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

The survey undertaken for the California Managed Health Care Improvement Taskforce indicated that 17% of insured people with a problem contacted their employer benefits office for assistance, the third most common source of assistance after health insurance plans and medical providers. Given this, and the fact that the vast majority of privately insured people receive their health insurance through their employment, it was decided to also examine the role of employers in complaints management, with three large employers being interviewed for this study.

• 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.

• DaimlerChrysler

  • 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.

• Motorola

  • Motorola provides health insurance for its employees on a self-funded, self-administered basis. The distribution of staff in various plan types is as follows:

    • 16% in 23 HMOs;
    • 6% in managed indemnity;
    • 6% opt out and do not have Motorola-provided insurance; and
    • 72% are in a custom designed program to improve the clinical quality of service and patient satisfaction, called the Health Advantage Plan.

    The Health Advantage Plan does not use a gatekeeper, capitation or deep discounting and somewhat resembles a PPO.

    Employees are subject to annual enrollment periods, with about 2% switching plans annually.

    As a self-administered plan, Motorola has installed both internal and external review processes, including the required ERISA appeal process. Motorola is unusual in being union-free nationwide (worldwide except where political processes require otherwise).

    Motorola focuses on proactive systemic quality and service improvements rather than on individual grievances, which typically result from quality and/or service issues. It has a strong emphasis on system-wide evaluation of its health insurance plans. In evaluating its HMOs, the measures it considers are:

    1. Clinical quality - 35%;
    2. Customer satisfaction - 30%
    3. Financial - 20%; and
    4. Access - 15%.

    As a result of this systematic evaluation, Motorola has decreased the number of HMOs it offers to employees from 35 to 23. The share of employees in HMOs has also declined from 35% to 16%, with greater take-up of the Health Advantage Plan. Motorola also offers employees a report card on HMOs, mainly based on the systematic evaluation, but also including HEDIS measures.

    In addition, it undertakes annual customer satisfaction surveys with results as follows:

    • HMOs - improvement in customer satisfaction from 84 to 91%; and
    • Health Advantage Plan - customer satisfaction is about 93-94%.

    Motorola has never lost a case brought to court through the external review process. It operates internal review processes using the standard ERISA process and standard HMO reviews as required by state regulation.

    In conclusion, increasingly, companies like Motorola have developed policies and procedures designed to systematically improve clinical care and customer satisfaction to attract and retain employees.

• Conclusion

  • Across the three employers interviewed for this study, complaints about health insurance were most likely to be used to reassess coverage decisions. None of the employers interviewed were able to provide complaints data which might shed some light on the pattern and volume of complaints, including the range of complaints related to patient protections.

    The level of involvement by the employers in complaints management seemed to vary, with Caterpillar having possibly the most direct involvement which is not surprising given that it operates a self-administered health insurance plan.

    Complaints data were also not a major factor in employer decisions concerning plan and provider selection or disenrollment. However the employers surveyed may use complaints to drive systemic quality improvement. For example, Caterpillar holds regular meetings with providers to seek how to improve practice, including consideration of employee complaints, while DaimlerChrysler may conduct on-site audits of plans in response to unusual patterns of complaints, albeit infrequently.

    In terms of the role of employers, DaimlerChrysler stressed the importance of clear communication in helping to prevent complaints and the necessity for both employers and plans to maintain good internal appeals processes in order to limit the volume of complaints that might otherwise go to external review.