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

Texas is a state with an interesting history, a still evolving future and multiple layered arrangements for the management of health insurance complaints.

In summary, until September 1996 the Texas Department of Insurance (TDI) and the Texas Department of Health (TDH) shared responsibility for traditional health insurance and managed care complaints respectively. While TDI assumed responsibility for all types of health insurance complaints in 1996, it has continued the split responsibility with the current involvement of two divisions - the Consumer Protection Program which handles traditional health insurance and preferred provider organization (PPO) complaints; and the Life, Health & Licensing Program which handles HMO complaints. An independent government agency, the Office of Public Insurance Counsel, represents the interests of insurance consumers as a class with a major contribution being the publication of annual HMO complaint report cards. Finally in 1999 the Texas legislature mandated the establishment of an Ombudsman program to assist individual insurance consumers in their appeals and hearing process, although this office has yet to be established.

Texas Department of Health

Until 1996 the Department of Health monitored and examined HMOs with regard to quality, availability and accessibility of health services, while TDI had the primary regulatory role concerning licensing and financial and contractual issues. In FY 1996 a Senate Interim Committee on Managed Care was established to assess the adequacy of managed care consumer protections. Its report expressed concern about the dual regulation of HMOs by TDH and TDI, resulting in a staged transfer of responsibilities to TDI. From 1 September 1996 to 1 September 1997 TDI managed TDH's regulatory responsibilities under a delegated contract, although still needing final approval from TDH before initiating regulatory action on those matters. Under Senate Bill 385 responsibility for HMO quality of care regulation was formally transferred to TDI, including funding for ten nurses to assist in examining HMOs and to investigate quality of care complaints.

While no longer involved in private health insurance plan complaints, the TDH Bureau of Managed Care continues to have primary regulatory responsibility for Medicaid Managed care and is undertaking a CAPHS survey of Medicaid managed care plans, including HMOs.

Texas Department of Insurance

The Consumer Protection Program in TDI operates a 1-800 number and is the first point of contact for all health insurance complaints including those concerning HMOs. It receives complaints by phone, fax, electronically or in person. Where the intake staff can readily identify that a complaint concerns a HMO, it will be referred to the HMO/URA Division. However sometimes the Consumer Protection Program will begin investigating a complaint and only later discover that it relates to a HMO plan, at which stage it will then be referred.

TDI distinguishes between inquiries and complaints, where an inquiry asks a question and a complaint both expresses a grievance and requests that TDI take action. Data on the volume of inquiries and complaints is reported in Section E dealing with Agency Performance Measures.

In regard to ERISA plans, it is often unclear whether the plan is fully self-funded or not. The Consumer Protection Program handles about 300-400 self-funded type complaints each month, and routinely writes to such companies. On average, about half the companies respond, even though they are technically under no obligation to TDI. In January 2000 the involvement of the Consumer Protection Program resulted in more than $153,000 of financial returns to consumers due to self-funded trusts. Consumers are particularly appreciative when TDI becomes involved in these complaints as they understand there is no requirement for TDI action.

TDI operates an Early Warning System within its financial program which analyzes data including complaints data received by the Consumer Protection Program. Under this System changes in complaint patterns or certain triggers will be monitored to provide an early sign of problems with insurance plans, including solvency.

The Consumer Protection Program in TDI also works closely with both the legal and market conduct sections. Staff from the TDI programs Consumer Protection, Legal, Life, Health & Licensing, Financial, and Property and Casualty meet every two weeks to review actions involving complaints. Consumer Protection provides complaints data to the market conduct examiners which may initiate special examinations on the basis of complaints.

Office of Public Insurance Counsel

OPIC was originally established in 1987 as the Office of Consumer Protection, falling under the jurisdiction of the State Board of Insurance which was also responsible for hiring the TDI Commissioner of Insurance. Initially the Office had responsibility for only property and casualty insurance but this was extended to other insurance lines, including health, in 1991. At that time OPIC became independent of TDI and now reports directly to the governor and legislature.

Authorized under the Texas Insurance Code Article 1.35A, OPIC is statutorily required to represent and advocate for the interests of consumers as a class. According to OPIC staff, Texas was the first state to establish an office with this function separate from the insurance regulator, a model which has recently been adopted by Georgia. The establishment of OPIC occurred during a period of tort reform in Texas. Its creation was seen as a compromise as the legislature wanted to ensure that there would be an agency acting on a consumer advocate basis to balance the insurance industry's arguments for insurance rate increases.

OPIC works closely with TDI, referring on any complaints it receives directly from individuals. OPIC and TDI will discuss the complaint categories used in the TDI database and whether the categories need to be changed to reflect emerging issues.

• Major activities undertaken by OPIC relevant to health insurance complaints include:
• Development of a consumer Bill of Rights;
• Publication of special reports including HMO Report Cards; and
• Advocacy on behalf of consumers before TDI.

Consumer Bill of Rights - The Texas Insurance Code Article 1.35A Sec 5 (b)(8) authorizes OPIC to submit to TDI for adoption a consumer Bill of Rights for each insurance line. The process is that OPIC will draft a Bill of Rights and informally request input from TDI and other interested parties. The TDI will publicize it in the Texas Register with a specified time available for public comment. TDI will notify the public of the opportunity to attend a public hearing, while OPIC will also generally circulate it to various public interest groups, health plans and HMOs. Ultimately, the Commissioner of TDI then adopts the Bill of Rights and takes responsibility for ensuring that plans distribute them to consumers. OPIC will also publicize information about the Bill of Rights on its internet site and through other public media. However it should be noted that the various Bills of Rights do not create new rights; instead OPIC's role is to inform consumers of their existing rights through this process of consolidating and publicizing rights.

While OPIC has produced Bills of Rights for Homeowners and Renters Insurance, and Personal Automobile Insurance, there is not yet an Health Insurance Bill of Rights. Currently OPIC has a draft health insurance Bill of Rights lodged with TDI for which they had filed a petition for its adoption. However OPIC has recently asked TDI to defer adoption of this Bill while OPIC makes various amendments. This Bill will cover all health insurance, including traditional indemnity insurance and HMOs. The Bill of Rights is based not only on statutes, but also rules and regulations adopted by TDI. If relevant, it could theoretically also include common law determinations, although regulators were not aware of any relevant case law for the Health Insurance Bill of Rights. Although the Health Insurance Bill of Rights is yet to be formally adopted by TDI, OPIC staff pointed out that the legislature has already adopted various protections which often involve HMOs or health plans informing consumers of their rights (e.g. external appeal of health plan decisions).

Publication of reports including HMO Report Cards - OPIC provides operating reports to the Governor and legislature covering standard performance and budget reporting issues. It also creates special reports or research documents to respond to Executive or Legislative requests or to highlight important or timely insurance issues. For example, OPIC submitted a report on health insurance coverage in Texas to the Senate Interim Committee on Children's Health Insurance in July 1998. However OPIC notes that it has "dramatically limited its consumer publications" in the last several years. This has involved eliminating duplicative publications and reducing its distribution channels.

The major focus of OPIC's publication activity is the production of the annual "Comparing Texas HMOs" guide. This report is discussed in greater detail in Section C on Complaints Reports.

Advocacy on behalf of consumers by OPIC before TDI - One of OPIC's key functions is to represent consumers as a class in hearings before TDI on issues such as insurance rates, rules, policy forms and other issues. For example, OPIC may file petitions with TDI on lower insurance rates and rules that are advantageous to consumers. As such petitions become public documents, OPIC receives comments back from the insurance industry and interest groups. OPIC staff noted that generally the majority of comments on such petitions are received from health plans and HMOs, rather than interest groups representing consumers. Health plans and HMOs may often provide suggestions for amendments or suggest a correction to an interpretation made by OPIC. In its advocacy role, OPIC often examines patterns of complaints.

Ombudsman

In 1999 the Texas legislature passed HB3021 creating an Ombudsman program to assist HMO consumers in complaints or appeals and to act as a statewide clearing house for consumer information. This role is intended to be quite different from OPIC which is authorized to represent consumers as a class, rather than deal with individual consumers.

However the legislation contained no funding to establish this new program. Consequently, this function has been subsumed into the work of the HMO Division in TDI. TDI staff noted that the advocacy role required of the Ombudsman program may not fit well with TDI's statutory mandate to enforce the Texas Insurance Code. Accordingly, TDI has commenced discussions with some non-profit groups as to whether they could take on this role, but funding still remains an issue.

New Regulatory Authority for "Downstream Risk"

TDI staff noted that there is a nationwide movement towards different forms of managed care, with examples of downstream risk such as Independent Practitioner Associations (IPAs) which are beyond the purview of TDI. In response to the changing marketplace, SB890 in the 1999 legislative session gave TDI some additional oversight over the contracting between the plan and delegated entities, but still not complete regulatory jurisdiction. However some TDI staff expressed the view that complaints about delegated entities would comprise a very small share of all TDI consumer complaints, but a growing share of provider complaints. TDI staff further suggested that consumers with such complaints would generally deal directly with their employer health benefits management staff, rather than approach TDI.

TDI Investigation of Complaints

When TDI receives a complaint, it forwards it to the relevant health insurance plan or HMO. Under Texas legislation plans are required to respond to TDI's investigation of a complaint within 10 days. HMOs are required by statute to advise members of the TDI complaints function via members' booklets and on any denial letters (e.g. benefit coverage, medical necessity).

Management of Grievances

Unlike some states such as Oregon, TDI does not require HMOs to file with TDI reports on "grievances" - that is, complaints made directly by members to the plan (Note: TDI does not use the term grievances, referring to these simply as complaints). TDI regulators expressed skepticism about the value of collating grievance data centrally, related both to the need for proper validation and the substantial work involved.

However TDI is involved in extensive scrutiny of plans' management of grievances through quality of care examinations. These exams are conducted by the Life, Health & Licensing Program, separate from those conducted by the market conduct section. They occur at least every three years for all HMOs, with the potential for additional focused quality of care exams arising from complaints or other information. The quality assurance audit tools used by TDI in quality of care examinations are available on its web site, while the specific tools used to monitor plans' grievances management are attached (Attachment 1). These tools include the specific citations in the Texas Insurance Code, imposing various obligations for grievance management by plans.

In summary, the key obligations on HMOs in regard to grievances or internal complaints include:

• Plans are required to respond within 5 business days of receipt of an oral or written complaint outlining the complaint procedures and timeframes;
• Plans are required to acknowledge, investigate and resolve complaint within 30 days after written complaint or one page complaint form received;
• Plans are required to maintain a complaint and appeal log for each complaint to be available at the time of quality of care examinations; and
• Complaint logs held by plans must categorize complaints into plan administration, benefit denial or limitation, quality of the treating provider and enrollee service categories.

In quality of care examinations, TDI will examine both the policy and procedures associated with complaints handling by plans and the actual grievances or internal complaints data held by plans.

The three major sources of complaints data available to the public are:

1. The Texas Internet Complaints Information System (ICIS), an electronic database maintained by the TDI;
2. "Comparing Texas HMOs" Annual Reports, published by OPIC using TDI data; and
3. Insurance Company and HMO Profiles available on the TDI internet site.

In brief, ICIS is the primary source of all insurance complaints received by TDI and is a searchable database accessible to the general public. It is believed that Texas is the only state to provide such complete access to complaints data. While consumers can use ICIS to generate a limited set of standard complaints reports electronically, TDI has not invested in the production of educational or interpretive consumer complaints reports.

The OPIC "Comparing Texas HMOs" Annual Reports are broadly similar to comparative complaints reports produced by several other states in this study including Oregon and New York, containing complaint indices for individual HMOs based on premium volume, to allow comparison shopping by potential HMO consumers. Finally the Insurance Company and HMO Profiles, available electronically on the TDI web site, contain company-specific information, including complaints reported to TDI by consumers and providers.

Copies of standard reports able to be generated by ICIS and examples of TDI plan-specific information, together with the published OPIC reports, are attached to this study (Attachments 2- 5). For each of these sources or reports, this study describes the major features, analyzes the data, and assesses the usefulness of the report from both the perspective of consumer friendliness and its value in monitoring the implementation of patient protection legislation.

Publications

TDI publishes a range of brochures relating to health insurance including:

• Independent Review Organizations;
• Patient Protection Rules - Fair Play under Managed Care;
• Questions and Answers about your Health Care Coverage.

Demand for Publications

In 1999 TDI distributed 1.5 million copies of insurance related publications. This is an increase from 1996, when more than 884,000 consumers received TDI information.

From September 1999 to January 2000 OPIC has distributed 25,116 copies of the "Comparing Texas HMOs 1999" guide, with a further 7,286 copies downloaded directly from its web site. The web site accounted for 22% of the total 32,402 copies distributed. OPIC releases the annual HMO report in October each year. In the period September 1999 to January 2000 it recorded 57,595 hits on its web site, comprising 10,079 visitors.

Outreach

In addition to complaints resolution, the Consumer Protection Program in TDI undertakes a range of public education and outreach activities through two separate units. The Information Assistance Unit is the first point of contact for consumers ringing the 1-800 Consumer Helpline. Staff in this unit answer general inquiries about insurance, provide advice about filing complaints and handle requests for complaint forms and consumer publications.

Supporting the Information Assistance Unit and the Complaints Resolution Unit is the Public Education Unit. This unit develops informational materials, coordinates a Speakers' Bureau and operates the federally funded Health Information, Counseling and Advocacy Program (HICAP) which provides advice to seniors concerning insurance problems. The Speakers' Bureau conducted 475 presentations in 1999 on insurance issues, up from 290 in 1996.

Following the release of the first HMO report in October 1998, OPIC handled telephone inquiries from people wanting additional information, but this demand has subsided in 1999 as consumers become more familiar with the report. OPIC is considering undertaking focus group testing and telephone follow-ups to elicit consumer responses to the HMO report and how to improve it.

Staffing

In the TDI Consumer Protection Program complaints unit, staff are split by insurance line, with 20 staff handling life, health and accident insurance complaints. The 20 staff include both intake/administrative staff and case workers/insurance specialist staff. The TDI HMO/URA Division has 17 staff in the Quality Assurance section which handles complaints. Staff are assigned complaints according to topic; for example, access and quality complaints will be assigned to registered nurses, while contractual issues will be assigned to insurance specialists.

OPIC currently has a total staff of 18 (down from 19 in the previous legislative session) with a mix of staff working either full-time on health insurance or working across multiple insurance lines. There are 2.5 full-time equivalent staff working on health and HMO report card issues. The significance of the HMO report card to OPIC's activities is also measured by the fact that 14% of total salaries are paid from the Consumer Education appropriation which consists solely of the report card project.

Volume of Business

Measures of demand for the Consumer Protection Program of TDI include:

• Number of inquiries - 347,000 in 1999, up from 284,500 in 1996;
• Calls handled by information assistance - 326,000 in 1999, up from 250,000 in 1996;
• Written complaints - In FY 99 complaints resolution staff resolved more than 22,700 complaints out of the 32,571 resolved agency-wide.
• Website hits to TDI - 162,000 in 1999 with the most frequently accessed items being the Company Profiles, the rate guides and the ICIS database.

Financial Savings to Consumers

TDI staff noted at interview that intervention by TDI had resulted in about $25m financial savings to consumers across all insurance lines of business in 1999.

External Audit

TDI is subject to external audit through the state auditor's office which measures performance against agreed parameters. In addition, there is a new "Compact with Texans", the purpose of which is for all state agencies to establish customer service standards.

The Consumer Protection Program undertakes internal audit on every complaint file to verify that correct procedures were followed. The Life, Health & Licensing Program undertakes monthly internal audits, comprising a random sample of complaints closed in the previous month. These complaints are reviewed against an audit form as to whether they meet the coding standards. TDI staff noted that there was a strong focus on audit within the agency.

Consumer Satisfaction Surveys

The TDI works in conjunction with a local university to conduct biennial written consumer satisfaction surveys, with the next survey scheduled to occur in about mid-2000.