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

In 1999, the U.S. House of Representatives and the U.S. Senate passed legislation addressing patient protections under health care plans, with the bills still being considered in Conference Committee as at June 2000. This followed the passage of comprehensive patient bills of rights in some 39 states between 1994 and 1998, in response to growing consumer concerns. While there is a perceived managed care backlash, consumers generally report high satisfaction levels with their individual health care providers and plans, with limited quantitative data available on the comparative problems faced by people in indemnity health insurance and managed care respectively.

Accordingly the federal Department of Health and Human Services issued a Task Order seeking advice on “Consumer Protection in Private Insurance: State Implementation and Enforcement Experience”. This Task Order is in two parts as follows:

1. Implementation Case Studies -- this part seeks to identify the lessons learned by states in implementing selected consumer protections; and
2. Identification of Most Common Consumer Health Care Complaints.

This report is submitted in accordance with the second part of the Task Order, while a separate report will be submitted on state implementation case studies.

This study provides background lessons for federal regulators who may be required to implement federal patient protection legislation by focusing on consumer complaints about private health insurance in a sample of selected states and major employers. Specifically, the study seeks to identify the agencies responsible for health insurance complaints and the availability of complaints data, to review the status of complaints "report cards” and to analyze complaints data as a tool in understanding the implementation of patient protections.

A sample of six states (California, Maryland, New York, Oregon, Texas and Vermont) was selected based on a review of the web sites of all 50 states and discussions with experts in health insurance regulation. The six states were selected to represent a range of jurisdictional responsibility for health insurance complaints and the existence of ombudsman programs, together with states representing best practice in publication of health insurance complaints report cards. In four of the six states (California, Maryland, Texas and Vermont) ombudsman programs operate independently of the insurance regulatory agency. Four states (California, Oregon, New York, Texas) publish health complaints report cards for consumers which provide comparative data across health plans.

In each state key officials were identified who had regulatory responsibility for health insurance complaints management, operated ombudsman programs and/or were involved in the production of complaints report cards. Using a written consent form, officials were invited to participate in this study through interviews conducted on a "background" basis. Appendix 1 includes the list of interviewees, but this report does not attribute comments to a specific person, instead including interviewee remarks and observations in summary.

In total, 22 state officials across 10 state-based agencies were interviewed using a standard questionnaire (Appendix 2). In two states (Maryland and New York) interviews were conducted in person, while in the remaining four states interviews were conducted by telephone. Only one of 11 agencies contacted, the California Department of Corporations, was not able to participate because of the timing of the study. The health insurance regulatory functions of the Department of Corporations are shortly to be transferred to the newly established California Department of Managed Care, and the workload associated with this transition precluded the involvement of staff of the Department of Corporations in this study. The 10 state-based agencies included 8 state government agencies and two private sector agencies, the California Center for Health Care Rights and the Vermont Office of Health Care Ombudsman.

Telephone interviews were also conducted with the employee benefits staff of three major employers (Caterpillar, DaimlerChrysler and Motorola) to ascertain their role in complaints management. Appendix 3 is the standard questionnaire used in employer interviews.

All interviews (including both state officials and employers) occurred between October 1999 and April 2000. Interviewees were sent draft excerpts of the report relating to their interview to ensure accuracy. While interviewee comments have been incorporated in this report, any remaining errors are the responsibility of the author alone.

Relevant written materials were identified and analyzed including a position paper on consumer complaints by the National Association of Insurance Commissioners (the peak association for state insurance regulators), materials produced by state regulators including complaints report cards, annual reports, circulars, data collection reporting frameworks and press releases, and the academic literature on consumer comprehension of report cards. Appendix 4 is the listing of state-specific attachments, which are provided as a separate volume to this report, while Appendix 5 is the list of other references.

Following this introduction, the report commences by identifying the views of the National Association of Insurance Commissioners on complaints management. The next six chapters describe and analyze complaints management in the six states. This is followed by a discussion of the role of three major employers in complaints management. Finally, the conclusion identifies findings, policy implications and recommendations.