Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. A. Jurisdiction and Responsibility for Consumer Complaints Systems


Legislative Jurisdiction

An important distinction recognized by the NAIC at the outset is that state insurance departments may well be involved in handling consumer complaints even where there is no specific jurisdiction through a statutory violation. Citing quality of service issues as an example, the NAIC states that insurance departments “should provide an avenue for resolution of all consumer complaints”, including providing “information and brochures outlining the consumer rights and resources”. The Draft White Paper appears to encourage less of a legalistic approach, and more of a consumer-focused, approach to the management of consumer complaints.

Liaison with Other Agencies

The Draft White Paper notes that for issues where state insurance departments lack jurisdiction, the "complaint should be immediately referred to the proper regulatory agency", citing the example of HMO complaints being sometimes the responsibility of health regulatory agencies. The NAIC suggests that where there is joint or overlapping jurisdiction, that the state insurance department should enter into a Memorandum of Understanding with relevant agencies. (Appendix G of the Draft White Paper provides an example of an MOU between the Maryland Insurance Administration and the Department of Health and Mental Hygiene which includes protocols and defines areas of responsibility for the two agencies). The Draft White Paper also proposes the development of an inter-agency task force with regular meetings for issues that cross agency lines.

  1. Medicare and Medicaid - The NAIC suggests that the established practice is a referral to HCFA(now known as CMS) or the Social Security Administration at the federal government level or to the state Medicaid agency. However it notes that the HCFA(now known as CMS)-funded State Health Insurance and Assistance Program (SHIP) can also provide counseling services to Medicare beneficiaries. The NAIC and HCFA(now known as CMS) have also developed a document titled "Guidelines to be used between HCFA(now known as CMS) and the state insurance departments for the Medicare+ Choice Program".
  2. ERISA - While acknowledging the lack of jurisdiction, the NAIC suggests that state insurance departments "should always be willing to assist all complainants who have problems with their health insurance or health plan".
  3. Distribution of insurance through banks - The NAIC notes that the Office of the Comptroller of Currency (OCC) has entered into agreements with 25 state insurance departments, as of February 2000, to share consumer complaint information, in recognition of the functional regulation of the OCC and state insurance departments.

Ombudsman Programs

While the Draft White Paper makes no specific reference to ombudsman programs, it notes at the outset that "one of the primary missions of state insurance departments is to serve and protect the insurance consumer". The Draft White Paper is largely silent, however, on whether insurance departments should move beyond consumer assistance and regulatory compliance to a more active consumer advocacy role.

In commenting on questions of fact complaints (i.e. "he said, she said" complaints which do not involve statutory violations), the NAIC suggests that such complaints may need to be referred to the appropriate remedy including "the court system, arbitration, appraisal, independent medical examination, or other appropriate mediator". The NAIC cites an example established by the Oklahoma Department of Insurance in 1999. The EAGLE program (ending arguments gently, legally and economically) is a mediation process using trained volunteer mediators, coordinated by the Legal Division in the Oklahoma Department.

Internal Communication

The NAIC notes that existing practices and procedures do not always result in timely, efficient internal communication between consumer services divisions of state insurance departments and other divisions with an interest in complaints. It is suggested that communication optimally involves both:

  1. The provision of written statistical reports custom-designed to the needs of relevant divisions; and
  2. An opportunity to discuss issues and share anecdotal information. The Draft White Paper cites as an example that the market conduct section "may be interested not only in evidence of trends but may also find that other facts discovered by the complaint analysts indicating any other systemic problems may be of value".

The NAIC suggests that other groups with an interest in complaints information may include: "management, actuarial, market conduct, financial services, rates and forms, policy groups, and the public information officer". It suggests that regular meetings involving a cross-section of staff should occur to exchange information and discuss ideas.