees for individual health plans and medical groups, presented through bar charts (Refer pg14).
  3. Consumer stories which provide an example of a problem category such as inappropriate care through including a Hotline case story, the action recommended and the system problem identified as a result of the call (Refer pg17).

In addition to this data, the report contains an analysis of the uninsurance problem and includes recommendations for health system change based on the calls received by the Hotline.

Period - The report covers the period from July 1998 to June 1999, the second reporting period for the Hotline which commenced operating in July 1997.

Coverage - The report is unusual among comparative report cards in distinguishing complaints by payer types - e.g. commercial HMOs, commercial preferred provider organizations, Medicare and Medi-Cal. Reflecting the peculiarly Californian evolution of provider groups and IPAs, the report also distinguishes problems reported by consumers about health plans and about medical groups. In the Sacramento area, almost all the 1000 primary care physicians are affiliated with one of eleven major physician organizations - 7 medical groups and 4 IPAs. These medical groups contract with most of the health plans, with the exception of The Permanent Medical Group which contracts exclusively with Kaiser Foundation Health Plan.

Complainants - the data is based on consumer complaints.

Complaints index - The index is calculated as the number of consumer problems reported to the Hotline per 10,000 enrollees, excluding consumer education inquiries. The complaints index does not distinguish whether complaints are justified or not justified. The Hotline can record up to three "issues" or problem for each caller, so that the complaints index does not reflect the volume of complainants but rather the volume and type of problems.

Complaint categories - The Hotline uses 57 distinct issues categories, but this Report includes data on 8 aggregate categories, namely customer service, delays in getting care, denials of care, inappropriate care, payment for care disputes, prescription drug problems, specialty care problems and other problems.

Data Analysis

Figure 3.3 shows the complaints rate for health plans of different types, while Figure 3.4 shows the complaint issues broken down into eight issue types.

Complaint rates vary substantially by plan type – There was a three-fold difference in the complaint rate across plan categories, with the lowest rate of complaints being experienced by PPOs and HMO-Group Model plans. (Note, however that there is only one group model HMO, Kaiser Foundation Health Plan, in the Sacramento area.) In some states it is possible to make a conclusion about the complaints rates reported by members of traditional indemnity vs. managed care health insurance. However the high penetration rate of managed care in California means that indemnity insurance is largely restricted to the Medicare and Medi-Cal (Californian Medicaid) populations.

Figure 3.3: Consumer Problem Rates by Health Plan Type, Sacramento, 1997/98 - 1998/99

Figure 3.3: Consumer Problem Rates by Health Plan Type, Sacramento, 1997/98 - 1998/99

Figure 3.4: Consumer Problem Rates by Type of Issue, Sacramento, 1997/98 - 1998/99

Figure 3.4: Consumer Problem Rates by Type of Issue, Sacramento, 1997/98 - 1998/99

Assessment of the Report

Consumer friendliness -As noted earlier, the report appears to be directed at both the health policy sector, as well as individual consumers. Consumer-friendly features of the report include:

Use of different presentation formats – for example, the performance of health plans is compared using diagrammatic formats with average, above average and below average style of rankings. This data is then also presented more quantitatively using bar charts, showing the statistical significance of the complaint issues rates.

Use of stories – By including examples of consumer calls to the Hot Line, the report explains in simple language what is meant by problems such as “inappropriate care” which may help consumers identify with, and realize that they have a similar problem. The stories are also helpful in identifying specific actions taken by the Hotline to resolve the problem.

Education on health insurance types – By providing explanatory background material on what is meant by different types of health insurance, the report serves to educate consumers and provide a context for interpreting the complaints results.

Other aspects of the report which may make it less consumer-friendly include:

Length – Both annual reports are over 60 pages long and quite densely written, making it difficult for a consumer seeking a quick answer concerning the relative complaints performance of a specific plan. However the Center's view is that this report is targeted at consumers for general problem solving, rather than consumers shopping for insurance.

Distinction between Health Plans and Medical Groups – Consumers may have difficulty following the presentation of complaints issues and identifying the results most relevant to them.

Inclusion of all issues – The report includes all issues raised by consumers, whether justified or not, which could be problematic if there are differences across plans. However staff at the Center commented that the role of an independent assistance program is not to adjudicate complaints, but to attempt to provide assistance and help people understand their rights.

Monitoring patient protection implementation – Obviously, the report is limited to identifying consumer complaints in a limited geographic area, and is therefore less relevant in extrapolating the likely impact of patient protection legislation. A positive feature, however, is the breadth of issues categories captured by the Hotline (57), many of which are of interest to this question.