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


Vermont is unusual among the states studied in that health insurance complaints are the responsibility of a health division, the Division of Health Care Administration, rather than an insurance regulatory agency. However the Division of Health Care Administration is a sister division to the Insurance Division in the Department of Banking, Insurance, Securities and Health Care Administration, with the Insurance Division still having a role in regulating health insurance products. In addition, Vermont is the first state to introduce an independent ombudsman to assist consumers in navigating the health system, including handling consumer inquiries and complaints.

Department of Banking, Insurance, Securities and Health Care Administration

In the early 1990s regulation of health insurance was split between the Health Care Authority, an independent agency which had responsibility for quality oversight of HMOs, and the Department of Banking, Insurance and Securities which handled the general regulatory framework including financial solvency, other non-quality oversight and enforcement of violations including those relating to HMO quality.

In 1996 these two agencies merged to form the Department of Banking, Insurance, Securities and Health Care Administration (BISHCA) on the basis that it made little sense to regulate HMOs separately as insurers and health care deliverers. The 1996 legislation (Act 180) creating BISHCA also strengthened regulatory responsibility and changed the focus from solely HMOs to managed care organizations more broadly.

All health insurance inquiries and complaints are now handled by the Division of Health Care Administration (DHCA), with staff initially moving across from the Insurance Division consumer services section when the new Department was created. The DHCA handles questions related to the quality of health care services received through HMOs, managed care plans and other health insurance plans licensed by the state. Under its quality assurance program, the DHCA reviews the performance of all HMOs and managed care plans licensed to operate in Vermont for quality of care and compliance with professional standards.

In terms of other regulatory functions related to complaints, the DHCA oversees quality of managed care plans while the Insurance Division reviews indemnity insurance through market conduct examinations, with enforcement activities coordinated by the Department as a whole.

In addition to the Ombudsman program discussed below, the DHCA may liaise with agencies including:

  • the Office of Vermont Health Access which is responsible for handling complaints from people under Vermont's Medicaid Section 1115 waiver program. Consumers insured through this program have the right to an appeal before the Human Services Board. (Note: There are no commercial Medicaid plans remaining in Vermont - Kaiser Permanente no longer had any Medicaid members as of 1 January 2000 and Blue Cross Blue Shield no longer had any Medicaid members as of 1 May 2000.)
  • the Attorney-General's Department can theoretically get involved in health insurance complaints involving fraud, although regulators suggested that this had not been an issue in Vermont.

The Vermont legislation introducing independent external review took effect as of 1 July 1999, but Medicaid and Medicare beneficiaries cannot appeal decisions through the external review process.


The Office of the Health Care Ombudsman was established by the legislature in 1997 under Act 159 to help consumers with questions and concerns about health insurance. (Act 159 simultaneously created the external review program).

The contract to provide the Ombudsman Office was awarded to Vermont Legal Aid, a non-profit organization, with the Office going live in January 1999, following a set-up period from September 1998. Act 159 required that the contract be awarded to a non-profit organization. The independence of the Ombudsman Office is guaranteed under the authorizing legislation which states that the Ombudsman "shall be able to speak on behalf of consumers…without being subject to any retaliatory action". In order to act as an advocate, the Ombudsman program cannot be performed by any group with a conflict of interest (e.g. any involvement with health insurance plans or providers).

Duties of the Ombudsman include:

  • advocacy on behalf of consumers;
  • assisting consumers with health plan selection;
  • facilitating public comment on regulations and laws;
  • educating consumers about the health system and their protections;
  • promoting development of citizen and consumer participation;
  • ensuring consumers have timely access to ombudsman services; and
  • reporting annually to the legislature on their activities.

The Ombudsman program is open to all Vermonters, regardless of health insurance status (e.g. private health insurance, self-funded employer plans, Medicaid, Medicare, uninsured) or income.

There is a close relationship between the complaints staff in the Ombudsman Office and the Division of Health Care Administration in BISHCA. While there are no formal protocols as to how complaints are managed across the two agencies, the staff are in frequent contact. The Ombudsman Office deals with many general inquiries and complaints about health services, including access, quality and billing issues. Compared with BISHCA, the Ombudsman Office will tend to handle calls including:

  • Complaints which are "cut and dry" advocacy issues;
  • Where there is likely to be a violation of the law, the Ombudsman Office may assist consumers in completing the DHCA Complaint Form; and
  • Assistance to consumers in filing external appeals, help with internal appeals and fair hearings processes, all of which may include gathering medical evidence.

In turn, the DHCA handles complaints where there is a violation of the insurance law in order for a formal complaint to be filed. The Ombudsman program and the DHCA do not generally work jointly on individual complaints, although this may occur if there are multiple issues involved in the one complaint (e.g. an advocacy issue and a potential violation of Rule 10, the managed care regulation). DHCA regulators noted that, despite the existence of the Ombudsman program, it was important for their agency to maintain a complaints function as this is "our pulse on the market".

Both offices are cognizant of maintaining consumer confidentiality and will not discuss individual consumer complaints across the two offices unless the consumer has consented. The DHCA complaints form (Attachment 1) contains an authorization for consumers to consent to the information being shared with nominated people, including the Ombudsman. A similar release form is used by the Ombudsman Office. While maintaining confidentiality of consumers, the two offices also share aggregate information for reporting purposes to track patterns of complaints. However the database maintained by the Ombudsman program is not accessible to the DHCA to protect consumer confidentiality.

Apart from the DHCA, the Office of the Health Care Ombudsman would have most frequent contact with:

  1. the Office of Vermont Health Access - this agency administers the Medicaid program in Vermont, including undertaking eligibility for the health care program for people with no other public benefits;
  2. the Department of Aging and Disabilities - this agency handles medical eligibility for the Medicaid waiver program; and
  3. the Department of Social Welfare - this agency determines eligibility for health care programs for people with other public benefits and also administers other public benefits such as food stamps.

It is of interest that even in a small population state such as Vermont, the multiplicity of state agencies involved in administering various health and social programs is such that the Ombudsman Office can play an important role in helping people navigate the system.

The Ombudsman Office does not have much contact with HCFA(now known as CMS) in helping individual Medicare consumers. It is often difficult to locate the right person and get definitive answers from HCFA(now known as CMS) staff. Contact with HCFA(now known as CMS) includes providing input into regulations and other systemic issues.