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

Publication Date

May 31, 2000

Report to the U.S. Department of Health and Human Services
by
Sharon Willcox
Harkness Fellow in Health Care Policy

This report is submitted to the Department of Health and Human Services in response to the Task Order “Consumer Protection in Private Insurance: State Implementation and Enforcement Experience” Contract No. HHS-100-97-0005.

The writer would like to acknowlege the following organizations for their assistance in granting permission to reproduce reports published and copyrighted by them:

National Association of Insurance Commissioners - Consumer Complaint White Paper;
Consumers Union and the Center for Health Care Rights - Manage to Care: How California Can Better Inform Consumers About Managed Care; and
Maryland Health Care Access and Cost Commission - Comparing the Quality of Maryland HMOs: A Guide for Consumers.

Information in this publication is in the public domain and may be reprinted without permission.

Executive Summary

Policy Implications and Recommendations

The multiplicity of agencies involved in oversight of health insurance complaints makes it difficult to develop a comprehensive picture of how well insurance plans are performing on consumer complaints. However, the pursuit of uniform models of health insurance complaints management is not recommended at this time. Instead, it is recommended that strategies be developed which clarify responsibility, facilitate communication and enhance the knowledge and experience of regulators in complaints management. Strategies which have been identified at state level include the use of a Memorandum of Understanding to clarify responsibility where there is shared authority, periodic meetings of federal and state regulators and the development of a single entry point for consumer complaints about health insurance.

Independent ombudsman or consumer assistance programs are essential in ensuring accountability of state insurance regulatory agencies and in providing an alternative, more approachable forum for consumer complaints. They can also play a vital role in resolution of consumer complaints through mediation and in undertaking systemic advocacy based on complaints analysis. The independence and accountability of ombudsman programs needs to be fostered through statutory authority, dedicated funding and a requirement for reporting to the legislature and general public.

Comparative complaints and grievance data should be more widely publicly available to enhance the accountability of health insurance plans to all stakeholders including consumers, employers, purchasers, policy-makers, legislators and regulators. Complaints report cards can be improved through design features including: the presentation of complaints data as part of a suite of performance measures and in conjunction with contextual information on the health insurance market; the incorporation of consumer-friendly performance measures and presentation formats such as grades and simple graphical formats; and the use of decision-support methods and expert global advice.

Grievance data provide a potentially rich source of information in understanding the implementation of patient protections. Analysis of grievance data, including the rate at which grievances are reversed in favor of consumers, can be used to identify areas where public education may be required, new legislative protections may be needed or improvements in monitoring health insurance plan performance may be warranted. However variations across states in how complaints are measured, the legislative environment and the complaints handling system mean that these analyses are likely to be of most value to regulators within states, rather than in developing a national picture. It is recommended that regulators design reporting frameworks for grievances which closely match the patient protections in the relevant jurisdiction and that grievance data are subject to audit to ensure validity.

Research Objectives

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 now being considered in Conference Committee. 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.

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.

Study Design

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.

Using standard questionnaires, telephone interviews were conducted with 22 state officials and staff of ombudsman programs involved in the management of complaints and/or the production of report cards across 10 agencies. Interviews were also conducted with the employee benefits staff of three major employers (Caterpillar, DaimlerChrysler and Motorola) to ascertain their role in complaints management.

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.

Principal Findings

Jurisdiction over private health insurance complaints varies across states, with responsibility for indemnity health insurance, managed care and quality complaints often split within or between state agencies. The lead role is usually taken by state insurance regulatory agencies, with the contribution of state health agencies declining in several states in recent years. While some states split regulatory responsibility according to type of insurance (e.g. indemnity, managed care), this is unlikely to be advantageous in the long term given the fluidity of the health insurance market and the potential for the market to evolve in response to different regulatory incentives.

There is also a wide spectrum in the type of consumer assistance or ombudsman programs available to people with health insurance complaints. Across the six states studied, Vermont, Maryland, Texas and California operated some ombudsman programs "independently" of the insurance regulatory agency, while California, Oregon and Texas also operated some ombudsman programs "internally" to the insurance regulatory agency. The Office of the Health Care Ombudsman in Vermont is the most independent public sector model across the studied states, having its own statutory basis including legislative protection for undertaking consumer advocacy and dedicated funding through a contract, with the authorizing legislation specifying that the contract be awarded to a non-profit organization.

According to an NAIC survey, only 26 states affirmatively publish complaints information. The five report cards produced in the studied states varied in features such as whether they included consumer and/or provider complaints, whether they included justified or all complaints, the complaint categories used, and the breakout of complaints by health insurance plan types. While there are some examples of best practice in complaints report cards, many reports are overly complex and provide insufficient guidance to consumers, suggesting that currently they are of most value to regulators in top-down accountability.

Grievances are internal complaints received directly by health insurance plans. In four states health insurance plans are required to regularly report grievance data to insurance regulatory agencies, with five states specifying the format for collection of grievance data. However there is no consistency in grievance data collection requirements across the states. Publication of grievance data is limited, with only New York publishing grievance data in its annual consumer guide, while Oregon makes grievance data available on its web site.

There is a hierarchy of complaints handling, with state regulators seeing only the tip of the iceberg in consumer complaints. A Californian survey found that 37% of people with a complaint called their health plan, but only 4% contacted a state or local agency for assistance. Across three states for which data were available, the volume of grievances received directly by plans was about seven to eight times greater than the volume of complaints received by state insurance regulatory agencies. While 17% of people contact their employer about health insurance problems, the three major employers studied did not maintain detailed complaints records for systemic analysis.

The level of complaints about managed care plans relative to indemnity insurance varies across the states, being lower in Oregon, higher or the same in New York depending upon the for-profit status of indemnity plans and essentially equivalent in Vermont. Hence, in these three states evidence for the managed care backlash, as measured by consumer complaints, is decidedly mixed.

Some data on complaint categories relevant to understanding patient protection issues are available in California, Maryland, Oregon and Texas. Of particular interest is the rate at which grievances are overturned in favor of consumers. In Oregon the best outcome for consumers was for grievances relating to emergency services (71% overturned) and the worst outcome was for grievances about access (only 1% overturned). In Maryland the best outcome for consumers was for grievances relating to pharmacy services (85% overturned) and the worst outcome was for grievances relating to mental health (only 28% overturned).

Introduction

Background

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:

Implementation Case Studies -- this part seeks to identify the lessons learned by states in implementing selected consumer protections; and
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.

Methodology

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.

Report Structure

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.

National Association of Insurance Commissioners

Introduction

The National Association of Insurance Commissioners (NAIC) was established in 1871 and is the peak association comprising insurance regulators from the 50 states, the District of Columbia and the four U.S. territories.

Since Spring 1998 the NAIC has been working on a Consumer Complaints White Paper concerning all lines of insurance. The Draft White Paper (Attachment 1, 13 March 2000) was adopted at the March 2000 meeting by relevant working groups and committees and it is expected that it will be formally adopted by the NAIC Executive in June 2000.

It is important to stress at the outset that while the initial charge by the NAIC to the Consumer Complaints Working Group included developing “recommendations for features of an effective complaint handling process”, the Draft White Paper does not generally invoke the language of recommendations. The NAIC states that “it is not the intent of the paper to prescribe a single methodology or procedure”. Hence, the paper is advisory in nature as reflected in much of the language with frequent reference to statements such as “the following best practices may be of assistance”.

The NAIC states that the paper “is intended as a resource guide for regulators”, identifying areas "where the preponderance of states have migrated to certain practices that appear to be efficient, effective and common between many states". In addition, the NAIC acknowledges the advantages of state regulation including that "each jurisdiction may establish laws and implement those laws in a ways that suit the expectations of the citizens of each jurisdiction" and the different budgetary and legal situations across states.

As occurs in many similar organizations, the NAIC Draft White Paper represents the result of compromise and negotiation to achieve a consensus position. While consideration was initially given to interviewing NAIC staff involved in the development of the Draft White Paper, it was later decided not to proceed with such interviews. The Draft White Paper represents the official position of the NAIC developed through a finely negotiated process and it would be unlikely for NAIC staff to offer views which differ substantially from the Draft White Paper.

The following analysis outlines the NAIC position, based on the Draft White Paper, on the broad issues examined in the state case studies, namely:

Jurisdiction and responsibility for consumer complaint systems;
Jurisdiction and liaison with health plans;
Complaints reports;
Public education activities; and
Agency performance measures.

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.

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".
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".
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:

The provision of written statistical reports custom-designed to the needs of relevant divisions; and
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.

B. Jurisdiction and Liaison with Health Plans

Oversight of Grievance Processes of Insurance Plans

The Draft White Paper is totally silent as to whether state insurance departments should have any role with regard to requiring plans to:

Submit internal complaints or grievance data;
Maintain internal complaints logs; and
Submit details of their internal complaints management process.

Enforcement

The survey of all state insurance departments conducted by the NAIC in 1998 found that in two-thirds of the responding states "less than 3% of complaints result in enforcement actions" and only three states reported that more than 10% of complaints resulted in enforcement actions. Interestingly, in discussing the link between complaints and enforcement, the NAIC suggested that complaints are "increasingly used by states to identify problem companies for purposes of market conducts exams and other oversight" rather than serving as the basis for individual enforcement actions.

The NAIC suggests that, in some situations, there are advantages to a "less legalistic approach to complaint resolution" using informal dispute resolution instead of enforcement including:

Reduced time and cost of an informal approach; and
Encouraging companies "to do the right thing" may be easier when advocacy is distinguished from enforcement and is sensible when there is no clear legal violation, but practices are "outside industry norms or otherwise not fair to the consumer".

However the NAIC also notes that enforcement actions may be required for "willful violations of an unambiguous law or recurrent violations of the same law". An example cited from Oregon concerned two HMOs which were fined for failing to conduct reasonable investigations prior to denying emergency room claims "despite the companies' argument that they routinely reversed initial decisions on appeal".

C. Complaints Reports

Definition of Complaints

The NAIC proposes that best practice would incorporate including both written and oral complaints, with the distinction between complaints and inquiries being that a complaint includes the expression of a grievance.

Consistency with NAIC Database

In some of its strongest language, the NAIC states that "it is imperative that states adopt the uniform data standards used for the NAIC Complaints Database System (CDS)". The CDS was "established to facilitate uniform data standardization, complaint analysis and the sharing of complaint data by multiple states".

Appendix B of the Draft White Paper comprises the NAIC Standard Complaint Data form. The form captures data using the following categories:

Type of coverage by line of insurance - under accident and health insurance the categories relate generally to the purchaser (e.g. Medicare supplement, individual) and some health condition/service groups (e.g. mental health, cancer/dread disease);
Reason for complaint - the first level categories are underwriting, policyholder service, claim handling and marketing & sales. Within these four categories, the following subcategories may have some broad relevance to the implementation of patient protection legislation:
Experimental;
PCP referrals;
Utilization review;
Quality of care;
Medical necessity; and
Denial of claim.

However compared with the complaints and grievance data collected by many of the states in this study, this database is much higher level (consistent with it being required to apply to all lines of insurance business rather than health insurance alone). It is therefore less likely to yield major insights into patterns of complaints relevant to understanding the implementation of patient protection legislation.

Disposition - The database allows up to 3 responses to be selected from a field of about 40 options as to the outcome of the complaint.

The Draft White Paper notes that states should submit closed complaints data.

Complaint Indices

The NAIC suggests that it is best practice that "aggregate complaint information should be provided in complaint index ratio format and should include well- documented definitions and explanations of calculation methodology". It also notes that it is "more accurate to have complaint index ratios based upon the number of policies in force instead of premium volume", but concedes that this information is often not readily available. The NAIC notes that complaint indices may be developed in a number of different ways and that it is important to base them on reliable data and to adequately define all categories and terms.

Justified Complaints

The NAIC is not prescriptive as to whether states should make a final determination as to whether complaints are justified or not justified. It notes that some states such as California make such a determination, but offers no advice as to whether this is desirable or not, simply noting somewhat ambiguously that the final disposition of the complaint should be "consistent with the administrative appeal procedures in the state". In discussing state submission of data to the CDS, the NAIC also notes that some states submit only "closed complaints that the department determines are justified", but again, makes no recommendation as to the preferred option.

Provider Complaints

The NAIC notes that regulators "struggle" with provider complaints, given the volume of consumer complaints. While recognizing the legitimate concern of state insurance departments about "being used as collection agencies", the NAIC cautions that providers play an integral role, citing an example relating to health insurance consumer protection standards. In particular, it acknowledges that provider education on "medical service authorization timelines, appeal rights, prudent layperson emergency services standards, and the like, is a key element of any strategy to promote compliance and improved health plan performance".

Analysis of Patterns of Complaints

The NAIC stresses the importance of a complaints database in tracking patterns of complaints. While noting that complaint trends may be used to trigger a referral to the market conduct or enforcement areas, the Draft White Paper does not provide any guidance on what level of complaints might constitute a pattern leading to further action, referring alternatively to "a large influx of complaints" and "a certain level" of complaints. Once a pattern has been identified, the NAIC suggests that "Department staff may want to meet with the company to review adverse trends and require that the company establish a compliance plan". It also notes that complaints patterns "should be considered in the selection of companies for examination and in the determination of the scope of an examination". Another proposal is that complaint patterns may be assigned to a single analyst or team of analysts to allow increased scrutiny and understanding.

D. Public Education Activities

Publication of Complaints Information

The NAIC notes that in response to a survey sent to all state insurance departments, 26 states indicated that they "publish complaint information in either an annual report, consumer brochure or on the department's web site". However the Draft White Paper is relatively silent as to the desirability of publicizing complaints information. Instead, the NAIC notes that "insurance departments should develop specific protocols consistent with state Information and Open Records laws to make information in closed individual complaint files public". Unlike other topics in the paper, the NAIC does not cite particular examples of best practice in regard to publication and dissemination.

Outreach

The NAIC suggests that "Insurance Departments should pursue programs that increase the accessibility of complaint analysts and consumer education services to all consumers".

While outreach programs are generally thought of as a way of increasing visibility and promoting greater use of services, the NAIC suggests that consumer outreach and education programs "may help prevent complaints", in addition to addressing consumer issues. Examples of outreach activities cited in the Draft White Paper include: consumer brochures, field offices, a Commissioner's Bulletin or a department seminar, a Speaker's Bureau and visits to groups including recreation facilities for the elderly, libraries and chambers of commerce.

E. Agency Performance Measures

Staffing

The Draft White Paper notes that although some complaints analysts may specialize by line of insurance, it is beneficial for all analysts to have "a basic understanding of all lines of insurance", particularly relevant to dealing with catastrophic situations.

Consumer Satisfaction

The NAIC states that a consumer satisfaction survey is "essential to providing feedback on overall performance". It mentions alternative methods such as written surveys and self-addressed postcards, but does not offer any guidance as to a preferred method. In addition to assessing performance, the NAIC notes that consumer satisfaction surveys can be helpful in determining resource needs "by identifying how consumers learned of the availability of consumer assistance and information, the means of communication used, the reason for contact, and the consumer's age and county of residence".

Audit

The NAIC notes that states should have "quality control measures in place to monitor both the individual complaint analyst and the department performance and to ensure that complaints are being handled properly". Monitoring individual complaints analysts may include supervisory review and telephone monitoring, with factors reviewed including: the timeliness of resolution, clarity of communication, accuracy and quality of response to consumer questions, friendliness to consumers and overall consumer satisfaction.

Appendix C provides examples of supervisory review and audit forms used by Florida, Colorado and California. For example, Florida undertakes monthly audits of consumer files and annual audits of overall office policies and procedures. The Florida annual audit is quite far-reaching and includes documenting the extent of consumer outreach programs, the volume of files referred to various agencies, identifying trends, topics of concern and legislative suggestions.

Random monitoring of complaint analyst telephone calls is also suggested as a quality improvement initiative. The NAIC notes that some states may also choose to conduct "blind telephone call" investigations where staff "call the Consumer Services Section and represent themselves as consumers in order to identify areas where improvements and job training were needed".

Workload Performance Measures Including Financial Savings

The NAIC notes that currently most states monitor various performance measures such as the number of telephone calls, information requests, Internet site hits, time for resolution of complaints and the amount of money recovered. However it is supportive of benchmarking through the development of more specific outcome measures.

In terms of measuring financial savings to consumers, the NAIC recommends that states track the amount of monies recovered subsequent to the involvement of the insurance department (a differential basis), rather than simply measuring the full amount of monies recovered by the complainant.

California

A. Jurisdiction and Responsibility for Consumer Complaints Systems

Overview

Commensurate with its size and diversity, California has a range of public and private sector organizations involved in either health insurance complaints management and regulation, or the production of health insurance complaints report cards.

Following the passage of comprehensive managed care legislation in September 1999, California is in a state of transition with two state government agencies currently sharing the major regulatory responsibility for health insurance, with a third agency waiting in the wings. In 1975 the Department of Corporations under the Knox-Keene Act assumed responsibility for the then evolving managed care industry, with California essentially leading the country in separating regulatory responsibility for indemnity health insurance from managed care. Given the rapid growth of managed care and the shrinking of the indemnity insurance market, the Department of Insurance now has regulatory responsibility for about 30% of the health insurance market including indemnity insurance and preferred provider organizations delivered by indemnity insurance companies and regulated under the California Insurance Code. Under legislation effective 1 January 2000, a newDepartment of Managed Care within the Business, Transportation and Housing Agency will focus exclusively on the licensing and regulation of managed care, essentially taking over this role from the Department of Corporations.

In addition, two other state government agencies have a minor regulatory role. The Department of Industrial Relations is involved in licensing and regulation of workers' compensation medical groups and managed care plans. The Department of Health Services shares responsibility as a purchaser with the Department of Corporations for managed care plans for Medi-Cal beneficiaries (the Californian Medicaid program).

California does not currently have a statewide independent Ombudsman to resolve consumer complaints as occurs in some other states such as Vermont. While the Department of Insurance and the Department of Corporations operate an Office of the Ombudsman and an Ombudsprogram respectively, the focus of these programs is more on improving and enhancing consumer satisfaction with the services of these Departments. However the 1999 package of managed care legislation also established a new Office of Patient Advocate in the new Department of Managed Care.

Finally the Health Rights Hotline, funded by private foundations, provides telephone assistance on health issues to consumers in the Sacramento area and produces annual reports including both quantitative and qualitative data on consumer complaints.

Recent History

The Managed Health Care Improvement Taskforce, comprising representation from health plans, employers, health plan members, providers and consumers, was created under AB 2343 in 1996 to review and report on the history and impact of managed care in California. The Commissioners of the Departments of Insurance and Corporations were ex-officio members of the Task Force.

The Taskforce report identified "public dissatisfaction with the current state of managed care regulation". Previous studies cited by the Taskforce included a 1992 Auditor General Report which found that the Department of Corporations had been lax about responding to complaints and a 1996 Consumers' Union report that documented difficulties consumers experienced in obtaining information from the Department of Corporations. The Taskforce essentially argued that the current regulatory structure, originating from the 1970s, was outdated in the context of the rapid growth and evolution of managed care.

Accordingly, the Taskforce recommended the establishment of a single entity responsible for regulation of managed health care and further study about the consolidation of authority for managed care and indemnity insurance. In 1999 the Californian legislature authorized the establishment of the new Department of Managed Care under AB 78.

Ombudsman Programs

The Managed Health Care Improvement Taskforce recommended that two pilot, independent external assistance or external ombudsman programs be established in different regions of the state with state funding. It further recommended that such programs be coordinated with the Sacramento-area independent assistance program (the Health Rights Hotline) and with existing targeted health care assistance programs (such as the Health Insurance Counseling and Advocacy Program (HICAP) and the Long-Term Care Ombudsman program.

Subsequently the Taskforce recommendation for two Ombudsman programs was included in SB 1689 which was passed by the legislature in 1998, but vetoed by Governor Wilson. Instead, AB 78 authorized the establishment of an Office of Patient Advocate in the new Department of Managed Care.

Interviewees commented that this represented a compromise, recognizing that the establishment of a statewide Ombudsman program (similar to the Vermont model) might have cost $15 million annually, more than the then entire budget for the Department of Corporations. There was also a view that it would be better to phase in a program gradually. The budget for the new Office of Patient Advocate is about $800,000 annually. It is too early to identify what approach the new Office will take, e.g. consumer advocacy and assistance, adjudication. There are also unresolved issues about the level of integration between the Office of Patient Advocate and the new Department of Managed Care.

B. Jurisdiction and Liaison with Health Plans

Department of Insurance

The Department of Insurance operates a consumer Hotline for inquiries and complaints which is essentially “the eyes and ears” of the Department. When the Hotline receives an inquiry or complaint, it does not immediately refer it onwards. The priority is to find out exactly what the problem is and help educate the consumer by giving them options.

The Department mainly takes calls from consumers. About 10 years ago the Department had a greater role in assisting providers on payment issues, but such calls have declined with the decrease in indemnity health insurance. The Department has a policy of not dealing with attorneys calling on behalf of consumers.

In 1999 the Department established an Interagency Connection to bring together the various federal and state agencies involved in insurance including the California Departments of Insurance and Corporations, the U.S. Department of Labor and the federal Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)) (HCFA(now known as CMS)). This group holds quarterly meetings to share issues of concern. In addition, there are regular contacts at staff level between each of these departments. There is also quite frequent contact with the Attorney General’s Department on insurance complaints. Regulators at the Department of Insurance stated that there has been a great improvement in sharing information across state government agencies over the last decade.

Within the Department of Insurance, the Consumer Hotline is the first point of contact for consumer inquiries and complaints handling about 25,000 calls per month across all lines of insurance, but other Bureaus may also be involved in investigation and resolution of complaints. Note, however, that the Department of Insurance currently receives very few calls relating to health insurance – only about 200 calls per month (or less than 0.1% of calls across all insurance lines). This volume of calls about health insurance appears to be disproportionately small given that 30% of insured Californians are in health insurance regulated by the Department of Insurance. The Consumer Hotline may ask consumers to complete a written complaint form (called a Request for Assistance). When the Department receives written complaints, they are handled by the relevant bureau (e.g. a complaint about pricing will be handled by the Rating and Underwriting Services Bureau).

The Department writes to the insurance company (which has 21 days to respond for non-urgent complaints), requesting its file on this policy and an explanatory statement. Once the outcome of complaints is determined, the insurance company generally responds directly to the consumer, with a copy to the Department of Insurance. The Department may then write to the consumer summarizing the outcome, but the substantive response is provided by the insurance company. In addition, the Department will write to the insurance company indicating whether the complaint is justified. The Department will handle urgent complaints (e.g. a non-renewal notice went to the agent but did not get passed to the consumer, so policy is about to expire) as a “phone and fax” complaint.

Complaints data is shared with other sections of the Department, including market conduct staff, who undertake targeted exams based on trends or other criteria identified from a review of consumer complaints.

The Department of Insurance requires all health insurance companies to have its contact phone number included on all policies and all Explanation of Benefits material, taking effect as of 1 January 1998.

Insurance companies are required to keep complaint logs for five years which may be examined in market conduct examinations undertaken by the Department of Insurance. (Note: The Department’s Consumer Hotline must keep records of inquiries and complaints for 3 years.) However there is no specific requirement for insurance companies to submit internal complaints or grievances to the Department of Insurance, but, again, this might occur upon request if tracking a specific issue or undertaking market conduct.

Staff within the Insurance Department have access to a relatively new integrated complaints database which became operational in February 1997. The Department reports complaints data to the NAIC CDS complaints database.

Role of the Office of the Ombudsman within the Department of Insurance

The Ombudsman Program was formed in 1994 by the then newly appointed Insurance Commissioner. The Department’s publications explain the Ombudsman role as follows:

"Beyond helping to ensure prompt responses and exemplary customer service, the Office of the Ombudsman engages in activities aimed at providing additional information to consumers. This office highlights critical insurance issues, focuses the spotlight on areas in need of regulatory reform, and facilitates a healthy exchange between consumers and the CDI."

Compared to the independent assistance programs in Vermont (independently contracted) and Maryland (located separately from the insurance regulatory agency), the internal Ombudsman program in the Department of Insurance does not appear to have a particularly strong consumer advocacy role.

The Ombudsman program is in direct contact with consumers by both phone and email. However regulators at the Department of Insurance advised that because of the complex nature of many insurance complaints, the established protocol was for the Ombudsman program to refer most consumer complaints and inquiries directly to the Consumer Services Division Hotline, which then responded to the consumer with a copy to the Ombudsman program.

Hence, the Ombudsman program serves as an additional window for consumers with complaints and provides an opportunity for the Commissioner’s office to monitor the level of services provided by the Consumer Services Division. It could, perhaps, be more accurately described as an internal quality improvement initiative rather than a consumer-focused advocacy function. A listing of the current projects undertaken by the Office of the Ombudsman tends to confirm this view (Attachment 1). Regulators at the Department of Insurance noted that the Ombudsman had been instrumental in proposing workplace improvements to enhance client responsiveness, such as an additional phone line in the licensing program, and improving the Department’s web site.

Department of Corporations

It should be noted that staff from the Department of Corporations were not able to be interviewed for this study, given the workload associated with the transition to the new Department of Managed Care. Commentary on the Department of Corporation’s operations is based on its web site and reports and other publications.

Until the establishment of the Department of Managed Care, the Department of Corporations has responsibility for the administration of the Knox-Keene Health Care Service Plan Act of 1975 which includes health care service plans and specialized health plan contracts. Under Section 1345(f) of the Act a "health care service plan" is defined as an entity:

"who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for to reimburse any part of the cost of these services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees".

The Department licensed 53 full-service health care service plans and 62 specialized health plans, covering about 55 million Californians in total as of 31 March 1998. Within the Department of Corporations, the Health Plan Division licenses and regulates health care service plans including handling consumer complaints, while the Health Plan Enforcement Division ensures compliance with the statutory and regulatory requirements.

The vast majority of insured Californians are covered by some type of managed care. In 1998 the private insurance market for people under age 65 comprised 62.3% of people enrolled in HMOs, 27.5% enrolled in PPOs, 8.0% enrolled in a POS, 2.1% in indemnity insurance and 0.1% in an exclusive provider organization (EPO) (derived from Schauffler and Brown, 2000). Hence, about 70% of the privately insured population are in plans regulated by the Department of Corporations (including HMOs and POS plans).

The Department of Corporations does not accept complaints until either there has been a decision by the plan, or consumers have spent 30 days (until January 2000 this was set at 60 days) working through the plan’s internal grievance process, whichever is the lesser. If consumers attempt to file a complaint with the Department of Corporations (called a Request for Assistance) before this time, they are redirected back to their plan, unless the complaint relates to an emergency or urgent situation in which case it will be accepted.

Once a written complaint or RFA is received, it is reviewed by Consumer Service Representatives, Health Care Service Plan Analysts, Attorneys, and/or physicians or other health professionals as relevant. (Note that there are currently no medical providers on staff). Where the health plan’s actions do not comply with the Knox-Keene Act, the Department will require that it make necessary changes. In response to some RFAs, the Health Plan Division may review a health plan’s operations generally to see if systemic problems are indicated, in addition to resolving the individual RFA. The Department advises consumers that the RFA review is an informal process which should not be considered a substitute for arbitration or other formal legal proceedings.

Knox-Keene regulated health plans are required to resolve non-urgent grievances within 30 days and urgent grievances within five days. They are also required to report information about internal complaints or grievances lasting longer than 30 days to the Department of Corporations. Plans must track their resolution, analyze the complaints and use the information for quality improvement. They are required to notify their members of the Department of Corporations in their Evidence of Coverage material and in any denial letters.

A 1999 report by Consumers Union and the Center for Health Care Rights (Attachment 2) was highly critical of the Department of Corporations including its annual complaints reports, its handling of grievances and the extent of its public education activities. The major findings of this report relating to inadequate performance by the Department of Corporations in collection, analysis and presentation of data, and in public education are further discussed in Sections C and D of this chapter. In terms of the Department of Corporation’s jurisdiction and liaison with health plans, the Report also highlighted the following problems:

Many health care service plans were not complying with the requirement to publicize the Department of Corporations in their correspondence with members about the grievance process. In 1997 the Department assessed almost $900,000 in fines to 80 plans for failure to provide the required notices to members.
If health care service plans do not meet the required timelines for handling grievances (30 days or 5 days for urgent grievances), they are required to file reports with the Department of Corporations about “late grievances”. The Consumers Unions and Center for Health Care Rights report criticized the Department’s management of these late grievance reports, including the absence of adequate guidelines for reporting. In addition, the information collected is not analyzed or presented to consumers in a manner that would help them understand differences in grievance handling across individual health care service plans.

Consumers may also be interested in understanding the relative performance of plans for all grievances or internal complaints, not just late grievances. For example, the New York Department of Insurance publishes grievance data in its consumer reports. Other measures which consumers may find useful include: the plan’s performance in resolution of grievances, the categories of grievances and the proportion of grievances that are resolved within the required timelines, none of which are currently reported by the Department of Corporations.

Regulatory Authority Over Medical Groups and Independent Practice Associations

Entities which fall outside the jurisdiction of either the Department of Insurance or the Department of Corporations include:

Some preferred provider organizations which are self-funded by employers - ERISA plans; and
Medical groups and independent practice associations (IPAs) - these are not directly regulated but are regulated indirectly by the Knox-Keene plans with which they contract. The Department of Corporations has until recently provided limited licensure for medical groups to accept full capitation contracts.

California is probably unique in the nation for the evolution of medical groups and independent practice associations (IPAs) which assume financial risk from HMOs. However California experienced the financial collapse of two large physician-practice-management companies in 1998. FPA and MedPartners had been among the first groups to obtain limited licenses when the Department began regulating provider risk arrangements in 1996. (Bodenheimer, 1998; Brewster, Jackson and Lesser, 2000).

In response, the legislature passed AB215 in 1999 which prohibits (from 1 January 2000 until 1 January 2002) the issue of limited licenses. It also prohibits any licensed HMO on and after 1 January 2000 from contracting with any person for the assumption of financial risk with respect to certain health care services and any other forms of global capitation (Schauffler and Brown, 2000: p112).

One future issue will be the extent to which regulation needs to focus below plan level, with common oversight of health payment and delivery functions. Currently the Department of Health Services licenses hospitals and undertakes Medicaid contracting. As Californian plans devolve more risk to providers, there will need to be greater co-ordination with other regulatory authorities.

Department of Managed Care

The new Department of Managed Care is intended to commence operation by no later than 1 July 2000. Daniel Zingale was appointed Director Designee in December 1999. One of the major changes in the recent legislation is the requirement under AB55 to establish an independent review system for resolving member complaints about health plans, effective 1 January 2001.

The Department will include an Office of Patient Advocate, replacing the existing Ombudsprogram in the Department of Corporations. This Office's role will include the compilation of annual quality of care report cards, development of educational material and the provision of advice to health plan members about complaints systems of both the Department and health plans.

Assembly Bill 78 (Section 38) also requires that the Director of the Department of Managed Care undertake a study, in conjunction with an Advisory Committee on Managed Care,

"to consider the feasibility and benefit of consolidating into the Department of Managed Care the regulation of other health insurers providing insurance through indemnity, preferred provider organization, and exclusive provider organization products, as well as through other managed care products regulated by the Department of Insurance",

with a report due to the Governor by 31 December 2001. If this occurs, California will be unique in having come full circle – being first in the nation in 1975 to separate regulatory responsibility for managed care from indemnity insurance, and in the near future, potentially reuniting these regulatory roles. Common oversight of all health insurance products is strongly supported by the Center for Health Care Rights.

Health Rights Hotline

The Health Rights Hotline is a joint project of the Center for Health Care Rights and Legal Services of Northern California, with funding from private foundations, the Henry J Kaiser Family Foundation, the Sierra Health Foundation, the California Wellness Foundation and the California Endowment.

The Hotline is a pilot program in the Sacramento area that provides free assistance and information to consumers with questions or concern about their health care. Factors which distinguish the Hotline from health care ombudsman programs in other states include:

Independence - it is independent of health plans, providers, purchasers or government regulators. For example, the Vermont Office of Health Care Ombudsman is dependent upon government funding.
Universality - it assists all consumers regardless of their health insurance status, including consumers in managed care and indemnity insurance, the private market, Medicare, Medi-Cal etc.
Data analysis - it undertakes systematic collection and analysis of data to provide feedback to health system stakeholders on problems and policy solutions.

Center staff commented that the major challenge flowing from their independent status is getting adequate promotion of their service, with the ideal being a mandated requirement on plans to publicize the existence of the Hotline. The lack of direct regulatory authority over plans has not affected the ability of the Hotline to provide effective assistance to consumers.

The Hotline uses the information it collects for systemic policy advocacy. Sometimes policy changes can flow from a single complaint. One example was a Medi-Cal consumer who rang up because her plan was not providing coverage for chiropractic services which is required in California. The Hotline investigated and discovered that the Evidence of Coverage material failed to include this mandatory service, resulting in the plan reversing its position and advising 30,000 members in Sacramento and other counties by mail of the change to cover chiropractic services.

The Center is also producing an analytical report, based on statistical analysis of Hotline calls over the first two years of operation, examining patterns of complaints by health condition.

The Health Rights Hotline has recently been subjected to an evaluation by the Lewin Group, covering the first 18 months of operation. Much of the commentary in later sections of this report is based on the Lewin evaluation (Attachment 3), with findings referenced to specific tables from the report.

C. Complaints Reports

In 1998 the Managed Health Care Improvement Task Force commissioned a one-off survey of insured Californians to assess the level and nature of their health insurance complaints and the processes used for dispute resolution (Attachment 4). While not strictly a “complaints report card”, it is examined here as it provides some background on the underlying level of complaints and to whom consumers turn.

The Department of Insurance does not currently produce complaints report card studies for indemnity health insurance. Its 1999 Consumer Complaint Study is only available for other lines of insurance business, namely, automobile, life, and homeowners' insurance. This study ranks insurers on the basis of closed justified complaints ratios related to the number of policyholders and includes data for 1996, 1997 and 1998. Staff at the Department suggested that health insurance complaints were not included in the 1999 Consumer Complaint Study because of the small size of the indemnity market, although as noted previously enrollment in indemnity and PPO plans comprises about 30% of the private insurance market. The Department of Insurance was required (but failed to meet the deadline) to include health insurance complaints in this report by 1 July 1999.

The Department of Insurance changed its protocols for handling and publicizing consumer complaints in the late 1980s, following legal challenges by several insurance companies as to the validity of complaints information in the public arena. As a result, the Department now establishes proof of justified complaints and notifies insurance plans by letter when a complaint is found to be justified.

Regulators at the Department of Insurance verbally advised that over the three year period from February 1997 to February 2000 there had been a total of only 7,356 phone calls (equivalent to 200 per month) concerning general health insurance issues (including general inquiries and complaints) and about 10,000 calls about long term care. The Department is not currently able to produce data on either company-specific or aggregate health insurance complaint indices.

The Department of Corporations is currently the only state government source of health insurance complaints reports, with their annual reports providing data on managed care plans, referred to as health care service plans (Attachment 5). In brief, the Department of Corporations annual reports provide information for each health care service plan on the total number of complaints and complaints index, with detailed information on 32 complaints category issues available for all health care service plans.

Finally, the Center for Health Care Rights produces annual reports detailing the experience of its Sacramento based Hot Line (Attachment 6).

For each of these 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.

Public Perception and Experiences with Managed Care - Report commissioned by the Californian Managed Health Care Improvement Task Force

Introduction

The Task Force Survey was intended to document the extent and nature of difficulties Californians report with their health insurance plan. While not a comparative "complaints report card", it is included here as it provides some insights into the general pattern of problems or complaints. It is also useful in identifying the proportion of insured consumers with problems who actually contact state government complaints units, and consumers' perceptions about the reliability of different sources of complaints information.

Features

Sample - Conducted via telephone interviews, the Survey sampled 3 different populations -
general insured population;
insured adults who were "dissatisfied" or "very dissatisfied" with their current health insurance plan and/or who had one or more problems with their health insurance plan in the last 12 months; and
insured adults who had been hospitalized in the past 12 months and/or had at least one chronic condition in a specified list.

Findings

Frequency of problems - In total, 42% of insured Californians (6.72 million people) reported having had one or more problems with their health insurance plan in the past year. However not all these problems are severe, as evidenced by the fact that even about 25% of Californians who are "very satisfied" with their health plan also report having had a problem in the past year. Also, the Survey made no attempt to determine whether consumer problems were justified or not. A similar survey conducted by the Lewin group in Sacramento found that 27% of consumers had insurance problems.

Type and severity of problems - Of Californians reporting a problem with their health insurance plan in the past year, the primary problems fell into five categories:

Care or services - 32%;
Benefits or coverage - 21%;
Choice - 16%
Claims or payment - 14%; and
Accessibility - 7%.

Severity of problems was assessed by whether there was an associated financial loss (27% of consumers), time lost from work (20%) and health impacts (32%).

Table 3.1 provides further disaggregation of the types of problems, several of which are relevant to examining the implementation of managed care.

Table 3.1: Primary problem for Californians reporting a problem with their health insurance plan in the past year, 1997

Problem Category	% reporting this as the primary problem
Care/Services	32% total
Not receiving the most appropriate medical care or what you need	6%
Doctors/nurses/administrators/staff insensitive or not helpful	10%
Delays in getting needed care	8%
Difficulty in getting referral to a specialist	8%
Benefits/Coverage	21% total
Plan not covering important benefits needed	13%
Misunderstanding over benefits or coverage	6%
Being denied care or treatment	2%
Choice	16% total
Difficulty selecting a doctor or hospital	5%
Forced to change doctors	7%
Forced to change medication	4%
Claims/Payment	14% total
A problem with billing or payment of claims or premiums	14%
Accessibility	7% total
Language or communication problems	3%
Transportation problems	4%
Did not report any primary problem	7%

Source: Improving Managed Health Care in California, Findings and Recommendations, Volume 2, January 1998; p25

Hierarchy of complaints resolution - Of insured Californians with a health insurance problem in the past year, 57% (3.8 million people) tried to resolve their problem. Figure 3.1, which shows the types of actions taken by Californians to resolve their problems, indicates that very few consumers with insurance problems actually contact state government agencies - only 4% of consumers with a problem, equivalent to 269,000 Californians. Health care providers, health plans, employer benefits offices and friends are much more likely to be consulted as a source of information by consumers with health insurance problems.

In commenting on the Survey findings in a letter to the Taskforce, the Director of the Center for Health Care Rights noted that "consumers frequently do not know where to turn".

Figure 3.1: Types of Actions Californians Take to Resolve Problems with their Health Insurance Plan, 1997

Source: Improving Managed Health Care in California, Findings and Recoьmendations, Volume 2, January 1998; p31

Complaints resolution - While Californians were equally likely to turn to either their health provider or their health plan for help in resolving health insurance complaints, many who contacted their health plan were not satisfied with how it handled their complaint. Almost one third (29%) were either dissatisfied or very dissatisfied with how their health insurance plan handled their complaint.

Consumer trust in information providers - The Survey also asked insured Californians who they would trust to provide them with neutral and complete information about specific health insurance plans, hospitals and doctors in California. Only 13% agreed that they would trust a state government agency, while 64% preferred a private, not-for-profit agency to provide such information. Of the remainder, 7% said they would trust a private for-profit agency, 7% would not trust any of the above and 10% did not know.

Department of Corporations Health Care Service Plan Complaints Data Annual Reports

Features

Scope - The report includes all complaints (but see next dot point) filed annually with the Health Plan Division about Health Care Service Plans, commonly referred to as HMOs. The Division groups health care service plans into full service, dental, vision, psychological and other. The Division's term for complaints is "requests for assistance", defined as a grievance or complaint against a health care service plan which has been received by the Health Plan Division. All complaints are included, whether justified or not.

Internal plan grievances - Under the Knox-Keene Act health plan enrollees must first participate in the health plan's internal grievance process for at least 30 days before being eligible to seek assistance from the Department of Corporations (with exceptions involving an imminent and serious health threat). This means that the level of complaints handled by the Californian Department of Corporations is likely to be lower than in states which do not impose this requirement. The Department refers back to plans any complaints it receives where the member has not participated in the plan's internal grievance process and reports data on these "referral to plan" complaints in this annual report. However compared to some states which include HMO grievances in their complaints report, this "referral to plan" data comprises only a subset of internal grievances against plans. In summary, both complaints indicators reported by the Department of Corporations vary from those used in other states, and are likely to underestimate the real level of complaints.

Complaints index - The report includes summary tables comparing each plan on the total number of complaints and complaints/10,000 enrollees with breakdowns into four issue types: accessibility, benefits/coverage issues, claims issues and quality of care issues.

Plan specific information - In addition to the summary comparison tables, the report includes detailed information for every plan against which a complaint has been filed. The additional information disaggregates the complaint issues into 32 different issue types Some of these complaint categories are potentially relevant to understanding implementation of patient protections, including:

Experimental/investigational procedure denied;
In-area emergency/urgent service denied;
Out-of-area emergency/urgent service denied;
Plan denial of treatment;
Plan refusal to refer;
Provider entity denial of treatment; and
Provider entity refusal to refer.

Data Analysis

Table 3.2 summarizes key trends in complaints about full service health care service plans or HMOs between 1997 and 1999.

Complaints about HMOs are increasing relative to enrollment - While the HMO complaints rate fell by 7% in 1998, preliminary data indicate an increase of 24% in the complaint rate in 1999. However, as with the number of consumer calls received by the Department of Insurance, the absolute volume of HMO complaints received by the Department of Corporations seems disproportionately low for such a populous state as California.

Quality of care issues are the major reason for complaints - The share of complaints mentioning quality of care issues has remained relatively constant over the last few years. The Department of Corporations allows multiple issues to be recorded for each complaint, meaning that the total issues recorded are greater than the number of complaints. In 1998 (the most recent year for which final data are available, the major types of complaints were:

Quality of care complaints - 64%;
Claims complaints (e.g. insufficient or slow payment, increases in premiums) -34%;
Benefits and coverage complaints (e.g. rejection or cancellation of coverage) - 24%; and
Accessibility (e.g. lack of primary care physician or specialist availability) - 7%.

Table 3.2: Complaints about Full Service HMOs, California, 1997-1999

	1997	1998	1999
Complaints (number)	2034	2154	2621
Complaints/10,000 enrollees	0.9807	0.9160	1.1364
Quality of care issues	1296	1375	1538
Quality of care issues/10,000 enrollees	0.6248	0.5847	0.6666
Quality of care issues as share of total complaints	64%	64%	59%

Note: 1999 data is still draft, awaiting reconciliation and production of final consolidated 1999 report.

In order to understand the significance of patient protection issues in consumer complaints, detailed quality of care data were examined for a sample comprising the six largest HMOs. The six largest HMOs - Blue Cross of CA, Blue Shield of CA, Health Net, Kaiser Foundation Health Plan Inc., Medpartners Provider Network, Inc., and Pacificare of California had 75% of market share in 1998. Figure 3.2 provides some breakdown of quality of care complaints for these largest HMOs.

Nature of quality complaints - Summing complaints across plans, providers and different settings, "denial of treatment" and the related "refusal to refer" complaints comprised 52% of all quality complaints in 1998, while complaints about "inappropriate care" accounted for 43% of all quality complaints.

Understanding of "referrals to plan" data - It is difficult to know how to interpret the "referrals to plan" data, which result when consumers who ring the Department of Corporations are advised that they must have first exhausted the plan's internal grievance process. One option is that high levels of "referrals to plan" complaints suggest that consumers are not well informed of their plan's internal grievance process. Regulators may want to consider targeting plans whose members produce higher than average rates of "referral to plan" complaints relative to plan enrollment.

Levels of "referral to plan" complaints vary, with the rates for 1998 for the major plans being:

Blue Cross of California - 0.70 referrals to plans/10,000 enrollees;
California Physicians Service (Blue Shield) - 0.70;
Health Net - 0.86;
Kaiser Foundation Health Plan - 0.54;
Medpartners - 0.02;
Pacificare of California - 1.04;
All full service plans - 0.62.

Figure 3.2: Major Reasons for Quality of Care Complaints, Six Largest HMOs, California, 1998

Figure 3.2: Major Reasons for Quality of Care Complaints, Six Largest HMOs, California, 1998

Assessment of the Report

Consumer friendliness - The report is highly quantitative, including multiple measures (RFAs or complaints, referral to plans, an RFA complaint index, number of RFAs by issue categories, and RFA issue complaint indices). It is likely to be difficult for consumers (and indeed other stakeholders) to determine which of these measures is most meaningful and then how to assess the relative performance of individual plans.

The inclusion of data on the four complaints categories makes the tables highly complex with little guidance or interpretation. Consumers may simply look at plans with high absolute levels of complaints, without examining complaints rates in order to put plans on an equal footing. There is no graphical presentation of the complaints data, nor is there any interpretation by the Department to explain the relevance of the findings.

Another factor which may limit the consumer usefulness of this report is that the RFA data is based on all complaints, rather than justified complaints. In addition, the report contains a prominent disclaimer as follows: “THIS INFORMATION IS PROVIDED FOR STATISTICAL PURPOSES ONLY. THE COMMISSIONER OF CORPORATIONS HAS NEITHER INVESTIGATED NOR DETERMINED WHETHER THE COMPLAINTS COMPILED WITHIN THIS SUMMARY ARE REASONABLE OR VALID.” Such a disclaimer is likely to encourage consumers to discount the relevance of the information in the report.

The joint report by Consumers Union and the Center for Health Care Rights cited earlier (Attachment 2) analyzes the Department of Corporations complaints reports in some detail, including providing suggestions for how these reports could be improved.

Complaints data – As the Department redirects consumers back to their plans’ internal grievance process until the lesser of either their plan has reached a decision or they have spent 30 days in the internal grievance process, the Department of Corporations collects a smaller subset of complaints than other states which do not impose this requirement but instead accept all complaints. Comparisons across plans in the level of complaints/enrollees may reflect the extent to which plans advise members of their right to complain to the Department of Corporations, once they have gone through the internal grievance process.

Implementation of managed care protections - The disaggregation of complaints data into 32 issue categories allows greater examination of patterns of complaints related to particular patient protections. However because this data is available only at a plan-specific level, analysis can be time consuming to identify policy relevant trends, with these reports more likely to be useful for tracking individual plans than aggregate trends. One useful feature is the distinction in issue categories between complaints arising due to the action or inaction of the plan, physician, provider entity, etc.

Center for Health Care Rights 1999 Report

Features

Scope – The report (Attachment 6) is a comprehensive policy analysis of complaints received by the Hotline, rather than simply a comparative complaints report card to help consumers in making health insurance plan choice decisions. The data in this report include:

Comparative charts of problems across health plans and medical groups, identifying individual plans and medical groups, and ranking them on a simple 5-point diagrammatic scale as to how they performed relative to the average (Refer Chart 7, pg8);
Quantitative data listing complaints rates/10,000 enrollees for individual health plans and medical groups, presented through bar charts (Refer pg14).
Consumer stories which provide an example of a problem category such as inappropriate care through including a Hotline case story, the action recommended and the system problem identified as a result of the call (Refer pg17).

In addition to this data, the report contains an analysis of the uninsurance problem and includes recommendations for health system change based on the calls received by the Hotline.

Period - The report covers the period from July 1998 to June 1999, the second reporting period for the Hotline which commenced operating in July 1997.

Coverage - The report is unusual among comparative report cards in distinguishing complaints by payer types - e.g. commercial HMOs, commercial preferred provider organizations, Medicare and Medi-Cal. Reflecting the peculiarly Californian evolution of provider groups and IPAs, the report also distinguishes problems reported by consumers about health plans and about medical groups. In the Sacramento area, almost all the 1000 primary care physicians are affiliated with one of eleven major physician organizations - 7 medical groups and 4 IPAs. These medical groups contract with most of the health plans, with the exception of The Permanent Medical Group which contracts exclusively with Kaiser Foundation Health Plan.

Complainants - the data is based on consumer complaints.

Complaints index - The index is calculated as the number of consumer problems reported to the Hotline per 10,000 enrollees, excluding consumer education inquiries. The complaints index does not distinguish whether complaints are justified or not justified. The Hotline can record up to three "issues" or problem for each caller, so that the complaints index does not reflect the volume of complainants but rather the volume and type of problems.

Complaint categories - The Hotline uses 57 distinct issues categories, but this Report includes data on 8 aggregate categories, namely customer service, delays in getting care, denials of care, inappropriate care, payment for care disputes, prescription drug problems, specialty care problems and other problems.

Data Analysis

Figure 3.3 shows the complaints rate for health plans of different types, while Figure 3.4 shows the complaint issues broken down into eight issue types.

Complaint rates vary substantially by plan type – There was a three-fold difference in the complaint rate across plan categories, with the lowest rate of complaints being experienced by PPOs and HMO-Group Model plans. (Note, however that there is only one group model HMO, Kaiser Foundation Health Plan, in the Sacramento area.) In some states it is possible to make a conclusion about the complaints rates reported by members of traditional indemnity vs. managed care health insurance. However the high penetration rate of managed care in California means that indemnity insurance is largely restricted to the Medicare and Medi-Cal (Californian Medicaid) populations.

Figure 3.3: Consumer Problem Rates by Health Plan Type, Sacramento, 1997/98 - 1998/99

Figure 3.4: Consumer Problem Rates by Type of Issue, Sacramento, 1997/98 - 1998/99

Assessment of the Report

Consumer friendliness -As noted earlier, the report appears to be directed at both the health policy sector, as well as individual consumers. Consumer-friendly features of the report include:

Use of different presentation formats – for example, the performance of health plans is compared using diagrammatic formats with average, above average and below average style of rankings. This data is then also presented more quantitatively using bar charts, showing the statistical significance of the complaint issues rates.

Use of stories – By including examples of consumer calls to the Hot Line, the report explains in simple language what is meant by problems such as “inappropriate care” which may help consumers identify with, and realize that they have a similar problem. The stories are also helpful in identifying specific actions taken by the Hotline to resolve the problem.

Education on health insurance types – By providing explanatory background material on what is meant by different types of health insurance, the report serves to educate consumers and provide a context for interpreting the complaints results.

Other aspects of the report which may make it less consumer-friendly include:

Length – Both annual reports are over 60 pages long and quite densely written, making it difficult for a consumer seeking a quick answer concerning the relative complaints performance of a specific plan. However the Center's view is that this report is targeted at consumers for general problem solving, rather than consumers shopping for insurance.

Distinction between Health Plans and Medical Groups – Consumers may have difficulty following the presentation of complaints issues and identifying the results most relevant to them.

Inclusion of all issues – The report includes all issues raised by consumers, whether justified or not, which could be problematic if there are differences across plans. However staff at the Center commented that the role of an independent assistance program is not to adjudicate complaints, but to attempt to provide assistance and help people understand their rights.

Monitoring patient protection implementation – Obviously, the report is limited to identifying consumer complaints in a limited geographic area, and is therefore less relevant in extrapolating the likely impact of patient protection legislation. A positive feature, however, is the breadth of issues categories captured by the Hotline (57), many of which are of interest to this question.

D. Public Education Activities

Publications

The Department of Insurance produces a number of general brochures related to health insurance and long term care. Since 1995 the Department has strengthened its efforts to improve the consumer friendliness and comprehensibility of these publications.

Outreach

Regulators at the Department of Insurance noted that there is an extremely active Speakers’ Bureau which commenced operation in the mid-1980s. The Speakers’ Bureau runs sessions with diverse audiences including: Chambers of Commerce, Seniors Centers, State Fairs, California Association for Home Health Care, LA City Sheriff Department, MS society, Rotary, junior high schools, mobile home parks, and small and large employer groups. Commissioner Quackenbush publicizes the complaints function with the annual release of the consumer complaints study (see Attachment 7 for an example of this press release).

The Department of Corporations has been criticized as an “invisible regulator” in the 1999 report by the Consumers Union and the Center for Health Care Rights. The report found the following problems associated with public education:

Inadequate listing of the Department of Corporations in telephone books and directory assistance, resulting in many consumers being unaware of the Department’s role in regulating managed care and handling consumer complaints about managed care; and
Insufficient use of the media, including news releases to promote the Department’s Hotline.

The Lewin evaluation examines the public education and outreach activities of the Health Rights Hotline. Activities undertaken by the Hotline include:

Publication of brochures;
Presentations and distribution of materials at community events;
Television advertising;
Mailing of postcards with a Hotline sticker to 250,000 households;
Distribution of a Hotline newsletter; and
Advertising in the Sacramento Yellow Pages.

The Lewin evaluation has examined, at some length, the cost effectiveness of various outreach activities (refer Attachment 3 for further details).

E. Agency Performance Measures

Staffing

The Department of Insurance Consumer Services Hotline has about 60 staff, including supervisors and clerical staff, working across all lines of insurance. The staff are organized into 5 teams of 10 staff with a supervisor, with regular supervisor meetings to examine emerging health complaints or patterns of complaints. In addition, there is a triage team comprising 6 people including a supervisor that handles health issues.

Volume of Business

As indicated earlier, the Department of Insurance receives about only 200 calls per month about health insurance to its Consumer Hotline.

The Lewin Group evaluation reports on the volume of print material distributed by the Health Rights Hotline. Over the 18 month period from July 1997 to December 1998 the Hotline distributed over 65,000 individual print materials to consumers in the four-county Sacramento area, the majority of which occurred through community organizations, health fairs, Hotline presentations and providers. The Hotline mailed 6,669 items to 2,358 callers. Exhibit IV.12 in the Lewin Group report details the number of copies of individual publications distributed to Hotline callers.

The Lewin Group evaluation indicates that the Hotline received over 7,530 calls in the first 18 months, 4300 of which became cases. Of these 25% were general information inquiries and about 75% sought assistance with a specific problem.

External Audit

The Department of Insurance is subject to both internal audit and external audit by the State Auditor’s office. External audit of the Consumer Services Division has occurred infrequently – possibly twice in the last sixteen years. However the Department strongly emphasizes internal audit including supervisors undertaking quality control on the Hotline (once per week or as needed), and random review of closed complaints by supervisors and other lead staff.

The Department of Corporations is subject to audit by the State Auditor. The 1999 Consumers Union and Center for Health Care Rights study reports some of the findings of the State Auditors 1999 report. Concerns expressed by the Auditor included that the Department failed to notify consumers when their complaints took longer to resolve than the allowed 60 days. The Auditor also expressed concern that the Department was not able to make a determination in about one- quarter of complaint resolutions as to whether there had been a violation or not.

Consumer Satisfaction Surveys

The Department of Insurance sends consumer satisfaction survey postcards monthly to a 15- 20% sample of all closed complaints. The postcards are color coded for return to the specific bureau which handled the complaint (e.g. Hotline, Rating and Underwriting Services Bureau etc). but regulators noted that the response rate to postcard surveys was generally quite low. Departmental publications noted that in 1998, consumer satisfaction surveys indicated that 86% of all consumers who contacted the Department would recommend it to others and 79% believed that their problem was resolved satisfactorily. The Department is also now including postcards when it sends out consumer education brochures, in an effort to seek consumer feedback and improve the content of these materials.

As part of its evaluation of the Health Rights Hotline, the Lewin Group undertook a consumer satisfaction survey of 489 clients who had used the Hotline. Of this sample, 62% rated the Hotline very helpful, 23% somewhat helpful, 5% not very helpful and 8% not at all helpful. The Lewin Group also evaluated in detail the helpfulness of particular tools used by the Hotline such as referrals and print materials (see Exhibit V.3 in Lewin report).

The Lewin evaluation of the Health Rights Hotline surveyed Hotline clients as to their satisfaction with referral contacts suggested by Hotline staff including medical providers, health plans, the California Department of Corporations and employer benefits departments (see Exhibit V.2 in Lewin report). On average, Hotline clients rated all referral contacts as very helpful in 31% of cases and somewhat helpful in 21% of cases. The most positive rating of referral sources was for employer benefits departments which were rated very helpful in 53% of cases. The least positive rating was received for the Department of Corporations which was rated very helpful in 24% of cases and somewhat helpful in 10% of cases. While this is not equivalent to surveying consumers who contacted the Department of Corporations directly and the sample size was limited, the Department was a significant outlier in terms of consumer satisfaction in this survey.

Staff at the Center for Health Care Rights commented that while the telephone consumer survey is quite costly, it provides value for money in allowing the collection of more data. It allows the Center to assess consumer satisfaction with referral sources as described above, in addition to consumer satisfaction with the Hotline itself.

Maryland

A. Jurisdiction and Responsibility for Consumer Complaints Systems

In Maryland two agencies - the Maryland Insurance Administration and the Health Education and Advocacy Unit in the Office of the Attorney General - have the major role in managing health insurance complaints, while the Health Care Access and Cost Commission produces comparative report card information on HMOs.

The Maryland Insurance Administration (MIA) is theoretically the first point of entry for all consumer complaints on health insurance. Regulators noted that the MIA is essentially the "pulse" of the industry. It is a regulatory body whose function is to check whether insurance plans are in compliance with statutes, their contractual obligations and various rules including the setting of rates. The MIA does not represent either insurance plans or consumers. Maryland law also allows providers to file complaints.

As of 1 January 1999 the new "Appeals & Grievances" Law took effect in Maryland. Grievances are internal complaints filed by consumers directly with their health plan challenging a plan's adverse decision to deny services based on medical necessity. As such, grievances are a subset of the total complaints about health insurance. Section B provides further information on the protocols specifically for management of grievances across the MIA and the Health Education and Advocacy Unit (HEAU) in the Office of the Attorney General. The jurisdiction and management of health insurance complaints generally is described below.

Occasionally, the MIA and the HEAU may be involved in managing the same complaint. Sometimes this occurs because consumers make multiple calls to state agencies. In other cases, the MIA may refer on a complaint to the HEAU for issues that fall outside its regulatory reach, but also retain the complaint to deal with other issues under its purview. The HEAU provides quarterly complaints reports to the MIA using compatible fields, but the data presented is non-identifying.

Unlike the MIA's regulatory compliance approach to complaints management, the HEAU (established in 1987) views its role as "problem solving for consumers". As such, it often gets the difficult cases which fall outside the regulatory scope of other agencies. The HEAU examines legislation which may be relevant in achieving complaint resolution. However unlike MIA's enforcement activities which are dependent upon the law, the HEAU undertakes mediation which can be successful in complaint resolution, even in the absence of specific legislation. Being able to move beyond the legislation is one factor considered important by HEAU staff in helping to assist consumers. It allows the HEAU to focus on consumer problems (a front-of house approach) and then work creatively with insurance plans to seek satisfactory resolution.

The HEAU does not have regular formal meetings with other agencies involved in complaints management, but liaises informally through telephone contacts. Staff believe that the HEAU operates somewhat like an ombudsman program, with no obvious powers lacking due to the absence of formal legislation establishing an ombudsman program. Unlike the MIA which remains neutral, the HEAU has a strong consumer advocacy focus.

The Maryland Department of Health and Mental Hygiene (DHMH) has primary responsibility for HMO quality complaints, with such complaints referred on by the MIA. Similar to the interaction between the MIA and the HEAU, the MIA and the DHMH may jointly handle a complaint if there are both quality and other issues. The MIA and the DHMH have signed a Memorandum of Understanding setting out their agreed roles and responsibilities (Attachment 1).

Provider licensing boards which fall under the Department of Health and Mental Hygiene also handle complaints about specific provider groups. In the late 1980s the HEAU established Memorandums of Understanding (MOUs) with some of these Boards, governing the way in which they would jointly operate and manage complaints. The HEAU continues to operate under the referral procedures initially established in these MOUs.

Currently the provider boards deal largely with quality of care issues and generally refer charging complaints to the HEAU. The Boards have to be careful in handling any financial complaints as there may be antitrust issues due to their governance and organizational structures. The HEAU refers some complaints (e.g. alleged molestation) to the relevant provider boards. The Boards tend to limit their operations to complaints where they have regulatory authority.

Medicare and Medicaid Complaints

The HEAU takes on a "translator" role for people who call with complaints involving Medicare and Medicaid. Common complaints for Medicaid beneficiaries involve billing issues. In some cases, the HEAU will directly answer the question, including contacting the relevant agency (HCFA(now known as CMS) for Medicare and the Maryland Department of Health and Mental Hygiene for Medicaid) on behalf of the complainant. In other cases the HEAU attempts to ensure that the complainant only has one more call to make, by identifying for complainants the correct person with whom they should speak.

The MIA liaises with relevant agencies via meetings and telephone calls on Medicare and Medicaid complaints. One advantage of MIA involvement is that it can issue penalties.

ERISA Complaints

The MIA and the legislature are aware that large numbers of Maryland residents are insured through self-funded plans and outside their jurisdiction. The MIA also does not have jurisdiction over workers' compensation or welfare pension plans. In dealing with insurance plans exempt under ERISA, the MIA requires plans to complete an "underwriter certificate", attesting to their status, rather than simply rely on the verbal assurance of the plan that it is self-funded.

The HEAU will contact plans which are exempt under ERISA to help resolve consumer complaints. Most of these plans are willing to discuss issues with the HEAU, but sometimes take the opportunity to remind the HEAU that they are under no obligation to do so.

B. Jurisdiction and Liaison with Health Plans

The MIA operates under two sets of legislation, one applying to the whole insurance industry and the other applying specifically to HMOs. These laws have different penalties, although there are moves under way to make the laws, including the penalties, more similar.

The MIA is currently responsible for licensing all health insurance plans including HMOs. As part of this process, and under the new Appeals and Grievances Law, HMOs are required to file details of their internal complaints processes with the MIA. This would generally occur at the initial issue of a license, but occurred for all existing HMOs when the legislation took effect on 1 January 1999.

In the 1960s when consumer protection laws were enacted, businesses that were otherwise regulated under existing legislation were exempted. This was the case with insurance plans which are therefore exempted from the operation of Maryland's consumer protection laws under the Office of the Attorney General.

Appeals and Grievances

The Maryland Insurance Administration's 1999 Report on the Health Care Appeals and Grievance Law provides a detailed analysis of the first 12 months of operation of the new legislation.

Under the new Appeals and Grievances Law, consumers who receive an adverse decision from their plan denying services based on lack of medical necessity have access to an internal grievance process through their health insurance plan. Similar to the Californian Department of Corporations, the MIA will not handle such complaints until the consumer has exhausted the plan's internal grievance process (unless there is an emergency or compelling reason). Health insurance plans generally have 30 days to respond to consumer grievances (1 day for emergencies, or 45 days for retrospective denials). However the HEAU will support and help consumers prepare their grievance during this period, and may also become involved in mediating disputes.

Within the MIA there are two separate units handling health insurance complaints. The Life & Health Complaints Unit handles all health insurance complaints that do not involve issues of medical necessity (e.g. coverage, premiums), while the Appeals & Grievances Unit handles grievances related to medical necessity. The Appeals & Grievances Unit in the MIA will become involved when consumers have exhausted the internal review process, at which time investigators will contact the plan, requesting a written response within seven days. The MIA may then refer the grievance for external review, using contracted Independent Review Organizations for medical review.

For general health insurance complaints MIA regulators noted that the vast majority of complaints are provider-driven, often arising from the Prompt Payment (30 days) requirement.

The Appeals and Grievances Law covers all health insurance plans (except those exempted under ERISA from state regulation, Medicaid and Medicare). Maryland did not attempt to define the appeals law as only applying to HMOs because of awareness that this would provide an incentive for new models of care to emerge which were not captured by a limited definition. The legislation deals with all commercial insurance plans including dental, catastrophic, medical and surgical etc.

When consumers are denied care, they must receive a letter including reference to the specific criteria on which the care is being denied. For example, payment for an emergency admission may require a patient to meet a specified number of criteria indicating their emergency status. Consumers often find out about the utilization review criteria used by the plan in denying care at the stage when they are required to seek pre-authorization. Sometimes this information can aid the health professional in more completely identifying patient characteristics and undertaking any other necessary tests to allow the patient to qualify for medical care.

Insurance plans are required to file their utilization review criteria with the MIA for approval. The MIA will examine the validity of these criteria, with the legislation requiring that these criteria are: objective, clinically valid, compatible with established principles of health care, and flexible enough to allow deviations from norms when justified on a case-by-case basis. Prior to the new legislation, the Department of Health and Mental Hygiene (DHMH) had responsibility for approving utilization review criteria of insurance plans. Staff at the HEAU commented that previous advice from DHMH staff was that plans that ran into difficulties in getting approval of their criteria tended to be those plans that developed criteria internally, rather than purchasing stock criteria. Now, the HEAU receives copies from the MIA of all plans' utilization review criteria which are often useful in the HEAU's informal assistance and mediation role during the internal grievance process.

HEAU staff noted that in order to keep denials out of the grievance process, insurance plans may attempt to find contractual reasons to deny care, rather than attributing it to the lack of medical necessity. For example, plans may attempt to deny jaw occlusions or plastic/reconstructive surgery on the grounds that these services are not covered. In recognition of this situation, the MIA's report on the operation of the Appeals and Grievance Law recommended that an appeal process also be established for coverage decisions. Legislation to expand the appeals and grievance process for coverage and contractual issues was passed by the Maryland General Assembly in 2000.

C. Complaints Reports and Data

Overview

The MIA does not publish regular reports directed specifically at consumers including comparative health insurance complaints data, similar to most of the other states in this study. In April 2000 the MIA issued a report focussing specifically on the operation of the new appeals and grievance law, but it has not published broader complaints data. In addition, the HEAU is required by law to issue an annual report on the Maryland appeals and grievance process, which includes a listing of the complaints filed against health plans.

In terms of plan-specific complaints information, the MIA noted that consumers were able to make formal Public Information requests but that consumers contacting the MIA with such a request tended to be referred on to the HEAU. HEAU staff noted that it received about 2-3 calls daily during the annual enrollment periods from consumers interested in the complaints history of specific plans. Staff have the ability to call up on screen aggregate data on complaints of individual insurance plans and can provide information to callers on the type of complaints received and how they were resolved. However staff of the HEAU are cautious in interpreting this information to consumers as "good" or "bad", as the database does not allow this material to be presented relative to the volume of business of the insurance company. The data include all complaints, with no attempt made to distinguish between "justified" and "not justified" complaints. The HEAU is installing a new complaints database which will assist staff in providing greater textual interpretation when they receive inquiries concerning complaints histories of individual insurance plans.

The MIA reports complaints data to the NAIC CDS for national tracking of complaints.

Two reports relevant to Maryland complaints management are available:

The Maryland Health Care Commission Comparing the Quality of Maryland HMOs 1999 Consumer Guide (Attachment 2); and
The Maryland Insurance Administration's 1999 Report on the Health Care Appeals and Grievance Law, April 2000 (Attachment 3). The required annual HEAU report on the appeals and grievance process is included as Appendix B of the MIA report.

For each of 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.

D. Comparing the Quality of Maryland HMOs 1999 Consumer Guide

Features

The Maryland Health Care Commission (HCC), a public regulatory body established by the legislature, produces annual consumer report cards on HMO quality using HEDIS and CAPHS measures. The HCC produces three major types of reports:

An analytical Policy Report providing both an Executive Summary and Technical information;
A Comprehensive Performance Report directed at health plans and benefit managers providing complete, statistically detailed information; and
A Consumer Guide presenting the information in simple graphical format. In addition to a hard copy booklet, the HCC produces an electronic interactive guide which allows consumers to focus in on specific plans.

The Consumer Guide released in June 2000, comprising results from 1999, includes two complaints measures using the CAPHS 2.0H Survey (included in HEDIS 1999). The survey, sent to 1,240 members of each plan, includes:

In the last 12 months, have you called or written your health plan with a complaint or problem?; and
If you had a complaint, was it settled to your satisfaction?

While Maryland was the first state to produce an HMO quality report card, this is the first time that complaint measures have been included in the annual consumer guide.

Findings

In 1999 26% of commercial HMO members reported that they called or wrote to their health plan with a complaint over the past 12 months, ranging from a low of 15% to a high of 35% across individual HMOs. (Note: the Policy Report indicates that the average complaint rate was unchanged from 26% in 1998.) When asked whether the complaint was resolved to their satisfaction, 56% said yes (range of 45-71%), 21% said no (range of 16-27%), and 23% said the complaint had not yet been settled (range of 12-31%).

Assessment of the Report

Consumer friendliness: The Maryland HCC report is presented in a manner which is simple and easy for consumers to follow. It uses a graphical presentation which compares the performance of individual HMOs, ranking them as average, higher than average or lower than average using colored circles. In addition, for consumers who want more detailed information, the report contains numerical scores with bar charts for all the performance measures for individual HMOs.

Monitoring patient protection implementation: As the complaints data does not provide any breakdown of the types of complaints experienced by patients, it is of limited use in tracking the implementation of patient protection legislation.

E. MIA Report on the Health Care Appeals & Grievance Law

Features

Scope - The report includes data from both the MIA and the HEAU on total health insurance complaints and grievances, covering between the first six to twelve months of operation of the new Appeals and Grievances Law. Complaints data in the report include a hierarchy of complaints management as follows:

Internal grievance data - the legislation requires that health insurance plans report to the MIA data on internal grievances including the outcome of grievances, with breakdowns by plans and by type of service.

Complaints received by the HEAU - this includes total complaints about all health services (e.g. providers, health insurance) and grievances whereby consumers (or providers) contact the HEAU once they have received a denial of care from their health insurance plan based on medical necessity.

Complaints received by the MIA - again, this includes data on total complaints and also grievances filed by consumers and providers. The MIA provides a breakdown of the grievance data by plan, outcome of the grievance and type of service.

Grievance categories - The MIA specifies the reporting format for health insurance plans to report on grievances (see page 33-35 of the MIA Report at Attachment 2). Plans must disaggregate grievances by type of service as follows:

Inpatient hospital services;
Emergency room services;
Mental health services;
Physician services;
Laboratory, radiology services;
Pharmacy services;
PT, OT, ST services (including inpatient rehabilitation services);
Skilled nursing facility, sub acute facility, nursing home services;
Durable medical equipment services;
Podiatry, dental, optometry, chiropractic services;
Home health services

In addition, for each of the service types, plans are required to report the five most common procedures/services/items that were at issue, using CPT codes or ICD-9 codes. The MIA requires that plans report on the number of grievances involving a hospital length of stay/denial of hospital stay, again including reference to the CPT or ICD-9 codes. Finally, the MIA requires that plans report on several process measures including: the outcome (original decision upheld, overturned or modified) and the average time for resolution of emergency and non-emergency grievances.

Findings

Consumers received a favorable decision in 60% of internal grievances made directly to health insurance plans, but the likelihood of a favorable decision varied significantly by the type of service.

Figure 4.1 shows the total number of grievances handled directly by health insurance plans in the first six months of 1999. Four service types - inpatient hospital services, emergency room access, pharmacy services and physicians - accounted for about three-quarters (72%) of all grievances. Figure 4.2 indicates the share of grievances decided in favor of the consumer. While 60% of all grievances resulted in the plan's initial decision being overturned or modified in favor of the consumer, this increased to 85% for grievances involving pharmacy services and 76% for laboratory radiology services services. Grievances which were the least likely to be overturned or modified in favor of the consumer were mental health services (28%), and podiatry/dental/optometry/chiropractic (38%).

Figure 4.1: Number of Grievances Handled by Health Insurance Plans, Maryland, January-June 1999

Figure 4.2: Outcome of Grievances Handled by Health Insurance Plans, Maryland, January-June 1999

The majority of complaints received by the MIA do not relate to grievances based on denial of care linked to medical necessity.

In 1999 the MIA Life & Health Complaints Unit received a total of 10,775 complaints, while the MIA Appeals & Grievances Complaints Unit received a total of 1,063 complaints.

The new Appeals & Grievances Law has more than doubled the number of complaints received by the Health Education and Advocacy Unit.

From 1996 to 1998 the HEAU received an average of 845 complaints annually, projected to grow to 2052 in 1999 (based upon the first six months of 1999). Prior to 1999 complaints about health insurance including HMOs comprised only 25% of the HEAU's workload, but this increased to more than 70% in 1999. Of complaints received by the HEAU in the first six months of 1999:

about 30% concerned services other than health insurance and HMOs;
about 25% involved general health insurance and HMO complaints; and
about 45% involved medical necessity grievances for health insurance and HMOs.

Assessment of the Report

Consumer friendliness - The MIA report is a policy analysis of the impact of the new Appeals & Grievances Law, rather than a report specifically targeted at consumers. For the complaints and grievances data in this report to be presented in a consumer-friendly way, one necessary change would be to compare individual plans on the basis of their market share, with complaints or grievances ratios calculated on the volume of premiums or insurance policies. MIA regulators commented that one issue in deConsumer friendliness - The MIA report is a policy analysis of the impact of the new Appeals & Grievances Law, rather than a report specifically targeted at consumers. For the complaints and grievances data in this report to be presented in a consumer-friendly way, one necessary change would be to compare individual plans on the basis of their market share, with complaints or grievances ratios calculated on the volume of premiums or insurance policies. MIA regulators commented tha

Monitoring patient protection implementation - The MIA reporting framework required for grievance reporting by health insurance plans is quite detailed by service type which would be useful for policy analysts in tracking certain patient protections (e.g. emergency room access). However the grievance reporting framework does not adequately capture "issues", as distinct from service types, including continuity of care and network adequacy. Ideally, data collected through the MIA (both the Health & Monitoring patient protection implementation - The MIA reporting framework required for grievance reporting by health insurance plans is quite det

F. Public Education Activities

Publications

The MIA has published a brochure titled "Need help with your HMO" which provides advice on the new Appeals & Grievances Law legislation and includes contact information for the MIA. The MIA website does not list any other health insurance publications.

The HEAU produces a range of brochures, guides and consumer tips including "When your health plan says 'no', "Making the most of your health insurance" and "Sorting out medical bills".

Outreach and Media

The Commissioner and senior MIA staff receive frequent inquiries for speaking engagements on complaints management, with a growing focus in the MIA towards consumer education. The Commissioner is very active in both the legislative and provider community, with press coverage resulting in growth in complaints. While the Annual Report of the MIA is tabled in the General Assembly, the Commissioner will publicize issues with complaints on an ongoing basis throughout the year, as they arise.

Staff of the HEAU undertake about 20-25 speeches to consumer groups annually and also staff information booths at fairs and other public events. However there is an information gap with consumer groups not particularly well focused and not actively using the HEAU office.

Following the passage of the appeals legislation, there has been quite strong demand from provider groups for HEAU staff to speak at public events. Mental health providers are the most well organized. Some other health professionals, including surgeons, have been much less active in using the legislation. Often it is the office practice managers who will be involved in handling patient complaints concerning insurance. However there are problems with poor communication between some professionals and their office practice managers. In one recent instance the State medical society sent information on the new appeals process to all its members. In a large radiology group practice comprising 95 radiologists, all the radiologists received this information but not one passed it on to the practice manager. The HEAU is now undertaking outreach activities to office practice managers, given their central role in patient complaints.

G. Agency Performance Issues

Staffing

The MIA has investigators who are specialized within two insurance lines, life and health or property and casualty. Life and health includes long term care, medical and surgical, life insurance and disability. The Life & Health Complaints Unit includes 1 Chief Investigator, one Quality Assurance Coordinator, nine investigators, one part-time investigator and three clerical staff to investigate and process non-medical necessity life, health and HMO complaints. Following the passage of the Appeals and Grievance legislation, the MIA established a new Appeals & Grievances Complaints Unit in the Consumer Complaint and Investigation Section with staffing as follows: 1 Chief Investigator, 5 Investigators, 2 clerical staff and 1 contractual physician.

The HEAU currently has 5 staff, 4 of whom personally handle grievances full-time. There are also 15-20 volunteers who handle most of the other complaints (i.e. non-grievances, complaints on billing issues etc).

Financial Savings to Consumers

The MIA collects some data on financial savings but noted that this is difficult to collect uniformly.

The HEAU captures some data on financial savings to consumers as a result of successful complaints resolution. In 1998 there were about $0.5 million of savings, while in 1999 the full- year savings are estimated to be between $1-1.5 million. However it is not always possible to fully capture this information or do so in a way that is comparable. The new database will allow the capture of two new fields - firstly, the $ that consumers want to get through complaints resolution, and secondly, the $ received as a result of action by the HEAU. It should be noted, however, that consumers are often very uncertain about what they want to achieve in resolving their complaint.

Consumer Satisfaction Surveys

The MIA does not undertake consumer satisfaction surveys for insurance complaints generally. Regulators commented that, given current staffing levels, they would prefer to have staff dealing directly with patient complaints rather than undertaking surveys.

However, following the passage of the Appeals & Grievance legislation, the MIA undertook a small mail survey in December 1999 of 342 individuals who had filed complaints with the Appeals & Grievances Complaints Unit. With a response rate of only 25%, the survey found that the majority of consumers were satisfied with their contacts with both the MIA and the HEAU. Appendix H of the MIA's Report (Attachment 2) includes the survey questions and analysis.

The HEAU undertook a consumer satisfaction survey in the past, using a brief 4-question survey which was hand tabulated. Staff noted that this was a fairly basic exercise and there was limited confidence in the validity of this exercise. Under the appeals legislation, the HEAU intends to survey providers and patients in 2000 regarding the operation of the new grievance process.

Audit

The MIA undertakes internal audit processes every 6 months and uses supervisory review in managing complaints. Regulators noted that this process will need to be reviewed and updated given the grievance and appeals legislation.

There has been no audit of the HEAU's operations. HEAU staff noted that the major concern of the General Assembly was timeliness by insurance plans in managing grievances, resulting in the requirement on insurance plans to respond to the MIA or HEAU in seven days on appeals.

Timeliness of Complaints Resolution

While the HEAU does track time taken to resolve complaints, this data is currently not particularly reliable. It is a low priority of staff to record when complaints are closed, so that this information will often overstate the time taken for closure. However the HEAU does run reports from its database, checking the length of time taken.

A further issue in monitoring time for resolution of complaints is that the largest delay under the new grievance process is getting authorization from the patient and/or getting necessary information from the clinical provider. The legislation requires insurance plans to respond within seven days, but imposes no timelines on other parties to the complaint. One of the major health providers in Maryland is attempting to get patient consent to the grievance process included on their admission/treatment forms which would expedite the process if it needs to be invoked.

New York

A. Jurisdiction and Responsibility for Consumer Complaints Systems

Two state government departments, the Department of Insurance and the Department of Health, share responsibility for health insurance complaints.

The Department of Insurance Consumer Services Bureau is responsible for complaints concerning payment, reimbursement, coverage, benefits, rates and premiums, while the Department of Health Office of Managed Care is responsible for complaints relating to quality of care and adequacy of providers. Both Departments collaborate on the production of, and contribute data to, the complaints report card, "New York Consumer Guide to Health Insurers".

For complaints involving other payers such as Medicare and Medicaid, the role of the Department of Insurance will depend upon the nature of the complaint. For example, Medicaid complaints involving prompt payment (statutory requirement for claims to be paid within 45 days) are under the jurisdiction of the Department of Insurance. However for most complaints, the Department of Insurance refers the consumer to the responsible agency (i.e. HCFA(now known as CMS) for Medicare complaints and State Department of Health for Medicaid complaints).

New York also enacted an external review process which took effect from 1 July 1999 which applies to private insurance and Medicaid, but not Medicare-only beneficiaries. Under this process consumers have up to 45 days from the date of receiving a final adverse determination through a plan's internal appeal process to make an application to the Department of Insurance for external review.

There has been no discussion about the establishment of an ombudsman office. Regulators at the Department of Insurance believe that the Department's Consumer Services Bureau is generally considered to be equivalent to an ombudsman office. The Consumer Services Bureau will recommend legislation based on analysis of patterns of complaints (e.g. prompt pay, external review).

B. Jurisdiction and Liaison with Health Plans

While the Department of Health handles quality of care complaints and licensing, the Department of Insurance still has regulatory responsibility for all types of health insurance including: indemnity insurance, HMOs and POS plans). Moreover, self-insured plans are outside the Department's jurisdiction, with some of these plans contracting with PPOs.

New York, like some other states in this study, has experienced problems because of the lack of direct regulatory authority over independent practice associations (IPAs). In 1999 Wellcare HMO experienced financial difficulties due to losses by its primary IPA capitation contract. Proposals to enhance regulatory authority over IPAs which are under current consideration by the Department of Insurance include:

A requirement on IPAs to make a security deposit, similar to the financial reserve requirements already applied to HMOs; and
Promoting the use of "stop-loss" insurance for IPAs to protect against excessive and catastrophic claims.

The Consumer Services Bureau (CSB) provides detailed monthly complaints reports to the Life, Health and Property Bureaus. The CSB views itself as the "eyes and ears" of the Department and may recommend market conduct exams on the basis of consumer problems. It may also advise the Life, Health and Property Bureaus if there are delays in payment of claims, indicating potential financial difficulties for a plan. The CSB participates in quarterly meetings which the Life, Health and Property Bureaus has with all plans.

Grievance Data

HMOs are required to submit internal utilization review (UR) and grievance data to the Insurance Department, which are then included in the Department's published annual complaints reports. This requirement applies to all HMOs, as well as insurers offering a contract that meets the definition of a managed health care insurance contract. Section C on Complaints Reports discusses the type of data submitted by plans in more detail. However, in summary, the Department defines UR appeals as when a consumer seeks to overturn an insurer's decision to deny a medical service on the grounds of medical necessity or that services are investigational or experimental, while grievances are defined as all other challenges to decisions made by an HMO.

To ensure consistency in grievance and UR data submitted by plans, the Department released a circular letter in 1999 specifying what should be included in these reports (Attachment 1). Regulators commented that, following the issuing of this circular, they were confident about the comparability of data coming in from plans. Regulators also noted that while the relevant legislation is quite clear in distinguishing between UR appeals and grievances, sometimes insurance plans will have a combined department which manages both types of complaints. The Department has established a single point of contact for each plan to deal with UR and external review.

C. Complaints Reports

Overview

The complaints reports produced by the New York Department of Insurance are among the most comprehensive of any of the states included in this study. Attachments 2 & 3 provide copies of the 1999 and 1998 reports respectively, which each include data for the previous calendar year. Both the 1998 and 1999 reports are examined as they differ in format. The key differences between these reports are:

The 1998 report includes substantial trend data examining patterns of complaints over the three years from 1995 to 1997, while the 1999 report presents annual 1998 data only; and
The 1999 report includes for the first time HEDIS performance measures reported by HMOs to the New York State Department of Health, in addition to complaints data.

These reports also provide advice for consumers on how to choose a health insurer, background information explaining the key differences between managed care and fee-for-service health insurance, and information on new consumer protections enacted by the legislature.

In addition to publishing comparative complaints reports, the Department makes available plan- specific information to consumers.

In what follows, the key features of the reports are described, the major findings from data analysis are identified, and the usefulness of the reports is assessed from both the perspective of consumer friendliness and their value in monitoring the implementation of patient protection legislation.

Features

Scope - As a result of their comprehensiveness, the New York complaints reports are highly complex. In particular, the reports break down complaints using two key variables, type of complaint and type of health insurance, as follows:

Type of complaint – the reports distinguish between the following different complaint measures:

Total complaints – complaints made by consumers and providers to the Department of Insurance;
Prompt pay complaints – complaints made by consumers and providers to the Department of Insurance about late payments under the Prompt Payment law. These complaints are a subset of the Total Complaints category;
Complaints to the Department of Health – complaints against HMOs made by consumers and providers to the Department of Health which typically involve quality of care issues. These data are not included in the Total Complaints category.
Grievances – these are internal complaints made by consumers directly to their health insurers challenging an insurer’s decision, excluding decisions made on the basis of medical necessity or on the basis that services are investigational or experimental; and
Utilization review appeals – these are internal complaints made by consumers directly to their health insurers challenging an insurer’s decision where the insurer cited the grounds of medical necessity or on the basis that services are investigational or experimental.

Type of health insurance – the reports distinguish between the following types of health insurance:

HMOs – offer HMOs products and HMO/POS plans that include an out-of-network option;
Commercial health insurers – offer indemnity insurance as well as managed care products such as PPOs, and may also insure the out-of-network benefits of HMO- POS plans; and
Nonprofit indemnity insurers – offer indemnity insurance as well as managed care products such as PPOs, and may also insure the out-of-network benefits of HMO- POS plans.

Given the evolution of different types of managed care products, the differences among these three groups of health insurers are not as clearcut as previously.

Justification of complaints – the reports include both total and "upheld" complaints. For complaints received by the Department of Insurance or the Department of Health, upheld complaints are when the respective Department decides in favor of the complainant. Complaint ratios are calculated using upheld complaints. Similar measure are used for utilization review appeals and grievances where the reversal rate is the percentage of decisions decided by the health insurer in favor of the consumer.

Complaints ratios – in the 1999 report these ratios are calculated on the number of upheld complaints divided by the health insurer's total annual premium, using complaints received by the Insurance Department only (not Health Department complaints). A 1.0 ratio indicates the Department upheld one complaint for every $1 million in premium. The report does not include any ratios for grievances or utilization review appeals.

Coverage – the reports exclude data on some low-volume premium plans. HMOs are excluded with less then $25 million in NYS premium, while non-profit indemnity and commercial insurers are excluded with less than $50 million in NYS premium.

Data Analysis

Some of the key aggregate findings follow.

Consumers are more likely to complain to their health insurer than to state government departments.

The 1999 report includes the HEDIS measure as to the proportion of health plan members who had called or written to their plan with a complaint or problem in the last 12 months. On average, 21% of HMO members had done so, noting that this measure is greater than the number of complaints which might actually result in a formal grievance or utilization review appeal with a plan.

A Californian survey (see California chapter) has indicated that there is a hierarchy of where people complain, with consumers being much more likely to complain to their health plan than to a state government agency. This is confirmed for New York in Figure 5.1 which sums the total closed complaints across HMOs, nonprofit indemnity and commercial insurers, regardless of whether the complaint was upheld. Figure 5.1 indicates that consumers are about three times as likely to formally complain directly to their plan than to state government departments. This is not surprising. All state insurance departments including New York advise consumers to first take advantage of the insurer's internal appeal process to resolve any problems.

Figure 5.1: Where Complaints are Received, New York, 1999

Figure 5.1: Where Complaints are Received, New York, 1999

There are major differences in whether complaints are justified or upheld according to where the complaint was lodged and the type of health insurance plan.

Table 5.1 shows the proportion of complaints that were upheld in favor of the complainant by where the complaint was lodged and the type of health insurance plan. The 1998 Report notes that interpreting reversal rates is complex. For grievances and utilization review appeals, low reversal rates may mean that plans are initially making determinations in compliance with contracts, regulations and laws, or it could mean that plans are incorrectly affirming some of their determinations. High reversal rates may reflect the poor quality of plans' initial determinations or may reflect a responsive internal grievance process.

In the context of these qualifications, it is notable that non-profit indemnity insurers have much lower rates of upheld complaints than HMOs and commercial insurers for complaints lodged with the Department of Insurance, suggesting that they have a better complaints record in being less likely to receive unwarranted complaints.

This difference for non-profit indemnity plans may partly be a function of the type of complaints - prompt pay and other complaints. If, for example, prompt pay complaints were more likely to be upheld and non-profit indemnity plans received a lower volume of such complaints, that might account for their lower reversal rate for total complaints. In fact, prompt pay complaints comprise 79% of all HMO complaints to the Department of Insurance, 62% of commercial plan complaints, but only 43% of non-profit indemnity complaints. However Table 1 also shows that prompt pay complaints are upheld at only a slightly higher rate than total complaints for HMOs and commercial insurers, suggesting that there are other factors behind the relatively good performance of non-profit indemnity plans.

Table 5.1: Share of Complaints Upheld, New York, 1999

Where complaint lodged	Type of complaint	HMOs	Non-profit indemnity insurers	Commercial insurers
Department of Insurance	Total complaints	40%	16%	40%
Department of Insurance	Prompt pay complaints	43%	13%	50%
Department of Health	Quality complaints	21%	NA	NA
Health plans	Utilization review appeals	51%	47%	21%
Health plans	Grievances	48%	NA	NA

Non-profit indemnity plan members are much less likely to complain than members of HMOs or commercial health insurance plans.

Figure 5.2 shows the complaints ratios (total upheld complaints divided by the premium volume of plans), indicating that HMOs and commercial insurers are two to three times more likely to receive upheld complaints than non-profit indemnity insurers.

Figure 5.2: Complaints Ratios for Complaints Lodged with the Insurance Department, New York, 1999

There have been quite large increases in the rates of all types of complaints between 1997 and 1998.

Table 5.2 shows the growth in complaints between 1997 and 1998 for the different types of complaints. Ideally, it is best to use complaints ratios when examining trends as this adjusts for changes in the volume of health insurance business. However neither grievance data nor utilization review appeals are expressed as ratios, meaning that only changes in the total volume of such complaints can be examined. The very large increase in grievances and utilization review appeals between 1997 and 1998 may therefore partly reflect growth in these market shares.

Table 5.2: Growth in complaints, New York, 1997-1998

Complaint measure	Health insurance type	1997	1998	% increase
Complaints ratio (total complaints to Department of Insurance)	HMOs	0.162	0.302	86
	Non-profit indemnity insurers	NA	0.119	NA
	Commercial insurers	0.112	0.329	194
Number of utilization review appeals (closed)	HMOs	4,439	14,427	225
	Non-profit indemnity insurers	801	5,606	600
	Commercial insurers	1,371	5,979	336
Number of grievances (closed)	HMOs	10,657	18,741	76

Note: In 1997 complaints ratios for non-profit indemnity insurers were calculated using claims, rather than premiums, and are therefore not included given the lack of comparability with the 1998 calculation.

Assessment of the Report

Consumer friendliness - The length and comprehensiveness of these reports may deter some consumers. The 1999 report recognizes this potential problem, noting that the amount of information "can appear to be intimidating", and proposes a strategy for consumers to navigate the report through a series of steps according to their type of health insurance. The series of questions about choosing a health insurer and the explanation of managed care options are also helpful in providing consumers with some context for the complaints data.

The style and layout of the 1999 report is more consumer-friendly than the 1998 report. In part, this is a result of including HEDIS data using a graphical presentation format (colored circles denoting average, above average and below average performance). The presentation of the complaints data is also simplified in the 1999 report, with easier-to-read tables that include some bar charts and the complaints ranking prominently displayed in the table. Also helpful from a consumer perspective is the deletion of the detailed policy analysis material found in the 1998 report which examined three-year trends in complaints and differences in complaints by geography, profit status and premium volume.

Despite these improvements, the 1999 report still presents the consumer with a significant analytical challenge - to understand the importance of the different types of complaints measures (total complaints, prompt pay complaints, UR appeals, grievances, complaints to the Department of Health), to compare the performance of relevant plans across these measures using either rankings or complaints ratios, and then to make a balanced judgement as to the most suitable plans.

Monitoring patient protection implementation - The data in these reports do not provide sufficient disaggregation of the types of complaints, grievances or utilization review appeals to be useful in monitoring the implementation of specific patient protections. However it is likely to be of use to regulators, particularly in assessing differences among plans in reversal rates for grievances and utilization review appeals.

Future plans - Under the recent external review legislation, the Department will be required to include external review data in its 2000 report to the legislature.

D. Public Education Activities

Publications

The Department of Insurance produces a wide range of consumer publications on health insurance. In addition to the New York Consumer Guide to Health Insurers described in the previous section, other significant publications include:

Your Rights as a Health Insurance Consumer;
Consumers Guide for Standard Individual HMO and Point of Service Coverage, 1999;
Premium Rates for HMO Standard Individual Health Plans by County;
Health Insurance - A Small Business Guide;
Information for Medicare Beneficiaries;
External Review: Your Rights as a Health Care Consumer in New York State; and
Insurance Policies covering Long Term Care Services in New York State.

Outreach

The Consumer Services Bureau runs about 100 outreach programs annually including visits to groups such as senior centers and high schools to talk about insurance. The Department of Insurance also works with the Department of Aging to provide advice about how to select different types of insurance policies.

The Department meets with HCFA(now known as CMS), the Office of Aging and the New York Health Department on the HIICAP program (Health Insurance Information, Counseling and Assistance Program) which is funded by the federal SHIP program. Under the HIICAP program volunteers sit down on a one-to-one basis with seniors to explain health insurance options. There is a training manual on the HIICAP program which the New York State Insurance Department reviews and provides technical assistance. Assistance is also provided at the end of the year, for example, when HMOs withdraw from the market.

Media

The Department of Insurance is extremely vigorous in using the media to publicize its efforts on behalf of consumers with weekly and sometimes, daily, press releases on issues including the release of the annual consumer guide to health insurance, promoting the availability of the external review hotline and penalties against non-compliant insurers. Attachments 4 & 5 provides examples of press releases promoting the consumer complaints guide.

E. Agency Performance Measures

Staffing

The Department's Consumer Services Bureau has 107 allocated staff, 34 of whom are clerical support staff. While some specialize in health insurance, others work across multiple lines of insurance business. In addition to its 1-800 hotline, the Department maintains offices in several cities including New York City, Albany, Buffalo and Mineola, all of which have a shop-front capacity to deal with consumers in person.

Volume of Business

The Department monitors web site hits and information calls to the Consumer Services Bureau. In 1999 the Consumer Services Bureau responded to about 450,000 telephone inquiries for information and received 67,186 complaints from consumers and providers across all lines of insurance business. Of the 52,737 complaints closed in 1999, 21,436 concerned accident and health insurance.

The Department also has dedicated toll-free lines for specific issues - the New York State Partnership for Long Term Care and Prompt Pay Complaints. In 1998 the Consumer Services Bureau responded to about 6,400 calls about the Partnership which allows individuals to qualify for Medicaid after their long term care policy benefits are exhausted, without divesting themselves of their assets. The Prompt Pay Law took effect as of January 1998 and requires all health insurers to pay undisputed health insurance claims within 45 days of receipt. Since the law took effect the Department has handled over 40,000 prompt pay complaints, with fines to insurers in 1999 of more than $266,000. Other toll-free lines include the disaster line, the multi- lingual line and the external appeal line.

Financial Savings to Consumers

The Insurance Department does not track financial savings to consumers with regulators commenting that it is unclear whether this information is particularly useful. For example, regulators noted that many consumers want information on whether they are treated properly and this may not result in additional financial savings to consumers. Regulators believe that measuring complaints only by $ returned to consumers understates the breadth of the role that the Department performs for consumers.

External Audit

There are two types of audit. The Office of the Controller audits all state government agencies. This report is given to the Insurance Department for comment, goes to the Superintendent/Governor and is publicly available, including receiving media coverage in the newspaper. There is also an internal control officer who audits the Department, including the Consumer Services Bureau.

Consumer Satisfaction Surveys

The Insurance Department has not yet undertaken consumer satisfaction surveys of people using its complaints function. It is building an "imaging system" which will involve paperless management of complaints. Under this system there will be the capacity to generate consumer satisfaction surveys. There is no view yet as to what form such surveys might take (e.g. postcard or telephone surveys).

Oregon

A. Jurisdiction and Responsibility for Consumer Complaints Systems

The organization of health insurance complaints management in Oregon is relatively straightforward, compared to most of the other states studied. The lead agency is the Department of Consumer and Business Services. Within the Department's Insurance Division, the Consumer Assistance Unit is directly responsible for consumer complaints.

Complaints considered outside the jurisdiction of the Insurance Division include those relating to:

the Oregon Health Plan which among other things extends Medicaid eligibility to all state residents with incomes below the federal poverty level, and is administered by the Office of Medical Assistance Programs within the Oregon Department of Human Services; and
Medicaid - any complaints are referred directly on to the Oregon Department of Human Services.

The Consumer Assistance Unit deals with complaints about self-funded trusts identically to complaints about health plans, because of the sizeable number and growth of trusts. It contacts the plan administrator, attempts to iron out the problem and generally has outcomes similar to other health plan complaints. While the Unit will often receive quite substantive responses from these plans, the response letters regularly refer to the fact that the entity is an ERISA plan which is under no regulatory obligation to the Unit. The Unit also educates the consumer on regulatory authority and informs them of their right to seek assistance from the U.S. Department of Labor.

The Unit also handles Medicare supplement complaints, although the number has decreased substantially over the last decade, following federal action to standardize benefit packages. Oregon has an extremely active Senior Health Insurance Assistance Benefits (SHIBA) program, with the educational and outreach activities undertaken by this program helping to reduce complaints.

Complaints about Medicare HMOs are handled in the same way as those involving commercial HMOs. All the Medicare plans are owned by companies domiciled in Oregon, allowing the Unit to have reasonable leverage over them.

Ombudsman

Oregon does not have an Ombudsman program for insurance complaints. However in 1987 the legislature mandated the establishment of a Consumer Advocacy section within the Insurance Division (Senate Bill 323, ORS 705.117). Complaints from individual consumers are dealt with by the Compliance Officers in the Unit, whereas the Consumer Advocate takes a broader systemic approach. The Consumer Advocate reports to the Manager, Consumer Protection Section, separately from the Consumer Assistance Unit.

The 1987 Annual Report for the Oregon Insurance Division notes that the primary purpose of the Consumer Advocacy Section is to administer the Division's public education program, develop legislative concepts and make recommendations for administrative action to resolve consumer issues. Regulators noted that the position description for the Consumer Advocate has recently shifted somewhat to be more collaborative working within the Insurance Division, including examining trends in complaints, monitoring the implementation of the Patient Protection Act 1997 (SB21) and working closely with the market conduct section. Another new focus is to undertake more consumer outreach.

Under Section 20 of the Patient Protection Act a Health Care Consumer Protection Advisory Committee was established as a rulemaking committee to implement the provisions of the Bill. This Committee has since disbanded.

B. Jurisdiction and Liaison with Health Plans

Unlike some states where health departments have a role in the quality regulation of HMOs, the Oregon Insurance Division has full jurisdiction over both traditional indemnity health plans and HMOs. The Oregon legislation uses the term "Health Care Service Contractors" for a HMO or other type of health insurance plan that contracts with doctors, hospitals and other medical providers to offer services on a prepaid basis.

One issue is the rapidly changing delivery system in Oregon which makes it difficult to keep up with newly emerging forms. Insurance plans are using "delegated entities" which involve paying capitation to an intermediary administrator of plans. These entities vary with some plans delegating functions such as utilization review, claims administration, customer service and referral management services. The degree of delegation varies by contractual arrangement. The Insurance Division position on delegated entities is that the authority is clear. While delegated entities may act as agents of the insurers, the insurer is bound to do business as regulated by the Division and is ultimately responsible for the performance of any functions it delegates or contracts out. In addition, the Division is undertaking an audit of delegated functions during current market conduct examinations.

Health insurers are required under the Patient Protection Act 1997 (PPA) to disclose certain information, including publicizing the existence of the Insurance Division. Most commonly, this is included in Member Handbooks, but some companies are also putting the information in their explanation of benefit reports. The PPA also puts an obligation on plans that where grievances are upheld, the plans are required to advise their members of their right to seek assistance from the Insurance Division.

The Insurance Division also interacts with the industry through formal channels including the Insurance Advisory Committee which meets quarterly to discuss issues across all lines of insurance. In addition to representatives from the insurance industry, agents, business/labor and consumer representatives participate in this forum.

C. Complaints Reports

Introduction

The Insurance Division produces (or disseminates) three different reports containing complaints data:

Consumer Guide to Oregon Insurance Complaints (Attachment 1);
Oregon Complaint Report Part II (Attachment 2); and
Insurance Company Annual Reports (Attachment 3).

In brief, the Consumer Guide to Oregon Insurance Complaints is the annual complaints "report card" providing comparative complaint indices and rankings, organized by line of business, including health insurance plans and Health Care Service Contractors (HCSCs). The Part II report provides a more detailed listing of all consumer complaints filed against every insurance company with the type and disposition of each complaint, but is not designed as a comparative report. The Insurance Company Annual Reports are prepared by health plans, as a requirement of the Patient Protection Act 1997, and include grievance statistics, utilization review summaries, quality assessment summaries and scope of network summaries. These reports are available on the Insurance Division's internet site for individual plans, with no summary report available across all plans.

1. Consumer Guide to Oregon Insurance Complaints

Features

The major features of the Consumer Guide report are as follows.

Scope - the report covers consumer complaints filed against major insurers in six lines of business: automobile, homeowner, life, annuities, health and health care service contractors. Health Care Service Contractors (HCSCs) include HMOs or other types of health insurance plans that contract with doctors, hospitals and other medical providers to offer medical services on a pre-paid basis.

Coverage (size) - the report only includes companies or groups that earned at least $1m in premiums in Oregon or had at least 10 complaints. These exclusion criteria result in the report including data on 90% of health plan complaints and 92% of HCSC complaints.

Coverage (groups) - the report provides complaint indices and rankings for insurance groups, rather than individual companies. However it also includes raw data on complaints and premiums for individual companies, allowing consumers to check the performance of their particular company.

Complainants - While not directly specified, the report is based on consumer complaints as it has been the Division of Insurance policy since 1990 to only accept consumer complaints and not generally to accept provider complaints.

Complaint index - the index is based on complaints closed in a previous calendar year, with no distinction made between whether complaints are justified or not. The index denominator is the amount of premiums earned by the company. An index of 1.00 means that a group's share of all complaints is equal to its share of business, while an index of 3.00 means that a group has three times its share of complaints.

Other performance measures - the report also includes data on the actual number of complaints for both groups and individual companies. It includes a ranking of groups based on the complaint index where 1 is the highest performer.

Type of complaints - the report provides no breakdown of complaints according to categories such as rating, quality or policy administration.

Complaint categories - the Insurance Division uses the same complaint categories as the NAIC and was one of the first states to report to the NAIC Complaints Database System. This report does not, however, disaggregate complaints by reason for complaints.

Data analysis

Trends in total complaints - The last three annual reports with data for calendar years 1996, 1997 and 1998 were analyzed to produce Table 6.1 indicating trends in complaints. The two most significant findings are:

the substantial increase in complaints against HCSC between 1997 and 1998. Regulators believe this is largely attributable to greater public awareness following the implementation of the Patient Protection Act. Regulators also indicated that this trend had continued in 1999 (for which published data are not yet available), with about a 68% increase in complaints between 1998 and 1999. A further reason suggested by regulators may be the growth of managed care market share during this time period.
the higher complaint rate against traditional health plans than HMOs. It is interesting given the "managed care backlash" that the complaints rate against HMOs is less than half that against traditional plans. Regulators suggest that the lower complaints rate may indicate the integral nature of the appeals process for managed care plans. Regulators indicated that some of the large HMOs worked very hard to take care of dissatisfied consumers, resulting in lower complaints rate made to the Insurance Division. The absence of similar well-established complaints handling processes in traditional plans may account for the disparity in complaints rates. However as of 1998 Oregon law began requiring uniform grievance procedures for all types of health benefit plans.

Table 6.1: Trends In Complaints, Oregon, 1996-1998

Health Plans	Total complaints	% change in complaints	Complaint rate per $100,000,000 premiums	% change in complaint rate
1996	358	NA	52.0	NA
1997	352	-1.7%	42.4	-18%
1998	484	38%	48.6	14.6%

HCSC
1996	379	NA	15.2	NA
1997	353	-7%	15.1	-0.7%
1998	595	69%	23.8	57%

Range of performance across plans - The complaints rates/$100,000,000 premium were calculated for HCSC for 1997 and 1998 (Figure 6.1). Within any year, there is substantial variation across plans in their complaints rate. There is also substantial variation between plans as to the growth rate in complaints; however this is not very meaningful without looking at the raw volume of complaints. For example, SureCare's 160% increase in the complaints rate is really about an increase in the number of actual complaints from 2 to 3.

Figure 6.1: Complaints Ratios for Health Care Service Contractors, Oregon, 1997 -1998

Assessment of the report

Broad aggregate snapshot - The annual report provides consumers with a snapshot of the comparative performance of health plans and HCSCs. However because it does not include data on the type of complaints (such as denial of care), it may be less valuable to consumers who want information on particular aspects of a plan's performance. It should be noted that this need is partly met, however, by the Oregon Complaint Report Part II which provides consumers with the option of obtaining detailed information on complaints type and disposition for individual companies.

Conceptual difficulty of an index - A complaints index may also be more difficult for some consumers to understand compared with a complaints rate, for example, based on the number of complaints/10,000 members. The absolute nature of an index makes it difficult for consumers to know their risk or probability of experiencing a complaint. Consumers have some familiarity with risks in other industries or situations, such as the risk of dying in a car crash compared with an airplane crash (expressed as say 1 person dying/40,000 miles).

No trend or industry performance data - Another problem with an index is that it provides no information on the relative performance of an industry or trends across time. While the complaints index allows consumers to compare the relative performance across health insurance groups, it provides no advice as to whether the overall industry complaints performance is at a level considered unacceptably high by some consumers.

Complexity of numerical rankings vs. average groupings - The use of rankings also makes the report overly quantitative and may encourage some consumers to place more importance on the relative rankings than is warranted (for example, is there a substantive difference between the insurers ranked 1-12 in the 1998 data, all of whom recorded zero complaints, but have been ranked according to their premium volume?). Regulators are aware of this problem and are considering removing the rankings on the basis of fairness. A numerical ranking is harder to understand for consumers than a simple grouping of insurers into "above average", "average" and "below average".

Future plans - Regulators are not currently considering including trend data in the Annual Consumer Guide. The Guide has been published since 1988 when it was an Interim Report. The other focus for the Consumer Advocate is working on developing a Company Profile report on the Web which could be done in a more timely fashion than the current consumer complaints report guide. This company profile report may contain: complaints statistics for the last three years, grievance data, NCQA indicators and financial information.

2. 1998 Oregon Complaint Report Part II

Features

Scope - This report comprises all complaints closed in Oregon in 1998 against all companies covering all lines of insurance business (e.g. property and casualty, automobile etc). The report provides a more detailed breakdown of the "reason" and the "disposition" of the complaint - information that is not included in the Consumer Guide to Oregon Insurance Complaints. The report includes a summary table for all closed complaints, summary tables for each insurance line (with the relevant line being Accident and Health) and tables for every individual company showing the complaint reason and disposition.

Data analysis

In 1998 there were 1190 complaints closed against accident and health insurance. The most common reasons for complaints included: denial of claim (28%), other claims handling (23%) and unsatisfactory settlement offer (11%). See Table 6.2 below for additional detail.

Compared to some other states such as Texas, Oregon has a relatively low share of "claims handling delays" complaints at 7.6% of all accident and health complaints. While the Oregon Unfair Claims Settlement Act does include reference to prompt payment, the low rate of these claims may reflect the fact that the Insurance Division since about 1990 has followed a policy of only accepting claims from patients rather than providers. The decision not to accept provider complaints reflects the Division's view that it would prefer not to have a major role as a debt collector for providers. It occurred in response to a 1990 initiative by a Californian private company which provided seminars to medical office bookkeeping staff advising them to routinely file complaints with state insurance departments and giving staff sample complaints letters. While the Insurance Division has, since 1990, advised providers to get consumers to make the complaint directly, it is considering relaxing this position somewhat given the emergence of new complaints issues arising solely between the provider and plan (e.g. the status of contracts).

Of the 334 denial of claim complaints, the disposition was as follows:

37% company position upheld;
16% additional payment;
13% claim settled;
8% other no relief;
7% claim reopened;
6% other relief;
5% coverage extended;
4% no jurisdiction;
3% question of fact; and
1% insufficient information.

Table 6.2: Reasons for Complaints, All Closed Accident and Health Complaints, Oregon, 1998

Reason	Number	%
Denial of claim	334	28.1
Other claims handling	279	23.4
Unsatisfactory settlement offer	127	10.7
Claims handling delays	91	7.6
Refusal to insure	67	5.6
Premium & rating	54	4.5
Cancellation/renewal	52	4.4
Other policyholder service	42	3.5
Other marketing and sales	38	3.2
Refunds	30	2.5
Premium notice/billing	18	1.5
Coordination of benefits	13	1.1
Other underwriting	12	1.0
Agent handling	11	0.9
Misrepresentation	8	0.7
Endorsement/rider	5	0.4
Misleading advertising	3	0.3
Post claim underwriting	2	0.2
Underwriting delays	2	0.2
Replacement/twisting	1	0.1
Marketing and sales delays	1	0.1
Total	1190

Assessment of the Report

Provides complaint categories - The report provides a more detailed breakdown relative to the Consumer Guide of complaint categories and disposition. It is of most use for people interested in examining the detail of individual companies.

Difficulty of company comparisons - The report is not designed to allow easy comparisons of types of complaints across individual plans. While one could theoretically examine issues such as "denial of claims" across individual plans, this is complicated by the fact that the report does not include premium volume data allowing the calculation of complaints rates. Also the report provides data on companies which may offer insurance across multiple lines of business. Thus while it may be reasonable to assume that all complaints about Regence HMO are to do with health insurance, the same cannot be implied for other companies providing multiple insurance products.

Patient protection implementation - As the complaint categories are quite broad (e.g. denial of claim) the report is of limited use in tracking patient protection legislation implementation.

3. Insurance Company Annual Reports (Grievance data)

Features

Scope - Under the Patient Protection Act 1997 insurers are required to file annual reports on grievance statistics, utilization review procedures, quality assessment summaries (managed health care plans only) and scope of network summaries (managed health care plans only). The first reports were submitted for the calendar year 1998.

Grievance categories - The Insurance Department requires that these reports provide breakdowns of grievances using the following nine categories:

Access problems including timeliness and availability of a provider - grievances related to availability of primary care providers, contracted and non-contracted specialty services, time frames in accessing services at provider offices and other access problems;
Referral issues - grievances related to referral denials outside physician organizations, within insurer contracted provider panels, and delay in processing of referral authorizations, referral problems affecting continuity of care, and other referral issues;
Denials based on medical necessity - grievances related to the denial of services or treatment that are based on medical necessity including preauthorization and case management decisions;
Denials based on other coverage laws, including denials based on the service being out of the plan, out of the area or not a covered benefit - grievances related to the denial of services that are not a covered benefit of the plan including health maintenance services received out of contracted provider network, coordination of benefits, and other third party recovery situations;
Eligibility - grievances related to initial eligibility, monthly eligibility, COBRA and portability options and other eligibility situations including the timeliness of processing paperwork;
Quality of clinical care - grievances related to care received from a provider of service, care not provided and other quality of plan service issues;
Quality of plan services - grievances related to customer service provided by the plan within all levels including sub-contracted entities, i.e. pharmaceutical administrators, physician organizations, and vision administrators, and other quality of plan service issues;
Emergency services - grievances related to all emergency situations including after hours care, urgency care settings, emergency rooms, ambulance or 911 services;
Administrative issues and issues other than those otherwise listed in this section - grievances related to issues that do not fit into categories listed above.

Data Analysis

A summary analysis (Figures 6.2 & 6.3) has been prepared based on downloading the Grievance and Appeal 1998 Annual Summary reports for the five largest Health Care Service Contractors reporting (comprising 80% of the premium volume) - Kaiser Permanente, Regence HMO Oregon, Regence BCBS, Providence Health Plan and Pacificare.

Figure 6.2: Types of Grievances, Five Largest Health Care Service Contractors, Oregon, 1998

Of interest, only 39% of grievances were reversed which is lower than the general rule of about 50% applying to external review processes. However there were wide disparities in reversal rate according to the type of grievance. Grievances most likely to be reversed in favor of the consumer were those concerning emergency services (71%), while those least likely to be reversed included access problems (1%), quality of care (4%) and quality of plan services (4%). The most common grievance, "other coverage/not covered" which accounted for 45% of all grievances was reversed in 47% of cases, which is similar to the related grievance category of "medical necessity", reversed in 41% of cases.

Figure 6.3: Share of Grievances Reversed in Favor of Consumer, Five Largest Health Care Service Contractors, Oregon, 1998

Assessment of the Report

Data reliability - The Insurance Division has issued Bulletins (Attachment 4) as to the required format for grievance reports. However regulators believe that it is too early to form a view as to the quality of data submitted by managed care plans under this requirement. The Division is examining the grievance data and its categorization as part of the current market conduct audit, which is targeting domiciled companies. The first stage involved targeting policies and procedures to verify that companies could comply with the reporting and disclosure requirements of the PPA, with the second stage involving auditing actual reporting compliance.

Consumer friendliness - Regulations require that insurance companies submit annual reports in a flexible electronic format, to the extent that the insurer engages in activities including utilization review, quality assessment practices or scope of network monitoring procedures. This regulatory flexibility means that the Annual Reports are somewhat cumbersome to download, with some of these reports being scanned in electronically and containing handwritten rather than typed information. It is currently a time consuming process to compare the performance of insurance companies from the Insurance Division's web site as each of the four measures (grievances, utilization review, quality assessment summaries and scope of network must be downloaded separately for each company.

Monitoring patient protection implementation - Regulators are relying heavily on market conduct examinations to monitor the compliance with the Patient Protection Act since domiciled insurance companies provide coverage for the majority of the population. The market conduct examinations will demonstrate whether or not insurance companies have the required policy and procedures in place. The true compliance will be determined by whether the insurance companies are actually following the regulations by performing procedure test audits.

Regulators believe that the grievance data, as distinct from complaints received directly by the Unit, will be of value in monitoring the implementation of patient protection legislation. The Consumer Advocate has begun examining these data, although as noted previously it is too early to say much about the quality of the data reported by plans. One example which the Consumer Advocate is examining is grievances relating to emergency services. Early analysis indicates that a high number of such grievances are being reversed, suggesting that the plans may not be properly applying the prudent person standards. However it will also be necessary to examine trends in grievance management, with only 1998 calendar year data currently available.

Future plans - The Division is considering publishing the grievance data in a comparative report. It has not been decided at this stage whether grievance data should be included in the existing Consumer Guide to Oregon Insurance Complaints or whether it should be combined with other data such as NCQA indicators, given that it does include information on quality of care issues.

D. Public education activities

Publications

The Insurance Division produces the following material relevant to health insurance complaints:

Consumer Guide to Oregon Insurance Complaints - This is the most popular of the complaints publications. In the three weeks since the report covering 1998 complaints became available, the Division mailed out 1,800 copies. The Unit receives written and phone requests with publicity also generated through the SHIBA program. The demand for hard copy reports may be decreasing slightly as more people access the report electronically. However it is not possible to measure the number of Internet hits to the specific Guide page.

Oregon Complaint Report Part II - While this report (costing $25) is distributed to all major libraries in the state, it does not generate substantial demand (possibly 25 requests annually). It appears to be most popular with insurance companies and other groups interested in monitoring the relative performance of insurance plans including differences in the disposition rates of complaints. It does not appear to be requested by individual consumers.

Oregon Insurance Division - Protecting the Insurance Buying Public - This brochure lists the general services provided by the Division and contact details.

Free Help with Medicare and Other Health Insurance Brochure - This brochure explains the SHIBA program, its services and provides sponsor contacts.

Demand for Publications

The Insurance Division provided the following estimate of the 1999 publication distribution based on inventory tracking (as at 11 February 2000):

Protecting the Insurance Buying Public - 5,250 copies distributed;
Consumer Guide to Oregon Insurance Complaints - 2,410;
Consumer Guide to Medicare Supplement Insurance - 14,200;
Free Help with Medicare and Other Insurance - 15,000;
Your Medicare Health Plan Choices - 7,300; and
Long Term Care Insurance - 6,000.

Outreach

The Insurance Division does not have a Speakers Bureau, but this responsibility falls within the Consumer Advocate position for health insurance. While a more active public speaking function is under consideration, the current focus is on developing more hard copy consumer brochures.

Media

The Commissioner is tending to take a more proactive position. The Division issues press releases for almost all significant actions taken against insurance companies to promote public awareness. The Consumer Guide to Oregon Insurance Complaints is also heavily publicized in the media.

E. Agency Performance Measures

Staffing

The Consumer Assistance Unit (which does not include the Consumer Advocate position) has nine staff, including the Manager. This represents a 50% increase, up from 6 staff, in 1987. Of the staff, three are employed full-time on life & health complaints, 5 work on property and casualty complaints, while the Manager works across all insurance lines.

Financial Savings to Consumers

The Annual Report noted that in 1998 the Division was responsible for the recovery of $6.9 million in claims for consumers across all insurance lines. However this performance measure is not promoted strongly as there are various definitional issues.

External Audit

The Unit has not been subject to external audit. The Oregon Insurance Code gives the Commissioner overall responsibility for protecting insurance consumers, with the legislation not specifying a requirement for a consumer protection unit per se.

Consumer Satisfaction Surveys

The Unit has not undertaken consumer satisfaction surveys on a regular basis. One previous postcard survey was undertaken with a low response rate, although good outcomes. The Unit largely relies on internal mechanisms of providing explanations to consumers if their complaint cannot be resolved and why.

Texas

A. Jurisdiction and Responsibility for Consumer Complaints Systems

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.

B. Jurisdiction and Liaison with Health Plans

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.

C. Complaints Reports

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

The Texas Internet Complaints Information System (ICIS), an electronic database maintained by the TDI;
"Comparing Texas HMOs" Annual Reports, published by OPIC using TDI data; and
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.

1. Internet Complaints Information System (ICIS)

Features

Complaint categories: ICIS, the electronic searchable database, contains closed complaints from January 1996 onwards, with key fields being the type of coverage and the reason for the complaint. Attachment 6 provides the TDI listing of these fields. TDI uses NAIC complaint codes and submits complaints data to the NAIC complaints database. The "reasons for complaint" field includes several fields relevant to monitoring the implementation of patient protection legislation, including:

access to care;
continuity of treatment (patient protection rules);
denial of claim;
denial of payment for emergency care (patient protection rules);
disclosure of benefit (patient protection rules);
financial incentives (patient protection rules);
material change made in contract (patient protection rules);
medical necessity;
network denial/termination of provider (patient protection rules);
out of network referral (patient protection rules);
primary care provider selection (patient protection rules);
quality of care;
retaliation by managed care plans (patient protection rules); and
tort liability shift to provider (patient protection rules).

ICIS outputs - In addition to its search capacity, ICIS provides automatically generated standard reports according to: line of insurance, quarter, and region.

Data Analysis

Changes in type of complaints about HMOs - Figure 7.1 shows annual trends since 1997 in the reason for complaints about HMOs, generated from the ICIS standard reports. The strengthening of the prompt payment law in 1997 saw over a five-fold increase in complaints about claims handling delays between 1997 and 1998. As a result, these complaints now comprise 47% of all complaints about HMOs, compared with only 28% in 1997. While these complaints dominate the complaint categories, it is important to recChanges in type of complaints about HMOs - Figure 7.1 shows annual trends since 1997 in the reason for complaints about HMOs, generated from the ICIS standard reports. The strengthening of the prompt payment law in 1997 saw over a five-fold increase in complaints about claims handling delays between 1997 and 1

Figure 7.1: Types of HMO Complaints, Texas, 1997-1999

Changes in health insurance complaints - Figure 7.2 shows trends in the reason for health insurance (non HMO) complaints. Again, the prompt payment law changes resulted in claims handling delay complaints almost tripling between 1997 and 1999. Apart from these complaints, the largest growth in health insurance complaints was about unsatisfactory settlement offers (an 105% increase between 1997 and 1999). In contrast to complaints about HMOs, denial of claim complaints about health insurance plans increased.

Figure 7.2: Types of Health Insurance (non HMO) Complaints, Texas, 1997-1999

Growth in HMO and Health Insurance complaints - Figure 7.3 shows the growth in complaints about health insurance and HMOs from 1997 to 1999. The major findings are:

The more rapid growth in HMO complaints relative to health insurance complaints - From 1997 to 1999 HMO complaints have grown by 220%, while health insurance complaints grew by 86%. Some of this may reflect differential growth in market share over the period. TDI regulators commented that the growth in HMO complaints reflects both the growth of covered individuals and providers under contract. As consumers move from indemnity insurance to HMOs, there is an increase in complaints due to lack of understanding about how HMOs operate.
The higher absolute level of health insurance complaints - In 1999 about 60% of all complaints were about health insurance. However it is not possible to compare the complaints rate for traditional insurance and HMOs, as TDI does not keep market share data on indemnity insurance on a regular basis.
HMO complaints are more likely to be justified than health insurance complaints - Over the period HMO complaints were more likely to be justified (41%) than health insurance complaints (31% justified).

Figure 7.3: Trends in Health Insurance and HMO Complaints, Texas, 1997-1999

Note: ICIS contains only closed complaints; hence data for late 1999 is likely to be still incomplete. Complaints data is dynamic with complaints moving between open and closed status. Accordingly, TDI reruns ICIS data for the four previous quarters to take into account changes that may have occurred.

Assessment of the report

Consumer friendliness - While ICIS provides unprecedented access to detailed information about insurance complaints, it is unlikely to be used by consumers interested in making health insurance purchase decisions. Rather, it is a tool for the industry, policy analysts and regulators interested in examining aggregate trends.

Monitoring implementation of patient protection - TDI has incorporated an extensive list of new complaint category codes in ICIS dealing with particular patient protection rules. In addition, Attachment 7 contains internal data provided by the HMO Quality Assurance Section with new, more comprehensive complaints codes and data for fiscal year 1999. These comprehensive codes in nine quality assurance categories were added to TDI's complaints tracking database, called CIS, and ICIS, the internet publicly available complaints database, will also now reflect this data. In the absence of centrally collected and audited data on HMO grievances, the HMO Division is the most reliable source of complaints data relating to patient protection issues. Its coding systems on patient protection complaints would appear to surpass that of most of the other states included in this study.

2. Comparing Texas HMOs Annual Reports

Features

Scope - This report is comprised of two main sections. Firstly, it contains the results of the Consumer Assessment of Health Plans Survey (CAPHS) which was administered by an independent survey vendor certified by NCQA to a sample of Texas health plan recipients. Secondly, it contains data on consumer complaints about HMOs made to the TDI and the results of appeals made to the Independent Review Organization (IRO).

Period - OPIC has produced two reports for calendar years 1998 and 1999. Note that the 1999 report is actually seven separate reports which group the results regionally.

Coverage (size) - The report excludes HMOs with zero registered complaints and distinguishes between plans with less than or greater than 50,000 enrollees. The report cautions against making accurate statistical comparisons for plans with less than 50,000 enrollees. Included in the report are "Basic Service HMOs" defined to mean those which provide a full range of medical benefits, including physician services, inpatient and outpatient care and other services.

Complainants - The report distinguishes between provider complaints, non-provider complaints and total complaints.

Complaint index - The complaint index is calculated as total closed complaints (whether justified or not) per 10,000 enrollees for the period 1 July to 30 June each year.

Other performance measures - In addition to TDI complaints data, the OPIC report includes the results of the IRO Appeals process. Under the Texas legislation consumers have a right to file an appeal with an Independent Review Organization if their HMO denies medically necessary care. Consumers can simultaneously file a complaint with the TDI. For each HMO the report indicates the number of appeals and the disposition (initial decision upheld, decided in favor of consumer, case decided partially in favor of both HMO and consumer, pending).

Data Analysis

Trends in total complaints - Based on the OPIC 1998 and 1999 reports, Table 7.1 highlights the major contributors to HMO complaints with key findings as follows:

A sizeable increase in HMO complaints - From 1997/98 to 1998/99 there was a 58% increase in total complaints against HMOs. However when HMO enrollment was taken into account, this translated into a 29% increase in the total HMO complaint index.
The significance of provider complaints - The OPIC report highlights the substantial role played by providers in complaining about HMOs, accounting for 53% of all complaints in 1998/99. However, at least in 1998/99 consumers were responsible for the majority of the growth in HMO complaints. The consumer complaint index grew by 47%, while the provider complaint index grew by 16%.
Wide variation in complaint performance across HMOs - The OPIC reports include data on 15 HMOs in 1997/98 and 18 HMOs in 1998/99 with enrollment greater than 50,000 members. There is significant variation in performance across plans, both in the total complaint indices and in their distribution of consumer/provider complaints. Additional information about the performance of specific plans can be found in the attached OPIC reports.

Table 7.1: Trends in HMO Complaints, Texas, 1 July 1997-30 June 1999

	1 July 1997-30 June 1998	1 July 1998-30 June 1999
Total complaints/10,000 enrollees (index)	14.6	18.8
Total complaints (raw number)	4,160	6,562
% provider complaints	59%	53%
% consumer complaints	41%	47%
Range of total complaint indices across plans (lowest and highest complaint indices)	1.5 - 35.4	1.2 - 42.7
Range of % share consumer complaints across plans	17 - 83%	0 - 92%

Note: Includes Basic Service HMOs with enrollment greater than 50,000.

Source: Comparing Texas HMOs 1998 and 1999 Reports, Office of the Public Insurance Counsel

Results of independent appeals - The 1999 OPIC report includes the outcomes of appeals to Independent Review Organizations up to 30 August 1999 as follows:

41% upheld in favor of HMO;
51% decided in favor of complainant;
5% decided partially in favor of both HMO and complainant; and
3% still pending.

While the report includes the individual results for each HMO, the numbers of appeals involved are so small as to make between-HMO comparisons of dubious value.

Assessment of the Report

Comparative data - the report allows consumers to compare the complaints performance of individual HMOs. Given the significance of provider complaints, it is important that the report distinguishes between consumer and provider complaints. Although there is no disaggregation by type of complaint, consumers could use the "consumer" and "provider" complaints as broad proxy indicators of "quality" and "payment" complaint issues respectively.

Consumer friendliness - the report contains a mix of graphical and tabular presentation of results which can help meet the needs of different consumers. While the bar charts provide consumers with the ability to quickly identify the low complaint index HMOs, the tables provide additional information and coverage of all plans, including those with less than 50,000 enrollees.

Monitoring patient protection implementation - the absence of complaint categories means this report is not useful for monitoring the impact of various patient protection measures.

Future plans - OPIC has had feedback that some consumers would like to see another publication providing comparative information on the types of coverage which are available across plans. While OPIC is examining standards for how this information could be presented, insurance companies often customize plans across employers resulting in a multiplicity of product offerings. In regard to the existing HMO report, OPIC is interested in increasing the use of the internet, including making the report more interactive and hence more consumer friendly. OPIC is very aware of the need to balance the amount of information that is useful and the readability of the report.

3. Insurance Company and HMO Profile Reports

Features

The TDI produces HMO and indemnity health insurance company profiles which are available electronically. Data in the profiles are as follows:

HMO profiles - The HMO profile contains information including: number of complaints, enrollment and utilization, financial information and NCQA accreditation information. The profile contains the number of justified complaints for the year to date for the last three years for each HMO. These individual HMO profiles do not put the complaints data in context by expressing it as a complaints ratio related to volume of business, or by comparing it with the industry average.
Insurance company profiles - the indemnity insurance company profiles include three different complaint measures, each expressed for the last three years. The measures are:
Justified complaints - the number of justified complaints closed against the company for the line of insurance;
Complaint ratios - the number of total closed justified complaints divided by the number of policies the company had in force for the line of insurance; and
Complaint indices - this is calculated by dividing the company's percentage of complaints for a specific line of insurance by the company's percentage of policies in force for the same line of insurance. The average index is 1.00. A number less than 1.00 indicates fewer complaints than average, while a number greater than 1.00 indicates more complaints than average.

Assessment of the Report

Consumer friendliness - Regulators commented that consumers are using both the insurance company and HMO profiles and finding them to be very helpful.

However if consumers are interested in comparing the performance of multiple plans (whether for insurance companies or HMOs), company-specific information is, by definition, less useful. Instead of a comparative report card which consumers can use to shop for insurance, the company-specific information puts the onus on consumers to search individual profiles. To a certain extent, this is inevitable in a state like Texas which has over 2,000 licensed insurance companies. Providing comparative complaints data for every individual company in a comparative reports card would produce a lengthy and unwieldy report. Given this difficulty, TDI regulators noted that they will shortly be compiling the insurance company industry indices into a table format available on the web site.

TDI already compiles the HMO complaints data into an electronic report (Attachment 8). This report lists the total number of complaints, justified complaints, enrollment and ratio of justified complaints per 10,000 enrollees. By including industry average data, consumers can easily compare the performance of individual HMOs to an industry standard.

A further comment on the insurance company complaints data is that consumers may find the inclusion of both complaints ratios and indices confusing, and will probably struggle to understand the different concepts. In addition, the complaints ratio for insurance companies is calculated differently than the complaints ratio for HMOs. The insurance company complaints ratios are based on the total number of closed complaints divided by the total number of policies in force. Most other states express complaints ratios as the complaints per 10,000 members, rather than the total policies in force. (Note: The method used by many other states is also the methodology used in the calculation of the Texas HMO complaints ratios.) Use of a single method to calculate complaints rates across all insurance lines would be simpler for consumers.

Monitoring patient protection implementation - As the HMO profiles do not contain disaggregated data on the type of complaints, these profiles are not directly useful in monitoring the implementation of patient protection legislation.

D. Public education activities

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.

E. Agency performance measures

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.

Vermont

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.

Ombudsman

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:

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;
the Department of Aging and Disabilities - this agency handles medical eligibility for the Medicaid waiver program; and
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.

B. Jurisdiction and Liaison with Health Plans

The Division of Health Care Administration, BISHCA

When the DHCA receives a complaint about ERISA plans, it sends out a letter as though they are able to be regulated. Generally, these entities respond in a similar manner to regulated plans, with no-one ever refusing to respond because of the lack of regulatory authority by the DHCA for these plans. Regulators suggested that the Vermont sense of community and desire to be good citizens contributes to the willingness of employers to handle complaints about ERISA plans.

Rule 10, the rule covering managed care patient protections, applies to managed care organizations. However there are also PPOs and physician-hospital organizations that do utilization review that fall outside the DHCA's direct jurisdiction. One of the health insurance plans regulated under the DHCA works with five physician-hospital organizations in Vermont, so that the DHCA indirectly influences these groups through its regulation of the plan.

With effect from September 1997, health insurance plans are required to submit grievance data (i.e. internal complaints received directly by the plan) to the DHCA biennially (January 15 and July 15). Attachment 2 comprises the grievance reporting framework specified by the DHCA. In summary, health plans are required to report:

The number of grievances for each of 5 broad grievance types, the rate per 1,000 members and the outcome (number and rate of grievances overturned/unresolved after 1^st review/2^nd review);
The timeframe (average, minimum and maximum number of days) taken to reach a decision in the grievance resolution process; and
The number of days to gather information necessary to make a decision.

While the reporting framework is quite detailed, the actual grievance categories used are less specific and relevant to understanding the implementation of patient protections than some of the other states studied. The grievance types captured in the reporting framework are:

Physical health service denials/coverage issues requiring expedited review;
Physical health service denials/coverage issues not requiring expedited review;
Behavioral health service denials/coverage issues requiring expedited review;
Behavioral health service denials/coverage issues not requiring expedited review;
Grievances related to quality of care delivery including:
Attitude concerns;
The provider's office;
Access to health care;
About overall coverage and services not covered;
Provider's competency; and
Grievances related to MCO-administration.

The DHCA evaluates the quality of the data with each filing, working in conjunction with a contractor. Regulators suggested that because Vermont specifies the format, there should be reasonable consistency in what plans submit. It was noted, however, that some plans count grievances differently, e.g. some only count written grievances, while others will also count oral complaints. In addition, sometimes plans challenge whether certain member complaints should be counted in the biennial grievance reports. For example, Vermont has recently mandated that plans cover chiropractic services. Some consumers will complain to their plan that they do not think they should have to go through their primary care physician, which is part of the mandate. In response, plans will suggest to the DHCA that they do not consider that this type of call is really a grievance as there is nothing they can do and they are operating within the law.

Regulators noted that the level of grievances about a plan will vary according to how well the plan publicizes the ability to file a grievance and the extent to which it is part of a plan's quality improvement activities.

Under Rule 10 (Section 10.203D) plans must keep written records and retain grievance data for at least three years. The rule also stipulates that there should be triennial reviews which include looking at the complaints and grievances process to make sure that they are timely and complete.

Health plans are required under the external appeals regulation to notify their members about the external appeal process and the availability of the DHCA toll-free phone number and the Ombudsman Office, when they issue a denial.

Ombudsman

Most plans are very good at publicizing the Ombudsman Office, with one example being Blue Cross which has featured the Ombudsman Office in its members' newsletter. The Ombudsman intends to work with plans to continue to improve their public education efforts about the Office.

The Ombudsman tends to meet or contact plans on an individual basis as issues arise, but does not hold regular meetings with insurance plan personnel.

C. Complaints Reports and Data

Neither the DHCA nor the Ombudsman Office publish complaints "report cards", comparing the complaints performance of individual plans.

DHCA

The DHCA has recently published the report "Vermont Managed Health Plans: A Guide for Consumers 1999" (Attachment 3). This health quality report card covers the performance of the four managed care plans against five categories of indicators: getting care, customer service; claims handling; women's health care; and care for children, with the first three categories collected through a CAPHS survey and the last two categories collected from plan records according to HEDIS. The guide is very consumer friendly and uses colored circles to classify plans as providing average, higher than average or lower than average care.

However unlike four of the six states studied in this report, Vermont does not currently report complaints data publicly. The guide does explain that all managed care plans are required to have an appeal process that allows consumers to complain about decisions and it includes the toll free number of the Consumer Services Section of the Division of Health Care Administration. It also refers to the Office of the Health Care Ombudsman and notes that the Ombudsman is a non-profit organization established to help Vermonters with questions and concerns about all kinds of health insurance.

In 1998 the DHCA received 4501 phone inquiries and processed 290 formal complaints. Regulators noted that the breakdown of inquiries matches the split of indemnity (80%) and managed care (20%) in the Vermont health insurance market. In 1997/98 of the 290 formal complaints, 67 (23%) were about managed care and 223 about non-managed care (77%). In 1999 the most common complaints have been about mental health parity, consumer rights and chiropractic care.

Attachment 4 is the Telephone Call Intake Form used by the DHCA Consumer Services Specialist in handling calls (both inquiries and complaints) to the Hotline. The issues categories used by the DHCA are quite comprehensive and would provide a sound basis for monitoring the implementation of managed care patient protections. In particular, the access issue categories cover problems such as clinical denial of care, specialty care, and emergency care.

The DHCA enters the information captured on the telephone call intake form into a new database, the purpose of which is to track calls, keep record of which is being mailed out for publications, provide information for reports to the legislature, and track trends.

Unlike some other states, the DHCA does not distinguish between all complaints and justified complaints. Regulators commented that DHCA's role was as a mediator and facilitator, helping both sides work through the process, not to sit in judgement as to the validity of the call.

If a consumer rings the DHCA requesting company-specific complaints information, the Consumer Services Specialist can retrieve this information from the database and advise of the number of complaints in the last year. The database does not automatically generate complaint indices for individual plans or industry averages. However, in conversation with consumers, the Consumer Services Specialist will attempt to put the complaints history of a plan in perspective, by advising them about the size of the plan as measured by covered lives.

Complaints received by the DHCA are reported into the NAIC CDS.

The DHCA does not provide regular reports to other parts of BISHCA, but will informally send information as needed. Regulators commented that complaints management and tracking is the primary function.

Ombudsman

In 1999 the Ombudsman Office received 1,775 phone calls. Attachment 5 is the data collection form used by the Office, which is broadly similar to that used by the DHCA. Again, the issues classification has the potential to identify the impact of various managed care legislation protections.

Currently access to dental services and prescription medicines are among the most common advocacy complaints. The Vermont legislature is considering a bill to regulate the cost of prescription drugs. The Office receives relatively few calls regarding access to primary care physicians. While Rule 10 contains access standards, a consumer may ring the Office because he/she is experiencing difficulty accessing a primary care physician. In this situation the Ombudsman Office may take immediate action to help the consumer find a physician and then also refer on the broader issue about the network adequacy of individual plans to the DHCA. There are similar issues involving continuity of care where the Ombudsman Office helps resolve the immediate problem and then contacts the DHCA about the systemic issue.

Consumers do not tend to ring the Ombudsman Office asking for the complaints history of individual plans. Consumers do call seeking advice as to the "best plan". The Ombudsman Office mainly helps them by identifying their needs (e.g. prescription drug coverage) and working through with them available information on plans (e.g. using DHCA information on managed care plans, premiums and benefit packages).

The Ombudsman Office accepts calls from both consumers and providers. Providers may call about particular patient issues or systemic issues (e.g. the level of Medicaid reimbursement, or delays in payment by insurance plans). While the Ombudsman Office encourages providers to use provider organizations, it may use the systemic problems identified in advocacy efforts.

In terms of feedback to consumers on complaints, the Ombudsman Office provides essentially all the information they uncover back to the consumer, including the process they undertook and what they found.

The Ombudsman tries to balance two roles - helping individual consumers and systemic advocacy issues. The Ombudsman has regular meetings with the Office of Vermont Health Access and the DHCA raising systemic advocacy issues. The Ombudsman also participates in the Vermont Health Access Oversight Committee (the Medicaid waiver committee), which is a legislative committee, and a very good vehicle for systemic advocacy.

In addition to an annual report to the legislature, the Ombudsman program makes quarterly reports to the DHCA and the Vermont Office of Health Care Access including the total number of calls, the types of calls and a narrative which highlights the policy issues involved.

D. Public Education Activities

Publications

In addition to the toll-free line, the DHCA publishes a range of reports relevant to health insurance including:

Consumer Bill of Rights for Vermonters covered by Managed Care Plans - this brochure explains in lay terms the protections offered to Vermonters including rights to information, appropriate treatment, and to ask questions or file complaints.
Vermont Managed Health Care Plans A Guide for Consumers 1999 - this reports uses CAPHS and HEDIS data to compare the performance of the four managed care plans in Vermont.
A Consumers' Guide to Health Insurance - This is a simple explanatory guide which also includes 2 pages explaining complaints, internal and external review and the Ombudsman.
Lists of licensed carriers - The Department publishes lists of carriers licensed to sell insurance in the individual, small group and Medicare supplement markets, together with details of premiums for each of the companies.

The Ombudsman Office prepared a brochure explaining the operation of the program which was mailed to 250 social service agencies and groups, together with all medical providers in the state, in the first year of operation. More recently, a poster was produced and sent to all state agencies and medical providers. The other new initiative which the Ombudsman would like to get started in the next few months is a newsletter.

Demand for Publications

In 1998 the DHCA distributed about 12,000 copies of the information sheets on Vermont's Patients' Bill of Rights, including to individuals, libraries, community groups, conferences and annual meetings.

Outreach and Media

The DHCA Consumer Services Specialist meets with various groups to explain their rights and educate them as to the complaints and external review process.

The Ombudsman Office has received television coverage through local news stations. The Ombudsman also tries to participate in health fairs and conferences, speaking to consumer groups, advocacy and support groups. The Ombudsman considers a web site a very good idea, but has not yet had time to focus on getting a site developed.

E. Agency Performance Issues

Staffing

In the DHCA there is one Consumer Services Specialist with responsibility for the Hotline, although consultation may occur with other staff as required for guidance, including legal staff.

The Ombudsman Office has a total of 4 and 1/2 staff, together with the Ombudsman. These staff cover all issues, including providing the Medicaid Ombudsman services.

Financial Savings to Consumers

In the DHCA complaints resolution resulted in $137,675.08 being collected from insurance plans in 1997/98.

The Ombudsman Office does not collect data on financial savings to consumers.

External Audit

It is believed that the DHCA is subject to audit by the State Auditor, including its management of the contract with the Ombudsman Office. However the Ombudsman Office is not audited directly by the State Auditor.

Consumer Satisfaction Surveys

The DHCA does not send out consumer satisfaction surveys to its Hotline callers.

The Ombudsman Office undertakes regular consumer satisfaction surveys (Attachment 6) which commenced in Fall 1999. They send a survey out for every closed complaint, providing a stamped self-addressed envelope in order to ensure confidentiality and to make it easier for consumers to respond. When they started in Fall 1999, they sent surveys to all the consumers who had used the program until that time, and did not get such a good response rate because of the time lag. Now, however, surveys are sent out regularly and it is likely that the response rate has improved. The Ombudsman receives quarterly reports including the tally of returned surveys and aggregate consumer satisfaction data. In addition, the Ombudsman personally reviews any surveys immediately where the consumer has expressed dissatisfaction with the service they received from the Office.

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:

Clinical quality - 35%;
Customer satisfaction - 30%
Financial - 20%; and
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.

Conclusion

Findings, Policy Implications and Recommendations

Based on interviews with state health insurance regulators and ombudsman staff and an analysis of documents, some interesting lessons emerge from the experience of the six states in operating health insurance complaints systems.

1. Jurisdiction over health insurance complaints varies across states, with responsibility for indemnity health insurance, HMOs and quality complaints often split within or between state agencies.

Table 10.1 indicates that in three states (Oregon, Texas and Vermont) a single government agency has the major regulatory responsibility for health insurance complaints management. However in the other three states (California, Maryland and New York), responsibility for indemnity health insurance, HMOs and quality complaints is split across two government agencies.

In attempting to determine what might be the optimal regulatory split, it is instructional to examine the evolution of regulatory authority for health insurance and hence, complaints management. Historically, health insurance regulation has focused on financial solvency, co- existing with regulation of other insurance business lines in state insurance departments.

The long history of financial solvency regulation is illustrated by Texas, which created a Department of Insurance in 1876, the same year as the State Constitution was adopted. The Department's establishment was spurred by the growth of wildcat insurance schemes and bankruptcies during a period of economic and population growth. In the 1950s the Texas legislature, confronted by the collapse of 23 insurance companies, passed at least 16 insurance- related bills.

In an environment of indemnity health insurance, regulation tended to focus on rates or premiums, contracts and other solvency measures (e.g. minimum reserves). Quality regulation through professional and facility licensing was historically the responsibility of state health agencies, with little need for co-ordination between state insurance and health agencies.

The emergence of managed care organizations which combined financing and delivery of health care exposed a need for new regulatory skills and powers. While state insurance departments tended to have a broad spectrum of enforcement powers, they lacked health- specific skills in quality assurance and improvement. In California, as early as 1975, this prompted the complete separation of responsibility for indemnity health insurance and managed care under the Departments of Insurance and Corporations respectively.

California is continuing this focus on ever-more targeted regulation with the recent establishment of the Department of Managed Care.

Table 10.1: Jurisdiction and Responsibility for Health Insurance Complaints

Features	California	Maryland	Oregon	New York	Texas	Vermont	NAIC
Major responsibility for indemnity health insurance complaints	Department of Insurance	Insurance Administration	Department of Consumer and Business Services (DCBS), Insurance Division Consumer Assistance Unit	Department of Insurance, Bureau of Consumer Services	Department of Insurance, Consumer Protection Program	Department of Banking, Insurance, Securities and Health Care Administration (BISHCA), Division of Health Care Administration	Insurance Departments should establish protocols such as a Memorandum of Understanding if there is shared jurisdiction
Major responsibility for managed care health insurance complaints (non quality)	Department of Corporations (see below)	Insurance Administration	DCBS Insurance Division Consumer Assistance Unit	Department of Insurance, Bureau of Consumer Services	Department of Insurance – Life, Health & Licensing Program	BISHCA Division of Health Care Administration	As above
Major responsibility for quality of care complaints	Department of Corporations (see below)	Department of Health and Mental Hygiene	DCBS Insurance Division Consumer Assistance Unit	Department of Health Office of Managed Care	Department of Insurance – Life, Health and Licensing Program	BISHCA Division of Health Care Administration	As above
Recent changes in responsibility	Department of Managed Care is due to take over responsibility for managed care including quality complaints by no later than July 2000	Since January 1999 the Health Education and Advocacy Unit has had an expanded role in helping consumers under the new Appeals & Grievances law	None	None	Until 1996 Department of Health was responsible for HMO quality	Until 1996 the independent Health Care Authority was responsible for quality oversight of HMOs, with all other insurance regulation the responsibility of the Department of Banking, Insurance and Securities	Not applicable

While it would be tempting to view the Californian experience as a possible evolutionary path along which other states will move, the evidence is mixed. California's population size and unusually high penetration rate for managed care have allowed the emergence of a new regulatory agency, midway between traditional state insurance and health agencies. Of the two other more populous states in this study, Texas has gone furthest down the Californian model, separating responsibility for indemnity insurance and managed care in different divisions of the state insurance agency.

However it is questionable whether splitting regulatory responsibility and complaints management by plan type is sensible given the fluidity of the health insurance market and the potential for the market to evolve in response to different regulatory incentives. Consumers are also unlikely to find the structure and regulation of the health insurance market intuitive. In California, for example, consumers with a complaint may not even know whether they are enrolled in a PPO or a POS plan, much less that the former is regulated by the Department of Insurance and the latter by the Department of Corporations (shortly to fall under the Department of Managed Care).

Interestingly, in none of the states in this study have health agencies taken the major role in health insurance regulation. In Maryland and New York health agencies have a limited role mainly regarding quality issues around health insurance. Moreover, in two states, Texas and Vermont, there has been a diminution of the role of health agencies. In 1996 the Texas Department of Health ceded responsibility for HMO quality complaints to the Texas Department of Insurance, while the Vermont Health Care Authority was merged into a larger government agency that had responsibility for insurance regulation.

The dominant role for state health agencies has generally been in complaints management for the Medicaid program and in professional licensing and oversight of physicians and hospitals. However the growth of managed care has blurred the historical distinction between insurance regulation and provider regulation, creating a need for improved communication across state health and insurance regulatory agencies. This has been brought into sharp relief in California with the financial collapse of several physician groups which assumed financial risk from HMOs. While California has experienced probably the highest level of integration of medical groups, state insurance regulators in New York, Oregon and Texas in this study also expressed concern about the delegation by insurance plans to medical groups and other intermediaries of certain functions, and some confusion about the consequential regulatory authority. Once again, consumers are unlikely to appreciate the implications of new contractual relationships between their insurance plan and providers. Many consumers will be uncertain about who has regulatory jurisdiction and to whom they can turn if they have a complaint.

Policy implications and recommendations

There is no coherent system or universal model of health insurance complaints management across the states. While this study has focused on state complaints management largely relating to commercial health insurance, many other federal, state and private agencies are also involved in oversight of health insurance plans or complaints management. These include the U.S. Department of Labor, the federal Health Care Financing Administration(now known as Centers for Medicare and Medicaid Services(CMS)) (HCFA(now known as CMS)), state Medicaid agencies, the federally funded SHIP program providing counseling and assistance to seniors on health insurance and many private assistance programs targeted at condition-specific populations.

The multiplicity of agencies involved in oversight of health insurance plans makes it difficult to develop a comprehensive picture of how well insurance plans are performing on consumer complaints. Several states have developed strategies to meet this challenge of overlapping responsibilities.

Given the multiplicity of existing regulatory models, each with their own history and inertia, the pursuit of uniform models of health insurance complaints management is not recommended at this time. However, it is recommended that strategies be developed which clarify responsibility, facilitate communication and enhance the knowledge and experience of regulators in complaints management.

It is recommended that the following examples of best practice may be of value in improving regulatory oversight of complaints management:

A Memorandum of Understanding could help clarify responsibility where there is shared authority for health insurance complaints across several government agencies, including federal and state agencies. One state-based example is the Memorandum of Understanding instituted in Maryland to clarify responsibilities between the state Department of Health and Mental Hygiene and the Maryland Insurance Administration (Maryland, Attachment 1). This strategy is supported by the NAIC.
Periodic meetings of state and federal regulators involved in health insurance oversight should occur to identify emerging issues across the sector and plan-specific issues. For example, California established an Interagency Connection in 1999 involving the state Departments of Insurance and Corporations, the U.S. Department of Labor and HCFA(now known as CMS), with the taskforce meeting quarterly.
Regulators at both federal and state level, including those in health agencies and insurance agencies, could consider developing a single entry point for consumer complaints related to health insurance. For example, the Maryland Insurance Administration is now designated as the central entry point for health insurance consumer complaints with referrals to other agencies as relevant. This may help overcome problems of consumer confusion about regulatory jurisdiction associated with the rapidly changing health insurance market, including the blurring of plan and provider roles. Under this proposal there would still need to be specialized depth in complaints management within agencies, supported by clear referral protocols

2. There is a wide spectrum in the type of consumer assistance or ombudsman programs available to people with complaints about health insurance.

Table 10.2 identifies the different models of consumer assistance or ombudsman programs and their major features in the five states with such programs (New York being the exception). The NAIC Consumer Complaint White Paper is essentially silent on the role of ombudsman programs and is hence not included in this table.

There is immense variation in terms of the independence of ombudsman programs across states, a critical factor in determining the ability of such programs to undertake consumer advocacy. The Office of the Health Care Ombudsman in Vermont is the most independent public sector model across the studied states, having its own statutory basis including legislative protection for undertaking consumer advocacy and dedicated funding through a contract, with the authorizing legislation specifying that the contract be awarded to a non-profit organization.

The “location” of the Vermont Ombudsman “outside” state government gives it greater independence than either the Maryland Health Education & Advocacy Unit or the Texas Office of Public Insurance Counsel. The assistance programs in these two states are still theoretically more subject to political influence as they are staffed by state government employees. However, in turn, both these agencies have greater independence than ombudsman programs which are internal to the state insurance regulator, as occurs in California, Oregon and also in Texas for the legislatively created (but not yet operational) ombudsman program. (Note that the Texas Office of Public Insurance Counsel is an ombudsman function for systemic consumer representation, while the yet to be established ombudsman program created under Texas legislation in 1999 is designed to assist individual HMO consumers in complaints and appeals).

Of the two states with “internal” ombudsman programs, the Consumer Advocate in the Oregon Department of Consumer and Business Services has a systemic role in examining complaint trends, monitoring the implementation of the Oregon Patient Protection Act 1997 and developing legislative concepts. In contrast, the internal Ombudsman programs in both the Department of Corporations and the Department of Insurance in California are more accurately described as internal quality improvement initiatives, rather than true consumer-focused ombudsman programs.

Another feature of the independence of ombudsman programs is the extent to which they are publicly accountable through the release of reports to either the legislature or the general public. None of the existing internal ombudsman programs in the California Departments of Insurance and Corporations and the Oregon Department of Consumer and Business Services produce publicly available reports. In contrast, all the “independent” ombudsman programs release reports to the legislature and/or the general public.

Table 10.2: Consumer Assistance and Ombudsman Programs

Features	California	Maryland	Oregon	Texas	Vermont
Ombudsman “independent “ of Insurance Department	Health Rights Hotline (HRH) in Sacramento area only	Health Education & Advocacy Unit, Office of the Attorney General		Office of Public Insurance Counsel	Office of the Health Care Ombudsman
Ombudsman “internal” to Insurance Department	Office of Ombudsman in Department of Insurance and Ombudsprogram in Department of Corporations; and planned Office of Patient Advocate in new Department of Managed Care		Consumer Advocate in Consumer Protection Section, Department of Consumer and Business Services	Ombudsman program created in 1999, but no funding, work currently subsumed into HMO Division of Department of Insurance, so essentially not operational
Statutory basis	No – Departments of Insurance and Corporations No – Health Rights Hotline Yes – new Office of Patient Advocate	Yes	Yes	Yes (both OPIC and the Ombudsman program)	Yes
Advocacy for individual consumers	Yes – HRH Limited -Ombudsman in Department of Insurance takes consumer calls, but complaint handling actually handled by Consumer Services Division	Yes, includes inquiries, complaints, assistance with internal and external appeals, mediation	No	No – OPIC	Yes, includes inquiries, complaints, assistance with external and internal appeals, fair hearings
Advocacy for systemic reform	Yes – HRH, through policy reports, including recommendations for systemic improvements No – Ombudsman in Department of Insurance has focus mainly on internal quality improvement	Limited – major focus on helping individual consumers, some role in recommending improvements to new Appeals & Grievances Law	Yes, systemic examination of complaints trends, monitor Patient Protection Act 1997, develop legislative concepts	Yes – OPIC develops consumer Bills of Rights and advocates for consumers at hearings of Department of Insurance	Yes, through discussions with other state government agencies and legislative committees
Public reports	Yes – HRH, consumer and policy reports on its operations and other policy reports No – Ombudsman in Department of Insurance	Yes, HEAU produced policy report on appeals and grievance law	No separate reporting either to consumers or to legislature	OPIC produces HMO report cards and reports to legislature	Yes, to legislature, no consumer reports
Public education	Yes – HRH, includes brochures, TV, postcards, newsletter, community events No – Ombudsman in Department of Insurance	Yes, brochures, meetings with consumer groups and other groups	Currently limited, but plan is for more consumer outreach	Limited education directed to consumers, with exception of HMO report cards; Major focus is systemic advocacy and reports	Yes, brochure, poster, TV, meetings

In considering the relative merits of ombudsman programs, it should be noted that even in states with “independent” ombudsman programs, state insurance regulators still believed that it was vitally important for their agencies to also provide a consumer complaints function. For example, the Vermont Division of Health Care Administration noted that their complaints function provided “a pulse on the market”. The information gleaned from consumer complaints is considered integral to many other functions undertaken by insurance regulatory agencies including monitoring financial solvency and analyzing the impact of changes to the regulatory framework.

However ombudsman programs can play a vital, complementary role to the complaints functions of state regulatory agencies. One key distinction between the two is the necessary focus on adjudication and enforcement by state regulatory agencies, compared with a stronger focus on mediation and consumer advocacy by ombudsman programs. Traditionally, state insurance regulatory agencies have defined one of their key missions as the administration and enforcement of the state insurance code. Hence, staff of the Maryland Insurance Administration described their role as determining whether insurance plans are in compliance with statues and their contractual obligations, with one advantage of this role being the ability to take enforcement actions including issuing penalties.

In contrast, ombudsman programs can serve consumers through providing assistance for complaints and problems that do not necessarily involve breaches of the insurance code. For example, the Health Education & Advocacy Unit in Maryland described one of their strengths as being able to work creatively with insurance plans to seek satisfactory resolution of consumer problems through mediation, even in the absence of specific legislative breaches. Similarly, staff at the privately funded Center for Health Care Rights in Sacramento, California, expressed confidence at their ability to provide effective assistance to consumers, despite lacking direct regulatory authority over plans.

Another important contribution of ombudsman programs is to combine individual consumer assistance with advocacy for systemic reform. Of the states studied, the Vermont Health Care Ombudsman and the Sacramento Center for Health Care Rights are strong examples of the value of using casework to drive policy advocacy, which can most readily occur in independent ombudsman programs. For example, the Vermont Health Care Ombudsman participates in the Vermont Health Access Oversight legislative committee, where she can present views independently of the Vermont Health Care Administration on problems facing Vermont consumers. The Center for Health Care Rights is particularly active in using information derived from its consumer hotline to undertake what it calls “evidence-based advocacy”. Hence the Center publishes policy reports with concrete recommendations directed at health plans, providers, policymakers and regulators on reforms necessary to improve the health system. Staff at the Center for Health Care Rights challenged the view that the primary function of ombudsman programs should be to assist individual consumers, arguing that this was a bottomless task, with the goal instead being to use examples of individual consumer problems to drive systemic reforms for all consumers.

Recommendations

It is recommended that ombudsman programs should be considered as a vital, complementary function to regulatory consumer complaint functions. Ombudsman programs can make important contributions in resolution of individual consumer problems through mediation and in undertaking systemic advocacy.

It is recommended that the following examples of best practice may be of value in developing or enhancing consumer assistance and ombudsman programs:

Independence of ombudsman programs can be enhanced through legislative authority and dedicated funding. For example, the Vermont Health Care Ombudsman has legislative protection “to speak on behalf of consumers…without being subject to any retaliatory action”. The Vermont Health Care Ombudsman also has funding guaranteed under a contract, in contrast to the absence of funding in the authorizing legislation for the ombudsman program in Texas.
Accountability and independence of ombudsman programs are also fostered by requirements for such programs to produce regular reports to the public and legislature. The privately- funded Center for Health Care Rights in Sacramento makes “the voices of health care consumers count” through regular published reports on consumer problems and suggested remedies (see California, Attachment 5).

3. The existence and standard of consumer “report cards” on health insurance complaints vary substantially. There are some good examples of best practice, but some reports are overly complex and provide insufficient guidance to consumers.

An NAIC survey of state insurance regulators undertaken in 1999 found that only 26 states affirmatively published complaint information “in either an annual report, consumer brochure or on the Department’s web site”. Readers are reminded that the four states with published reports (California, Oregon, New York and Texas) discussed below represent a sample of the higher- performing states with respect to complaints report cards. They were selected for inclusion in this study based on a web site review of the quality of published complaints reports across all states, with these four states appearing to produce among the most comprehensive reports.

Table 10.3 identifies the major features of the report cards published in the four states. Neither Maryland nor Vermont agencies published comparative health insurance complaints data, similar to the other four states. In Maryland both the Maryland Insurance Administration and the Health Education & Advocacy Unit have published reports analyzing the impact of the new appeals and grievances legislation, but do not routinely publish data on all health insurance complaints. It should also be noted that an alternative source of complaints information to published report cards is health insurance plan-specific complaints information. In all of the six states studied, regulators or ombudsman staff made available plan-specific information either through published reports (e.g. Oregon, Attachment 2), through their websites (e.g. Texas) or verbally in response to telephone calls from the public (e.g. Maryland). Staff at the Maryland Health Education & Advocacy Unit noted that consumer requests for plan-specific complaints information were more common during open enrollment periods. However the major focus of the following discussion is the status of comparative complaints reports.

In considering the value of complaints report cards for consumers, the starting assumption is that consumers will be able to exercise some choice among health insurance plans. To the extent that consumers have no or limited choices, report cards – whether they compare measures of quality, health prevention, consumer satisfaction or consumer complaints – are unlikely to be actively sought by consumers. The consumer market for report cards is therefore limited to a subset of the population, with the attention span probably limited to enrollment periods, rather than to more continuous interest in monitoring plans’ performance.

One key feature of complaint reports cards is the measure that they use to compare the relative performance across health insurance plans. Focus groups undertaken by the Pacific Business Group on Health (Schauffler and Rodriguez, 1996) support consumers’ unease with quantitative data. Consumers reported preferring formats based on grades (A, B, C, etc) over rankings such as “average” or “below average”, which, in turn, were favored over proportions such as 80% or 85%. In another focus group study, Jewett and Hibbard (1996) found that 43% of low comprehension problems of health quality report cards were due to gaps in understanding aggregate or quantitative concepts (e.g. mammogram rates were often confused with ratings or fees).

Table 10.3: Consumer Report Cards on Complaints

Features	California	California	Oregon	New York	Texas	NAIC
Source	Department of Corporations	Health Rights Hotline	Department of Consumer & Business Services	Department of Insurance	Office of Public Insurance Counsel	NA
Includes consumer and/or provider complaints	Not stated	Consumer complaints only	Consumer complaints only	Reports total complaints	Separate tables for consumer, provider, total combined complaints	Recognizes vital role of both consumer and provider complaints
Distinguishes indemnity and managed care complaints	"Health care service plans" only - i.e. managed care. Separate tables for full service, dental, vision, psychological, other plans	Major breakdown is: commercial HMOs, commercial PPOs, Medicare, Medi- Cal; also separately reports complaints by health plans and medical groups	Separate tables for health insurance and "Health Care Service Contractors" - HMOs and other managed care organizations	Separate tables for HMOs, commercial health insurers and nonprofit indemnity insurers	Basic Service HMOs only with separate tables for large and small HMOs	No guidance
Distinguishes justified complaints	No, includes all 'requests for assistance" received	No, includes all complaints received	No, includes all closed complaints	Yes, includes total complaints and upheld complaints	No, includes all closed complaints	No guidance
Complaint index or ratio determination	Complaint ratio based on enrollees. Ratio of 1 means 1 complaint received per 10,000 enrollees	Complaint ratio based on enrollees. Ratio of 1 means 1 complaint received per 10,000 enrollees	Complaint index based on premiums. Index of 1 means share of complaints = share of premiums	Complaint ratio using upheld complaints and premium. Ratio of 1 means 1 upheld complaint for $1 million premium	Complaint ratio based on enrollees. Ratio of 1 means 1 complaint per 10,000 enrollees	Prefers "complaint index ratio" based on policies in force, not premium volume. Index of 1 means share of complaints = share of premiums
Complaint ranking	No	No	Yes	Yes	No	No guidance
Complaint categories	Uses 32 issues categories	Uses 8 issues categories	No breakdown	Total and prompt pay complaints only	No breakdown	Database includes 74 reasons for complaint
Presentation format	Numerical tables	Colored circle and arrow tables indicating average, higher or lower than average; bar charts with complaints rates, consumer anecdotes	Numerical tables	Numerical tables, barcharts with complaints ratios	Numerical tables, graphical barcharts ordered from highest to lowest complaints ratios	NA

When assessed against these findings, the standard of the five complaints report cards examined in this study leaves considerable room for improvement. The two complaints report cards produced by the California Department of Corporations and the Texas Office of Public Insurance Counsel are based solely on complaints rates related to the number of plan enrollees. Both reports provide data on the average complaint rate across plans, allowing consumers who understand the concept of rates to assess the performance of individual plans against the average. Of the two, the Texas OPIC report is more user-friendly in presenting the complaints rate data in graphical format, as well as tabular format, which is helpful to consumers who are less at ease with quantitative data.

The Oregon and New York reports improve upon the Texas and California Department of Corporations reports by including “rankings” of complaints (e.g. 1, 2, 3, 4 etc,) in addition to using complaints rates. This grading system is more likely to be understood by consumers, although the use of the open-ended ranking is problematic. Hence, for example, of the 72 Oregon health insurance plans ranked 1 to 72, the first 11 plans recorded zero complaints, but are still ranked from 1 to 11 on the basis of their premium volume. It may have been more helpful for regulators to use their expertise to group plans into a limited number of grades (A to E), given that consumers are likely to have difficulty understanding whether there are substantive differences in complaints performance using an open-ended ranking.

Finally, of the five reports, it is only the privately funded Center for Health Care Rights in California that moves beyond complaint rates or rankings to also include a relatively simple “average” ranking. The Center’s report includes the following 5-point graphical scale

- much higher than average;
- higher than average;
- lower than average;
- much lower than average; and
O - not statistically significant to allow users to visually compare the complaints performance of plans and more readily identify plans with significantly higher or lower complaints rates.

The Center for Health Care Rights report also uses a range of other presentation formats to explain complaints data including bar charts and consumer anecdotes. Hence, rather than simply listing the complaints rates for different types of problems (e.g. inappropriate care, customer service problems), the Center includes an example of each problem through including the story of a consumer with this problem, the action taken by the Hotline to resolve the problem and the system problem identified as a result of individual consumer problems.

Another criterion for consideration in assessing complaints report cards is the extent to which they offer guidance to users.

Hibbard, Slovic and Jewett (1997) suggest that some factors which may be useful in report card design generally include:

Provision of global ratings by experts – to help reduce the information-processing burden; and
Use of a decision support method that leads consumers step by step through a rational process, including framing the issues through providing contextual information.

Gormley and Weimer (1999) also support including “expert” opinion such as the use of benchmarks or objective standards against which readers can assess performance. In considering complaints reports cards specifically, Gormley and Weimer (1999) argue strongly that the data presented should only include “justified” complaints, implying that a regulator or expert has made an adjudication as to whether the complaints were found proven.

Once again, the results of the five complaints reports against the factors that comprise this criterion can best be described as patchy. Only the New York report provides advice on complaints and complaints rates using “upheld” or justified complaints. The Center for Health Care Rights includes all complaints received in its reports and argues convincingly that as an independent consumer assistance program, its role is not to adjudicate consumer problems but to provide assistance to all consumers including understanding their rights. However if this argument is accepted, the other two regulatory agencies (the California Department of Corporations and the Oregon Department of Consumer & Business Services) are deficient in not including justified complaints data in their reports. Regulators at the California Department of Insurance noted that there had been significant resistance, including legal challenges from the insurance industry generally (not limited to health insurance) to the publication of complaints data. As a consequence of this industry “push-back”, the California Department of Insurance now establishes proof of justified complaints and notifies insurance plans by letter when a complaint is found to be justified. Perhaps in response to this situation, the California Department of Insurance does not publish any comparative health insurance complaints rates.

The five complaints reports also demonstrate fairly limited performance when assessed against other aspects of the guidance criterion (e.g. use of expert global ratings, decision-support methods, provision of contextual information). If it is assumed that complaints data should be presented in the context of other health insurance plan performance measures to allow consumers to develop a multi-dimensional view, the New York and Texas reports are superior to those of the other states. These reports include a range of other relevant data such as HEDIS measures, NCQA accreditation status and CAPHS measures, in addition to complaints data. Some of the reports include other background information that consumers may wish to consider in making plan selection decisions such as:

Advice on choosing a financially healthy insurance company and how to manage the cost of insurance (Oregon); and
Consumer legal rights and protections, and information about different types of health plans and how they operate (Texas and New York).

Staff at the Center for Health Care rights indicated that their report was not intended primarily as a guide to consumers shopping for insurance, but is focused on providing consumer information which is more explanatory of rights and is also directed at regulators and employers for purposes including policy advocacy.

All the complaints reports struggle with providing expert global ratings or decision support methods to help users understand and interpret complaints data. In part, this probably reflects both the embryonic status of complaints reports and the lack of consensus on objective standards. In contrast, health quality report cards have a slightly longer history and some expert consensus around measures such as HEDIS and CAPHS (for example, immunization rates can be compared against performance benchmarks set in Healthy 2000 or state health documents). At interview, state regulators invariably mentioned the difficulty in interpreting “high” and “low” complaint rates, advising that one factor affecting comparative complaints rates across plans was the extent to which plans actively publicized the ability to make complaints, including providing contact information for the state insurance regulator. However, only the California Department of Corporations report provides any advice on this issue, stating that the variations in complaints across plans can be influenced by factors including “the effectiveness of the health plan’s internal grievance procedures, and the quality of the health plan’s services”, together with the “degree to which the health plan discloses to enrollees the right to file” complaints with the regulator. (Note that the New York report provides similar advice on grievances and utilization review appeals, but not in the section of the report containing information on complaints made to the regulator). Admittedly, the inclusion of such advice is likely to provoke a frustrated response by readers of “So what does this mean, should I discount all complaints data?” Unfortunately, this reflects the general lack of agreement on the validity and interpretation of complaints data.

Policy Implications and Recommendations

The above discussion suggests that existing complaints reports suffer from a range of problems which reduce their effectiveness as a tool for consumers. In assessing the role of report cards in bottom-up accountability to consumers, Gormley and Weimer (1999) propose that factors critical to their success include:

The existence of meaningful variation in the reported measures;
The ability of consumers to exercise choice; and
The extent of consumer fees (for example, large consumer payments may diminish the salience of other measures such as quality or complaints data).

On this basis, complaints reports cards are likely to be less relevant to consumers as assessed against the second and third criteria, with significant work required to explain the meaning of variation in complaints across plans. In summary, in their current state of development, complaints reports are more likely to be useful for top-down accountability to policy-makers, legislators and regulators, than for bottom-up accountability to consumers.

It is recommended that comparative complaints data be publicly available to enhance the accountability of health insurance plans to consumers, employers, purchasers, policy- makers, legislators and regulators.

It is further recommended in developing or revising complaints report cards that consideration be given to the following features:

Complaints data should be presented as part of a suite of performance measures of health insurance plans, rather than as the sole measure of plan performance. For example, the New York report (see New York, Attachment 2) which includes multiple measures such as HEDIS scores, NCQA accreditation and complaints data is preferable to the Oregon report (see Oregon, Attachment 1) which contains complaints data (but no other performance measures) for health insurance, auto insurance, home insurance, life insurance and annuities. In comparing these two reports, it is interesting to note their genesis – the New York report involved input from both the Departments of Insurance and Health, while the Oregon report is produced solely by the insurance regulatory agency. The desirability of including multiple performance measures lends support to earlier recommendations for the need to improve communication and coordination across multiple agencies with involvement in health insurance regulation and health services quality.
Complaints report cards should include contextual information on the health insurance market to educate consumers about their health insurance choices.
Complaints report cards should incorporate consumer-friendly performance measures and presentation formats, in accordance with the findings of research (e.g. the use of grades or averages, simple graphical formats).
Complaints report cards produced by regulatory agencies should be based on justified complaints, in order to incorporate the expert adjudication of regulators and place plans on a level playing field.
Complaints report cards should include decision-support methods or expert global advice, as such tools are developed. One example outside the complaints report cards arena is the 1998 HMO quality report produced by the Maryland Health Care Cost Commission. This report provides guidance to readers by asking them a series of questions to help structure their decision making and includes a worksheet for users to include the performance measures relevant to their needs. It is more normative and less neutral than the five complaints report cards examined in this study.

4. Grievances (internal complaints received by health insurance plans) are a potentially rich data source in examining the implementation of patient protections. In five of the six states regulators stipulate the framework for grievance data that insuranc

Table 10.4 outlines the management and reporting of grievances in the six states studied. The NAIC Consumer Complaint White Paper does not refer to grievances managed directly by insurance plans and hence is not included in this table. The term “grievance” is used in this report to mean any complaint made by a consumer directly to a health insurance plan, compared with a “complaint” made to an insurance regulator or ombudsman program. However, as can be seen in Table 10.4, two states (Maryland and New York) distinguish between different subsets of complaints received by health insurance plans.

Under Maryland’s new Appeals and Grievances Law which took effect from 1 January 1999, grievances are complaints filed by consumers directly with their health plan challenging a plan’s adverse decision to deny services on the basis of medical necessity. Consumers will obviously file other types of complaints with their health plans, but these are not included in the count of “grievances” in Maryland. In New York, however, the term grievance means almost exactly opposite what it means in Maryland. The New York Insurance Department collects data on two types of internal complaints received by insurance plans as follows:

Utilization review appeals – complaints filed by consumers with their health plan challenging decisions to deny medical services on the grounds of medical necessity or that services are experimental or investigational; and
Grievances – all other complaints filed by consumers with their health plans challenging their plan decisions (that is, excluding medical necessity, experimental or investigational services).

Four states (Maryland, Oregon, New York and Vermont) require health insurance plans to regularly report grievance data to the insurance regulator. In the two states without this requirement, insurance plans are still required to maintain grievance logs which may be examined by regulators during market conduct and quality of care exams. Texas regulators expressed skepticism about the value of collecting grievance data centrally, given the need for proper validation of such data, although interestingly the audit tools used by Texas to review grievance data held by plans seemed to be very comprehensive.

In five states the insurance regulator stipulates the data framework that insurance plans are required to use in collecting grievance data. (Note, in California the Department of Corporations stipulates the reporting framework for late grievance data, but the absence of a more general grievance data framework was not able to be confirmed with staff of the Department of Corporations. Staff at the California Department of Insurance indicated there was no grievance reporting framework for plans under their jurisdiction.)

Table 10.4: Management and Reporting of Grievances

Features	California	Maryland	Oregon	New York	Texas	Vermont
Definition of grievances	Grievances are all complaints received by health insurers	Grievances are complaints received by plans in response to adverse decision involving medical necessity	Grievances are all complaints received by health insurance plans	Utilization review appeals are challenges to plan decisions on grounds of medical necessity, experimental or investigational services. Grievances are all other challenges	Does not use term grievances, refers to all complaints received by HMOs	Grievances are all complaints received by health insurers
Insurance plans are required to maintain grievance logs	Insurance Department - Yes, 5 years, may be examined in market conduct exams	Not stated, but implicit in reporting framework	Yes, may be examined in market conduct exams	Not stated, but implicit in reporting framework	Yes, may be examined by regulator in HMO quality of care exams	Yes, required to keep written records and maintain for 3 years
Insurance plans are required to regularly submit grievance data to regulator	No routine requirement for all grievances. However HMOs are required to file quarterly reports on late grievances with Corporations Department	Yes, annually, applies to all commercial insurers	Yes, annually, applies to all health insurers	Yes, annually, applies to all HMOs and insurers offering "managed health care insurance contracts"	No	Yes, biennially, applies to all health insurers
Regulator provides grievance data framework to plans	Corporations Department - Yes, but only for late grievance reports, no issue categories specified	Yes, includes 11 issue categories, CPT and ICD-9 codes	Yes, includes nine issues categories	Yes, Insurance Department issued circular in 1999, but does not stipulate issue categories	Yes, includes four issue categories	Yes, includes ten issue categories
Data on outcome of grievances required	Corporations Department - late grievances, no requirement for data on number and % upheld	Yes, number and % upheld, overturned or modified by plan	Yes, requires number and % of grievances reversed in favor of consumer by plan, also % closed at initial grievance, 1st and 2nd appeal	Yes, includes number and % reversed in favor of consumer by plan	Plans are required to keep information on "action taken" on each complaint in logs. No stipulation as to outcome categories	Yes, includes number and % of adverse decisions overturned at first and second appeals by plan
Regulator publishes grievance data	No	Not in consumer report, first policy report released in April 2000	Available on regulator web site, but not published in comparative report	Yes, in annual Consumer Guide with data on complaints received by regulator	No	No

There is no consistency in grievance data collection requirements across the five states. Of the three states which define grievances most broadly and stipulate data collection frameworks, Oregon has probably the richest reporting framework for understanding the implementation of managed care patient protections. The Oregon reporting framework distinguishes nine different categories of grievances. Categories of particular relevance include: “denials based on medical necessity”, “denials based on other coverage issues, including denials based on the service being out of the plan, out of the area or not a covered benefit” and “emergency services”. As Oregon also requires plans to report on the outcomes of managing grievances by type of grievance, regulators can use this information to determine whether plans appear to be in compliance with patient protection legislation. For example, in this study a review of grievance data across the five largest HMOs found that 71% of grievances filed by consumers concerning emergency services were being reversed in favor of consumers, compared with 39% of all other grievances. Regulators commented that this was suggestive of plans failing to properly apply the “prudent person” standards required under Oregon legislation.

Analysis of grievance data can also be vitally important both for plans and regulators in identifying issues on which greater public education may be required. For example, across the five largest Oregon HMOs, only 1% of consumer grievances about access problems were reversed in favor of consumers. This suggests that consumers probably need better information about how managed care operates, including reasonable timeframes in which they can expect to see a primary care provider and the rules for accessing out-of-network providers.

Of the other two states which use a broader definition of grievances, Vermont requires plans to report separately on physical and behavioral health services grievances and also to identify whether expedited review is required, while Texas stipulates only four broad grievance categories (plan administration, benefit denial or limitation, quality, and enrollee services).

Of the two states with narrower (and opposite) definitions of grievances, Maryland stipulates a much more rigorous reporting framework than New York. Maryland’s reporting framework categorizes grievances into eleven service types (e.g. emergency room, mental health, pharmacy), with plans then also required to provide further information using CPT or ICD-9 codes for the five most common procedures or service items associated with each grievance category. Whether this level of regulatory enthusiasm, perhaps associated with the recency of the law, yields benefits and is complied with by plans remains to be fully tested. In addition, because of its concentration on service type rather than problem issue, it seems that the Maryland reporting framework will not be as valuable as the Oregon framework in monitoring the implementation of patient protections. Finally, New York does not require health insurance plans to do any breakouts of grievance categories, but simply requires plans to report the total number of grievances and utilization review appeals.

While the states in this study were selected on factors including the comprehensiveness of their complaints reports, only New York also includes grievance data in its annual consumer guide. The two Maryland agencies have recently released policy reports analyzing the impact of the grievances and appeal legislation, which include grievance data for the first year of operation. Oregon makes individual insurance plan grievance reports available electronically on its website, but does not currently produce any comparative reports on grievances. The lack of ready public access to grievance data in some states reduces the accountability of health insurance plans to their various stakeholders.

The New York consumer guide includes information on the total number of grievances filed and the rate at which grievances were reversed in favor of the consumer for each health insurance plan. However the New York report cautions readers that “the number of grievances filed may be higher for HMOs that actively promote the grievance process to their members as a benefit” and that “there is no ideal reversal rate”. It further explains that “ a high reversal rate may indicate that an insurer’s grievance process is responsive to needs of consumers. However an unusually high reversal rate may indicate that the HMO’s process for making initial decisions could be flawed”. As discussed previously in the section on complaints report cards, consumers are likely to experience difficulty in interpreting grievance data and understanding its implications.

Recommendations

While analysis of grievance data is likely to be most valuable to regulators, it is recommended that comparative grievance data be publicly available to enhance the accountability of health insurance plans to other stakeholders including consumers, employers, purchasers, policy-makers and legislators. Like complaints data, publication of grievance data will need to be accompanied by information to educate stakeholders about grievances and what constitutes “reasonable” performance by plans.

It is recommended that the following examples of best practice may be of value to federal and state regulators in improving regulatory oversight of grievances:

Regulators should design reporting frameworks for grievances which closely match the patient protections in the relevant jurisdiction and require plans to report on the process of managing grievances (e.g. closed at grievance, first appeal, second appeal) and the outcome (e.g. upheld in favor of plan, reversed in favor of consumer etc). One good example is the reporting framework stipulated by the Oregon Department of Consumer and Business Services (Oregon, Attachment 4).
Grievance data must be subject to audit to ensure validity. The Texas Department of Insurance HMO Quality Assurance Section has developed a particularly impressive audit tool (Texas, Attachment 1) which is used by the Department in examining the processes and procedures used by plans to manage grievances. Regulators need to ensure standardization across plans in grievance reporting.

There is a “hierarchy” of complaints handling, with state regulators seeing only the tip of the iceberg in terms of consumer complaints about health insurance plans. While surveys indicate that consumers are more likely to consult their employer benefits staff with problems about health insurance, three major employers included in this study did not maintain detailed complaints records for systemic analysis.

The previous discussion on the differences between “complaints” to regulators and “grievances” to health insurance plans raises the obvious question of the relationship between the two. What proportion of consumers only contact their health insurance plan if they have a problem? Or, how many consumers contact their state insurance regulatory agency, either before or after seeking resolution through their health insurance plan? Where are consumers most likely to turn if they have a problem with their health insurance?

In attempting to answer these questions, three data sources have been examined:

Complaints and grievances data from three states (Maryland, New York and Oregon) which publish or have released some data on both measures;
Surveys which address the issue of consumer actions taken in response to health plan problems; and
Interviews with three major employers concerning their role in complaints management about their employees’ health insurance plans.

Comparing Complaints and Grievances Data

Oregon uses the broadest definition of grievances as all complaints received directly by plans, compared with New York and Maryland which define grievances as subsets of plan complaints where the consumer is challenging an adverse decision by the plan on specific grounds. Given this, the Oregon data is likely to present the most realistic picture of the comparative volume of complaints received by plans and insurance regulators.

In 1998 the five largest HMOs in Oregon reported handling a total of 3,272 grievances, while the Oregon Consumer Guide recorded a total of only 461 complaints about these five HMOs made to the Department of Consumer and Business Services. In other words, for every one complaint about an HMO received by the regulatory agency, seven grievances were received directly by the health insurance plan.

Turning to New York, in 1999 the Departments of Insurance and Health received a combined total of 16,248 health insurance complaints. Health insurance plans reported closing a total of 44,753 grievances and utilization review appeals (both measures are included to more closely approximate the broader definition of grievances used in this paper). This equates to about one complaint received by the regulatory agencies for every three complaints received directly by health insurance plans. However it is important to note that New York has a prompt payment law requiring health insurers to pay within 45 days of receipt of a valid claim and that the Department of Insurance also accepts complaints from providers as well as consumers. Hence, of the 16,248 complaints to regulatory agencies, 10,871 (67%) were prompt pay complaints, many of which would have been made by providers. If these prompt pay complaints are excluded from consideration, the ratio of complaints made directly to health plans vs. regulatory agencies increases to 8:1.

In Maryland the relationship of a greater number of health insurance plan grievances than regulator complaints appears initially not to be sustained. Hence in 1999 the Maryland Insurance Administration received a total of 11,838 complaints across its two complaints handling units, while health insurance plans reported receiving only 4,785 grievances. However, there are several factors which might explain this apparent anomaly.

Firstly, the Appeals and Grievances law only took effect in Maryland on 1 January 1999, suggesting both that consumers may only be beginning to understand their rights to file grievances with health plans and that health plans may still be on a learning curve in reporting grievances. For example, staff at the Health Education & Advocacy Unit in Maryland indicated that plans sometimes attempt to find contractual reasons to deny care, rather than attributing it to lack of medical necessity, to keep denials out of the grievance process. Second, like New York, Maryland has a prompt pay law and regulators at the Maryland Insurance Administration noted that the vast majority of general health insurance complaints are provider-driven. Third, the definition of grievances used in Maryland is very narrow (complaints challenging a health plan’s decision to deny services based on medical necessity) and represents only a subset of all complaints lodged by consumers directly with their health insurance plan. For example, in Oregon which records all grievances received by plans, only 11% of grievances concerned medical necessity. When these three factors are taken into consideration, it is likely that the situation in Maryland is quite similar to the Oregon and New York experiences.

Surveys

Several surveys attempt to measure the extent of consumer problems with their health insurance plans, with some surveys also indicating the action taken by consumers in this situation. These include:

The Consumer Assessment of Health Plans Study (CAPHS) 2.0H survey used in Maryland and New York in 1999; and
Two surveys undertaken in California in 1998 and 1999.

The CAPHS 2.0H survey asks health plan members “in the last 12 months, have you called or written your health plan with a complaint”. In Maryland 26% of surveyed consumers responded in the affirmative, ranging from a low of 15% to a high of 35% across individual HMOs. When asked whether the complaint was resolved to their satisfaction, 56% said yes, 21% said no and 23% said the complaint had not yet been settled. In New York 21% of surveyed members reported contacting their health plan with a problem in the last 12 months.

In 1998 the Californian Managed Health Care Improvement Taskforce commissioned a survey to document the extent and nature of difficulties Californians report with their health insurance plan. In total, 42% of insured Californians reported having had one or more problems with their plan in the last 12 months. However not all these problems were severe, as evidenced by the fact that even about 25% of Californians who were “very satisfied” with their health plan also reported having had a problem in the past year.

Of most interest, however, were the findings indicating what action people took to resolve their problem, with the survey allowing multiple responses. The vast majority of people contacted their health plan – 37% called the plan for information or assistance, 31% referred to plan documents and 12% wrote to the plan. The next most popular option was to contact the physician or other health care provider, a strategy adopted by 37% of people. The third most common response (17%) was to contact the employer benefits office, closely followed by asking a friend or family member for help (16%). The least likely actions were to contact a state or local agency for assistance (4%), an elected official (3%) or a lawyer (3%).

While not all these contacts result in filing formal complaints with the regulator or grievances with the plan, it can be seen once again that the volume of problems lodged directly with health insurance plans dwarfs the assistance sought from regulatory agencies. However, like the Maryland CAPHS survey, only 52% of people reporting a problem with their health insurance plan in the last year indicated that the problem had been resolved. Of people contacting their health plan, 29% of people were either dissatisfied or very dissatisfied with how the plan handled their complaint. Also of interest is the fact that 3% of people with a problem contacted an elected official, equivalent to about 200,000 Californians in 1998. No doubt, this is contributing to the “push-back” on managed care, including the strong stance taken by most state governments to create tighter legislative frameworks.

Employers

Given the prominent role of employers in private health insurance, staff of three major employers, Caterpillar, DaimlerChrysler and Motorola, were interviewed to understand their role in complaints management. None of the employers interviewed was 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. Complaints about health insurance were most likely to be used by the employers in this study to reassess coverage decisions.

Complaints data were 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.

Hence, while the Californian survey indicated that employers were frequently contacted by employees with health insurance problems, this study found that employers did not appear to provide a good source of complaints data, either in aggregate, or specifically for use in understanding the implementation of patient protections.

Policy Implications

This analysis has highlighted the importance of health insurance plans, both as the most common destination for consumers with health insurance complaints and as a much better repository of complaints data than other groups such as employers. Based on Oregon and New York, it is likely that the volume of grievances received directly by health insurance plans is between seven to eight times greater than the volume of complaints received by state insurance regulatory agencies.

These findings reinforce the previous recommendation that it is vitally important for regulators to require accurate reporting and to monitor grievances received directly by health insurance plans. Health insurance complaints received by regulators provide an incomplete picture in determining the need for legislative changes, public education or enhanced regulatory oversight. Policy-makers, purchasers, consumer advocacy groups and legislators are all potential audiences for grievance data.

The analysis to date has indicated the patchwork nature of complaints data, with the involvement of multiple agencies in several states, differences across states in the type and categories of complaints data included in published report cards and variations across states in grievance reporting frameworks.

Against this backdrop of variation, it is nonetheless of interest to examine what the complaints data reveal. Are complaints about managed care plans more common than complaints about indemnity insurance? What is the frequency of complaints relating to managed care patient protections that are of most interest to legislators and regulators? How often are complaints upheld in favor of consumers?

The following analysis attempts to provide some partial, illustrative answers to these questions. As with any analysis of state-based data, the findings cannot be directly extrapolated nationally and are likely to reflect the specific environment of individual states. For example, states with prompt payment statutes will generate a different pattern of complaints than states without such statutes. The complaints management system will, itself, substantially impact on the volume and type of complaints received by regulators. For example, a requirement that consumers exhaust health insurance plans’ internal appeals processes before making a complaint to regulatory agencies will influence the level of complaints observed by regulators.

Complaints About Managed Care and Indemnity Insurance

Comparisons between the level of complaints for managed care and indemnity insurance need to adjust for market share through, for example, using complaints rates which are based on premium volume or number of enrollees. Three of the six states studied (Oregon, New York and Vermont) reported data in a manner which allowed some views to be formed about the relative incidence of complaints about managed care and indemnity insurance.

In Oregon the complaint rate for indemnity health insurance was 48.6 complaints per $100m premiums in 1999, compared to a complaint rate of only 23.8 for managed care plans. This two-fold greater rate of complaints about indemnity insurance than managed care plans initially seems at odds with the managed care backlash. Several factors might help explain the apparent dissonance between public perceptions of a crisis in managed care and the reality, at least in Oregon, of a much lower complaint rate for these plans.

Firstly, complaints about managed care are growing much more rapidly in Oregon (a 57% increase in the complaint rate between 1997 and 1998) than complaints about indemnity insurance (15% increase). This high growth in managed care complaints may be associated with increases in market share. When people move from indemnity insurance to managed care, their unfamiliarity with how managed care works might prompt this higher growth in complaints. If this is true, the mismatch between consumer expectations and the reality of managed care protocols (such as use of gatekeepers and authorization procedures) may diminish over time, together with the growth rate of complaints.

A second more compelling argument espoused by Oregon regulators is that lower complaints rates may reflect the integral nature of the appeals process for managed care plans. If managed care plans have better well-established internal grievance handling processes than indemnity insurance, this will result in the observed finding of lower complaints rates for complaints made to regulatory agencies. The Oregon finding should again serve notice that regulators are seeing only a small fraction of all consumer complaints. Regulators commented that historically some of the large HMOs have invested substantial efforts in internal complaint resolution and consumer satisfaction. In 1998 Oregon began requiring uniform grievance procedures across all types of health insurance plans which may over time, reduce the disparity in complaint rates observed by regulators.

In New York the Department of Insurance measures complaints rates adjusted by premium volume for HMOs, commercial indemnity insurers and non-profit indemnity insurers. The highest complaints rates were recorded for commercial insurers (0.329 complaints per $1m premiums) and HMOs (0.302), with the lowest complaint rate for non-profit indemnity insurers (0.119). Hence in New York, managed care plans have about the same complaint rate as commercial indemnity insurers, but about two and a half times the complaint rate as non-profit indemnity insurers.

Finally, in contrast to both the Oregon and New York findings, regulators at the Vermont Department of Banking, Insurance, Securities and Health Care Administration noted that complaints about managed care and indemnity insurance were in proportion to their market share. Hence, in 1997/98 the Department received 290 complaints, of which 67 (23%) related to managed care plans which have a market share of about 20% in Vermont.

Complaints About Specific Managed Care Patient Protection Issues

In four states (California, Maryland, Oregon and Texas) there is some breakout of either complaints or grievances data relevant to understanding patient protection issues.

In California the Department of Corporations records the distribution of HMO complaints in 1998 as being: quality (64%), claims (34%), benefits and coverage (24%) and accessibility (7%). Within the subset of quality complaints, the most common complaint reasons across the six largest HMOs include inappropriate care (43%), denial of treatment (33%) and refusal to refer (19%) (Figure 3.2). The California Department of Corporations does not record whether complaints are justified or upheld in favor of consumers, nor does it require the reporting of grievance data collected by plans, so missing an opportunity to learn more about specific patient protection issues.

In Oregon and Maryland regulatory agencies report some grievance data relevant to patient protection issues. In Oregon an analysis of grievances for the five largest HMOs (Figure 6.2) revealed that 46% of all grievances concerned “other coverage/not covered” issues, while other significant grievance categories included medical necessity (11%), quality of care (9%), referral issues (9%), administrative issues (8%) and emergency services (8%). In contrast, Maryland uses service type categories in recording grievances, with the only parallel with the Oregon categories being the Maryland category of “emergency room” grievances. Emergency room grievances accounted for 17% of grievances in Maryland, compared to only 8% for emergency service grievances in Oregon.

Comparisons showing the rate of grievances overturned in favor of consumers are also of interest with such data being available for Maryland (Figure 4.2) and a sample of the five largest HMOs in Oregon (Figure 6.3). The grievances most likely to be decided in favor of consumers differed across the two states. In Maryland consumers were most likely to receive favorable outcomes for grievances concerning pharmacy services (85%), skilled nursing facility and rehabilitation facility care (75%) and emergency room services (65%). In Oregon the best outcomes for consumers were for grievances relating to emergency services (71%), other coverage/not covered (47%), referral issues (44%) and medical necessity (41%). Grievances which were least likely to be reversed in Maryland were mental health (28%) and podiatry, dental, optometry and chiropractic (38%). In Oregon grievances which were least likely to be reversed were access problems (1%), quality of care (4%) and quality of plan services (4%).

Finally Texas, like California, has some data on categories of complaints received by the regulatory agency, but does not require reporting of grievance data. In 1999 the most common reasons for HMO complaints were delays in claims handling (47%), denial of claims (20%), and claims reimbursement or balance billing (17%). For indemnity health insurance, the most common reasons for complaints were delays in claims handling (53%), denial of claims (19%) and unsatisfactory offer (19%).

Policy Implications

While there is much variation across states, complaints and grievances data are of value in examining the relative level of complaints about managed care and indemnity insurance plans. Regulators can also track changes in the distribution of different complaint categories and in the share of complaints upheld in favor of consumers to identify areas where public education may be required, new legislative protections may be needed or improvements in monitoring health insurance plan performance may be warranted. However variations across states in how complaints are measured, the legislative environment and the complaints handling system mean that these analyses are likely to be of most value to regulators within states, rather than in developing a national picture.

Appendices

Appendix 1 - List of Interviewees

California

Judy Penman Supervisor
Hotline
Consumer Communications Bureau California Department of Insurance
Phone: (213) 346-6817

Peter Lee
Executive Director
Center for Health Care Rights
Phone: (213) 383-4519

Maryland

Joy Hatchette, Associate Commissioner, Consumer Complaints
Louis S. Butler, Quality Assurance Coordinator, Life and Health Section
Melanie Brown, Investigator, Life and Health Section
Maryland Insurance Administration
Phone: (410) 468-2029

Kevin Simpson
Director
Health Education and Advocacy Unit
Office of the Attorney General
Phone: (410) 576-6563

New York

Salvatore Castiglione,Chief Insurance Examiner 2
Merline Smith, Consumer Services Bureau
Consumer Services Bureau
Mitchel Gennaoui, Chief Insurance Examiner 3, Consumer Services Bureau
New York Department of Insurance
Phone: (212) 480-6400

Oregon

Larry Culbertson, Manager, Consumer Assistance Unit
Kathleen Barrie, Consumer Advocate
Oregon Department of Consumer & Business Services
Insurance Division
Phone: (503) 947-7269

Texas

Audrey Selden, Associate Commissioner, Consumer Protection
Mike Jackson, Director, Life, Accident & Health Complaints Resolution, Consumer Protection
Melissa Hield, Team Leader, Special Work Assignments Team, Consumer Protection
Texas Department of Insurance
Phone: (512) 322-4309

Blake Brodersen, Deputy Commissioner, HMO Division
Cady Crisman, Director, Quality Assurance
Jo Anne Todd, Manager, HMO Complaints
Texas Department of Insurance
Phone: (512) 475-1962

Rod Bordelon
Public Counsel
Office of Public Insurance Council
Phone: (512) 322-4181

Vermont

Donna Sutton Fay
Health Care Ombudsman
Office of Health Care Ombudsman
Phone: (802) 863-2316

Jane Baird, Director Quality Improvement and Consumer Protection
Pat Jones, Health Care Administrator
Nicole Weidman, Consumer Services Specialist, Consumer Hotline
Division of Health Care Administration
Department of Banking, Insurance, Securities and Health Care Administration
Phone: (802) 828-2923

Employers

Caterpillar Inc.

William R Beale
Health Care Initiatives Manager
Plan Design, Compensation and Benefits
Phone: (309) 675-4897

DaimlerChrysler Corporation

Walter B. Maher
Vice President, Public Policy
Phone: (202) 414-6731

Ronald D. Gurdak
Senior Manager, Health Care
Group Insurance & Health Promotion
Phone: (248) 512-2498

Motorola

Randy Johnson
Director, North America Rewards
Phone: (847) 576-4299

Appendix 2 - Interview Questionnaire State Officials

1. Co-Ordination and Liaison

Jurisdiction and relationship with other government agencies:

What other agencies are involved in health insurance complaints in your state? Is there any involvement by the Health Department, Attorney General's Department, an Ombudsman, federal agencies including DOL and S-SHIP programs etc?
Have there been changes in terms of the responsibilities for complaints management across agencies? Describe those changes and the circumstances leading to the changes.
What does your Department do when it receives complaints for Medicaid and Medicare beneficiaries in your state? Is there any contact with Medicare Peer Review Organizations (PROs)?
What does your Department do when it receives ERISA complaints? Do you undertake any investigation/do you simply refer these onwards? What liaison do you have with federal agencies regarding ERISA complaints?
Are there any issues or problems with overlapping responsibility for managing health insurance complaints in your state that you particularly want to raise?
What is the current view about whether the complaints function in (name of state agency) should also be responsible for managed care issues? How do the Insurance Department and the Health Department manage the interface of regulating HMOs?
Has there been any interest expressed in the establishment of an ombudsman office? What has been the motivating factor?
Over which health insurance plans do you have jurisdiction? Is this a licensing function? Do you have responsibility for: indemnity plans, HMOs (commercial, all), PPOs, POS etc? Are the responsibilities and powers you have the same across all plans or do they differ? If so, can you describe how they differ?
Are there any types of health insurance plans which are not within your jurisdiction? Please describe these and any issues you have with them.

Relationship with health insurance plans/HMOs:

Do you require insurance plans or HMOs to submit complaints, grievance data or results of internal appeals processes regarding denial of care on a regular basis to your agency? If so, is this material publicly accessible and in what format? (e.g. your agency's annual report, web site, brochures, other?) (seek copies)
If plans submit data on complaints received directly by them, what is the quality of these data? Do you require plans or HMOs to conform to any standard reporting definitions in submitting these data?
Do you require insurance plans or HMOs to maintain complaints logs which may be accessed during market conduct examinations?
Do you require insurance plans or HMOs to submit details of their complaints management or internal grievance processes to you for approval? If so, what criteria do you use in approving these processes? Is there a legislative or regulatory basis for your involvement in oversighting plans/HMOs complaints and/or grievance processes?

2. Public Education on Complaints

General education/outreach:

In terms of publicly available information on health insurance complaints, your web site currently lists the following information which is produced for consumers
(insert state-specific list of electronic brochures/reports);
(insert state specific list of brochures/reports listed on Web available in hard copy only).
Can you provide me with copies of brochures/reports not accessible through your Web site?
Do you actively publish information on complaints? How, and to what extent, do you undertake outreach on complaints publications?
Do you promote the availability of speakers who can talk to various groups about the complaints function managed by (name of State agency)? What is the demand?
To what extent does your Annual Report highlight the effectiveness of the complaints function? (Seek copy)
Does your Commissioner issue press releases publicizing the complaints function on a regular basis?
Do you require health insurance plans or HMOs to publicize the existence of your agency's complaints function? If so, when does this occur - at enrollment, at denial of services, other?

Plan-specific complaints information:

Do you provide information to consumers on request (specify whether requests can be oral or must be in writing) concerning the complaints performance of individual health insurance plans/HMOs? If so:
What information is provided in these reports to consumers?
What is the most common situation in which people are requesting information about specific plans? Is this when they are considering changing plans, when they have encountered problems themselves or some other situation?
Is this information provided free or is a charge made?
In your general inquiries intake, to what extent does there appear to be a demand for comparative or individual information on health insurance plans/HMOs? Is there a demand for information which you currently are not providing?

3. Complaints Analysis and Agency Performance Issues

Internal use by agency:

Do you routinely provide access to complaints data to other sections of your agency? (for example, agent licensing, market conduct, rates and forms, legal, financial examination section) In particular, do you provide aggregate data to any of these sections, rather than simply seeking their involvement in resolution of individual complaints? Please describe what information you share and how this is used.
Do you follow up unusual levels or patterns of complaints against specific plans?

Comparative complaints information:

Do you publish complaints ratios ranking the performance of health insurance plans/HMOs on the basis of the volume of complaints? (seek report/citation)
Does this material include the raw number of complaints against each plan?
Are complaints ratios published which adjust for volume of business and, if so, how? (e.g. premiums written, number of policies, other measure)?
When did you commence publication of this material and how frequently is it published?
Does your publication include annual trends or is it point in time?
What is the basis of complaints included in these reports? (e.g. all complaints, justified complaints, closed complaints etc - obtain relevant definitions)
Are complaints only included above a certain minimum number or a certain level of business in the state? What is the proportion of total complaints received by your office included in these reports?
Does this material distinguish types of complaints and if so, what are the groups used? (e.g. rating, policy, marketing/sales, claims handling, other)
Who is eligible to make complaints - consumers, providers, others? Do you impose filing time limits beyond which you will not accept complaints?
What is the consumer feedback on this report - ease of understanding? usefulness? How do you handle consumer perceptions of "poor performance" when there is an increase in complaints?
In investigating complaints, what is the extent of the information provided back to consumers? Do you provide all information sent to you by the health plan or HMO or will you provide a summarized version to the consumer? To what extent is any of the information protected?

Analysis of complaints data:

What analyses of complaints data do you undertake? What standard reports do you generate from your complaints database and who has access to these reports? (seek copies)
What have been the trends in total complaints over time and what factors do you believe are contributing to the change? (Seek quantitative information)
How do you categorize complaints (including types of coverage, reasons for complaints, disposition of complaints)? (Seek documentation of how complaints are categorized).
Do you use the same categories used by the NAIC for the CDS (Complaints Database System)? Do you submit complaints data to the NAIC? If not, why not?
Has there been a change in the type of complaints (e.g. rating vs policy service) and what factors have contributed to any such change?
To what extent does your database allow you to track complaints as new issues emerge (e.g. privacy of genetic information, denial of care for managed care plans)? Have you made any recent changes to how you record the types of complaints in response to new issues?
Do you analyze complaints data to assess the effectiveness of legislative, rule or policy changes instituted by the state government or your agency? For example, to what extent have you tracked changes in complaints relating to rating before and after rating reforms?

Agency performance issues:

What resources (staffing) are currently available to manage the complaints function in your agency? How has that changed over time and is it adequate to meet the demand?
Do complaints staff in (name of state agency) work across all lines of insurance or do they specialize in one area? What are the advantages and disadvantages of these approaches?
What additional data do you have on the performance of your agency in managing complaints including:
Number of unanswered calls?
Average time taken to achieve resolution of complaints?
Volume of complaints handled (if not answered in complaints analysis section)?
Number of hits on your website, including number of hits on electronic complaints form, complaints brochures or complaints reports?
Accuracy of information provided?
To what extent does your agency track financial savings to consumers resulting from successful complaints resolution? How is this data collected (e.g. consumer reporting on $ saved, application of standard formulae)? (seek copies of information on financial benefits of complaints management process)
Has there been any independent evaluation or auditing of your complaints management processes (e.g by another state government agency) and, if so, what if any changes were recommended to improve the complaints function? What aspects of your agency's function were audited - timeliness, compliance with legislative framework, other?
Do you undertake consumer satisfaction surveys of the complaints function? If so, how frequently and how many consumers are sampled? What have been the results of these surveys?
If consumers are not satisfied with the outcome of your agency's decision, what channels are open to them to have the decision reviewed?

Appendix 3 - Interview Questionnaire Employers

1. Do you get involved when your employees have a specific complaint about a health plan, as distinct from general information inquiries about benefit coverage or eligibility?

2. What is the nature of your involvement in employee complaints about health plans? Do you ring, write or fax the health plan? Is there a nominated contact in the health plan with whom you deal specifically regarding employee complaints?

3. What data or records do you keep on employee complaints about health plans? Do you have any information about the most common types of complaints? Do you have any complaint log templates which indicate the type of data you collect?

4. Do you follow up unusual levels of patterns of complaints about health plans?

5. What selection of plans is currently available to employees? What is the nature of the plans - insured or self-funded? How often can employees switch plans? What data do you keep on disenrollment?

6. Is any information on health plan complaints management, including internal grievance procedures, considered in choosing plans which will be offered to employees?

7. Do you circulate any information to employees concerning health plans' grievance procedures?

Appendix 4 - List of NAIC and State Attachments

Attachments - NAIC

1. National Association of Insurance Commissioners, Consumer Complaint White Paper, Draft of 13 March 2000

Attachments – California

California Department of Insurance, Ombudsman Projects, Downloaded on 14 March 2000. http://www.insurance.ca.gov/EXECUTIVE/OMBUDSMAN/Projects.htm
Consumers Union and Center for Health Care Rights, Manage to Care: How California Can Better Inform Consumers about Managed Care, June 1999
The Lewin Group, Inc., Evaluation of the First 18 Months of Operation of the Health Rights Hotline: A Pilot Independent Assistance Program of the Center for Health Care Rights, January 2000, http://www.kff.org/content/2000/1569/OmbudsEvaluationReport.PDF
Managed Health Care Improvement Taskforce, Improving Managed Health Care in California, Findings and Recommendations, Volume 2, pgs13-41, January 1998
California Department of Corporations, Health Care Service Plan Complaint Data, 1998 Requests for Assistance, July 1999,http://www.hrh.org/99_rpt.pdf
California Department of Insurance, Commissioner Quackenbush releases new consumer complaint study on insurance companies, 28 October 1998 http://www.insurance.ca.gov/PRSarchive/PRS1998/Pr150-98.htm

Attachments - Maryland

Department of Health and Mental Hygiene and Maryland Insurance Administration, Memorandum of Understanding
Maryland Health Care Access and Cost Commission, Comparing the Quality of Maryland HMOs: A Guide for Consumers, 1999, Available at: http://www.mhcc.state.md.us/hmo/hmoreport99.pdf
Maryland Insurance Administration, Report on the Health Care Appeals & Grievance Law, April 2000

Attachments - New York

New York Insurance Department, Circular Letter No 5, Re: Managed Care Grievance and Utilization Review Appeal Data, 19 February 1999, Available at: http://www.ins.state.ny.us/c199_05.htm
New York Department of Insurance, New York Consumer Guide to Health Insurers, September 1999, Available at:http://www.ins.state.ny.us/hgintro.htm
New York Department of Insurance, Annual Ranking of Health Insurance Complaints, 1998, Available at: http://www.ins.state.ny.us/hrk97.htm
New York State Insurance Department, Levin Announces Availability of State's Premier Consumer Guide to Health Insurers, 17 November 1999, Available at: http://www.ins.state.ny.us/p9911173.htm
New York State Insurance Department, Department Releases Annual Health Complaint Ranking - New report shows most consumers are winning battles with NY HMOs, 15 December 1998, Available at: http://www.ins.state.ny.us/p9812151.htm

Attachments - Oregon

Oregon Department of Consumer & Business Services, Consumer Guide to Oregon Insurance Complaints, Complaints from Calendar Year 1998, 1999, Available at: http://www.cbs.state.or.us/external/ins/docs/consumer/2311.pdf
Oregon Department of Consumer & Business Services, Sample Insurance Company Annual Reports, 1998, Available at: http://www.cbs.state.or.us/external/ins/docs/sb21/sb21_reports.htm
Oregon Insurance Division, 1998 Complaint Report Part II, 1999
Oregon Insurance Division, Bulletins: 1998-1999

98-6 Annual Reporting of Grievances under SB21
99-2 Annual Reporting on Quality Assessment as Enacted under SB 21 (1997)
99-3 Annual Reporting on Utilization Review as Enacted under SB 21 (1997)
99-4 Annual Reporting on Scope of Network as Enacted under SB 21 (1997) Available at: http://www.cbs.state.or.us/external/ins/docs/

Attachments - Texas

Texas Department of Insurance, HMO Quality Assurance Section Audit Tools, Downloaded on 29 February 2000, http://www.tdi.state.tx.us/company/hmoqual/examhome.html
Texas Department of Insurance, Internet Complaint Information System, Sample reports, Downloaded on 31 January 2000, http://www.tdi.state.tx.us/consumer/icis/ciindex.html
Office of Public Insurance Counsel Comparing Texas HMOs 1999: Health Plan Quality from the Consumer's Point of View, 1999, Available at: http://www.opic.state.tx.us/counties.html
Texas Department of Insurance HMO Information and Sample HMO Profile - Aetna, Downloaded on 29 February 2000, Available at: http://www.tdi.state.tx.us/company/hmo/geninfo.html
Texas Department of Insurance Sample Company Information - Humana Health Plan of Texas. Inc, Downloaded on 14 April 2000, Available at: http://onyxpub.tdi.state.tx.us:8881/pcci/pcci.search
Texas Department of Insurance, Types of Coverage and Reasons for Complaint, ICIS, Downloaded on 27 August 1999, Available at: http://www.tdi.state.tx.us/consumer/icis/ciindex.html
Texas Department of Insurance, Aggregate Number of HMO complaints for FY 1999, including Access and CIS Complaint Codes, Facsimile received 14 February 2000
Texas Department of Insurance, HMO Complaints for Calendar Year 1999, Downloaded 26 April 2000, Available at http://www.tdi.state.tx.us/company/cihmo99.html

Attachments - Vermont

Vermont Department of Banking, Insurance, Securities and Health Care Administration, Division of Health Care Administration,Insurance Complaint Form
Vermont Department of Banking, Insurance, Securities and Health Care Administration, Division of Health Care Administration,Grievance Process Tables
Vermont Department of Banking, Insurance, Securities and Health Care Administration, Division of Health Care Administration,Vermont Managed Health Care Plans, A Guide for Consumers, 1999 Available at: http://www.state.vt.us/bis/hca/consumer/pubs/MCguide99.pdf
Vermont Department of Banking, Insurance, Securities and Health Care Administration, Division of Health Care Administration,Telephone Call Intake Form
Vermont Office of Health Care Ombudsman, Data Collection Form, 13 January 1999
Vermont Office of Health Care Ombudsman, Client Satisfaction Questionnaire

Appendix 5 - References

Bodenheimer T “California’s Beleaguered Physician Groups – Will they survive?” New England Journal of Medicine, 2000, 342(14):1064-1068

Brewster LR, Jackson L and CS Lesser “Insolvency and Challenges of Regulating Providers that Bear Risk”, Issues Brief, Center for Studying Health System Change, February 2000, Number 26

Gormley WT Jr. and DL Weimer Organizational Report Cards, Harvard University Press, 1999

Hibbard JH, Slovic P and JJ Jewett "Informing Consumer Decisions in Health Care: Implications from Decision-Making Research", The Millbank Quarterly, 1997,75(3):395-414

Jewett JJ and JH Hibbard "Comprehension of Quality Care Indicators: Differences among Privately Insured, Publicly Insured, and Uninsured",Health Care Financing Review, 1996, 18(1):75-94

Managed Health Care Improvement Taskforce Improving Managed Health Care in California, Volumes 1, 2 and 3 January 1998

Schauffler HH and ER Brown The State of Health Insurance in California 1999, Berkeley, California, Regents of the University of California, January 2000

Schauffler HH and T Rodriguez "Exercising Purchasing Power for Preventive Care", Health Affairs, 1996, 15(1):73-85

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