Consumer Bill of Rights and Responsibilities
Chapter Seven
Complaints and Appeals

Statement of the Right All consumers have the right to a fair and efficient process for resolving differences with their health plans, health care providers, and the institutions that serve them, including a rigorous system of internal review and an independent system of external review.

Internal appeals systems should include:

• Timely written notification of a decision to deny, reduce, or terminate services or deny payment for services. Such notification should include an explanation of the reasons for the decisions and the procedures available for appealing them.
• Resolution of all appeals in a timely manner with expedited consideration for decisions involving emergency or urgent care consistent with time frames consistent with those required by Medicare (i.e., 72 hours).
• A claim review process conducted by health care professionals who are appropriately credentialed with respect to the treatment involved. Reviews should be conducted by individuals who were not involved in the initial decision.
• Written notification of the final determination by the plan of an internal appeal that includes information on the reason for the determination and how a consumer can appeal that decision to an external entity.
• Reasonable processes for resolving consumer complaints about such issues as waiting times, operating hours, the demeanor of health care personnel, and the adequacy of facilities.

External appeals systems should:

• Be available only after consumers have exhausted all internal processes (except in cases of urgently needed care).
• Apply to any decision by a health plan to deny, reduce, or terminate coverage or deny payment for services based on a determination that the treatment is either experimental or investigational in nature; apply when such a decision is based on a determination that such services are not medically necessary and the amount exceeds a significant threshold or the patient's life or health is jeopardized.¹
• Be conducted by health care professionals who are appropriately credentialed with respect to the treatment involved and subject to conflict-of-interest prohibitions. Reviews should be conducted by individuals who were not involved in the initial decision.
• Follow a standard of review that promotes evidence-based decisionmaking and relies on objective evidence.
• Resolve all appeals in a timely manner with expedited consideration for decisions involving emergency or urgent care consistent with time frames consistent with those required by Medicare (i.e., 72 hours).

Rationale

Fair and efficient procedures for resolving consumer complaints about their health care serve many purposes. First and foremost, enhanced internal and external review processes will assist consumers in obtaining access to appropriate services in a timely fashion, thus maximizing the likelihood of positive health outcomes. Second, they can be used to bridge communication gaps between consumers and their health plans and providers, and to provide useful information to all parties regarding effective treatment and consumer needs. Third, the opportunity for consumers to be heard by people whose decisions significantly touch their lives evidences respect for the dignity of consumers as individuals and engenders their respect for the integrity of the institutions that serve them.

Properly structured complaint resolution processes should promote the resolution of consumer concerns as well as support and enhance the overall goal of improving the quality of health care. Internal and external complaint and appeal processes should be:

• Timely.
• Fair to all parties.
• Administratively simple.
• Objective and credible.
• Accessible and understandable to consumers.
• Cost and resource efficient.
• Subject to quality review.

Internal and external complaint and appeal processes should not interfere with communication between consumers and their health care providers. For example, in instances where consumers and their providers agree that a service should be reduced or terminated, no written notification of such decisions is needed. Additionally, health care providers who participate in the complaint and appeal processes on behalf of patients should be free from discrimination or retaliation. Likewise, consumers who file a complaint against a provider or plan should be free from discrimination or retaliation.

For the purposes of this chapter, the following definitions are used for the terms "complaints" and "appeals":

Complaint. A "complaint" is any expression of dissatisfaction to a health plan, provider, or facility by a consumer made orally or in writing. This includes concerns about the operations of providers, insurers, or health plans, such as waiting times, the demeanor of health care personnel, the adequacy of facilities or the respect paid to consumers, and claims regarding the right of the consumer to receive services or receive payment for services previously rendered, including the organization's refusal to provide services the consumer believes he or she is entitled to.

Appeal. An "appeal" is a consumer's request for a health plan, facility, or provider or other body to change an initial decision. An appeal process is a procedure for reconsideration of a specific determination made by a health provider, facility or plan.

Current Resolution Processes

State Licensed Insurance Products. States traditionally have regulated the benefit structure, solvency, rates, and claims process of indemnity insurance companies doing business in the State. Some State insurance regulations require health insurers doing business in the State to provide certain complaint procedures to enrollees (Abraham, 1990). In addition, all 50 States have laws licensing or governing HMOs doing business in the State separate from their laws regulating indemnity insurance products. Many States' laws are based on the model HMO law drafted by the National Association of Insurance Commissioners (NAIC, 1996), which requires HMOs to establish complaint procedures approved by the State's insurance commissioner. An estimated 30 States have some specified complaint procedures that HMOs must follow and at least 7 States now require an expedited appeal for denials of urgently needed care.

ERISA Plans. All employers offering health benefits to their employees through managed care organizations or traditional indemnity insurers must comply with requirements of the Employee Retirement Income Security Act. ERISA requires private employer-provided health benefit plans to disclose certain information to plan participants, to report information to the Federal government, and to pay benefits that are promised under the plan. ERISA regulations generally require employer health plans to approve or deny claims within 90 days and to approve or deny appeals of claims denials within 60 days. Although ERISA health plans are required to establish and disclose complaint and appeals procedures to participants, and to notify participants of claims denials, the plans are not required to provide a particular complaint procedure (Butler and Polzer, 1996). An internal reconsideration of denied claims is stipulated but appeals may be decided by the same plan administrators that initially denied the claim. Determinations must be in writing and state specific reasons for the decision.

Medicare. Under the Medicare fee-for-service system, fiscal intermediaries and carriers must provide a two-step internal review and notification of their final decision before a beneficiary is entitled to seek reconsideration from the Social Security Administration's payment division and the Health Care Financing Administration (Kinney, 1996). Medicare provides a graded appeal process that includes a hearing before an administrative law judge and administrative appeals council review for claims under Part A (hospital coverage) if the amount in controversy is more than $100; and under Part B (physical and outpatient coverage) if the claims are more than $500. Claims under Part A and Part B for more than $1,000 are entitled to judicial review.

HMOs that participate in Medicare are required to provide meaningful internal procedures for resolving complaints about the quality of care, untimely provision of care, or the improper demeanor of health care personnel (Stayn, 1994). HMO decisions to deny coverage for certain treatment, referral outside a plan, or reimbursement for emergency or out-of-area care are subject to an external review and administrative appeal. HCFA has contracted with a private organization, the Center for Health Dispute Resolution, to perform these reconsiderations (Richardson, Phillips, and Conley, 1993). After external review, a Medicare beneficiary enrolled in an HMO who is "dissatisfied by reason of his failure to receive any health service to which he believes he is entitled and at no greater charge than he believes he is required to pay" has a right to Social Security administrative review for controversies more than $100 and judicial review for controversies more than $1,000.

Medicaid. The Federal Medicaid statute requires State agencies to provide beneficiaries with a fair hearing and an administrative appeal when their eligibility or requests for services are denied or not acted upon within reasonable time. These State agency determinations can be challenged in State court under State administrative procedure acts or in Federal court. In addition, HMOs that contract to serve Medicaid beneficiaries must establish an internal complaint procedure that will resolve disputes promptly. These internal procedures are subject to review and approval by the State. Medicaid HMO enrollees have the same rights to administrative appeal as do fee-for-service enrollees and no recommendations are made concerning the changing of such rights.

Federal Employees Health Benefit Program. Federal employees and their dependents receive coverage through private insurance carriers, including more than 300 HMOs. Under the FEHBP complaint resolution process, enrollees may bring disputes concerning benefits or services to the Office of Personnel Management for review after asking the plan to reconsider its initial denial and failing to receive a satisfactory reply. OPM seeks to determine whether the enrollee or family member is entitled to the services or supply under the terms of the contract.

Other Approaches. The federal HMO Act requires that to be a "federally qualified HMO," a plan must provide meaningful procedures for hearing and resolving complaints between subscribers and the plan. The written procedures must be easily understood and provided upon request. HMOs are not required to comply with the Act's requirements but may do so to obtain favored status. Other approaches to complaint resolution exist in the Department of Defense's health programs, including the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

Implications of the Right

Enhancing Internal Review Systems. Health plans will need to examine their existing internal review systems to assure that consumers receive a timely, understandable notice of decisions to deny, reduce, or terminate treatment or pay claims; notice of the reasons for that determination and of the complaint and appeals procedures available to them; and expedited processes for certain types of cases. While there do not appear to be reliable data indicating how many health plans currently provide internal complaint procedures, most apparently do. Thus, implementation of a general right to file internal complaints, to appeal within a health plan, and to receive a response will not require a majority of health plans to change their current practices significantly. It will be important for quality oversight organizations (State licensure programs, Federal certification programs, and private accrediting bodies) to assure that their standards and review processes adequately address internal complaint and appeal processes of health plans.

Establishing Independent External Appeals Systems. Additional analysis must be done to identify the most effective and efficient methods of establishing the independent external appeals function. Issues to be considered include: mechanisms for financing the external review system; sponsorship of the external review function; design of review processes to assure evidence-based decisionmaking; qualifications of reviewers; consumer cost-sharing responsibilities (e.g., filing fees); and methods of overseeing and holding external appeals entities accountable. It will also be important to establish an ongoing evaluation mechanism to assess the impact of the external appeals process on access to appropriate services, rates of consumer disputes, litigation rates, consumer satisfaction, and costs. The evaluation mechanism should also assess the impact of certain design characteristics on the effectiveness and efficiency of the external appeals process.

References and Selected Reading

American Accreditation Health Care Commission/Utilization Review Accreditation Commission (AAHCC/URAC). National Network Accreditation Standards. Washington, DC; April 1996.

American Association of Health Plans. Health Plans Announce Policies on Appeals Rights and Emergency Care Coverage. Washington, DC; January 1997.

American Bar Association, Commission on Legal Problems of the Elderly, Roundtable on the Resolution of Consumer Disputes in Managed Care. Washington, DC; 1997.

American Hospital Association: State Issues Forum. Designing Consumer Protection Standards. Chicago; 1996.

American Psychiatric Association. Principles for the Provision of Mental Health and Substance Abuse Treatment Service: A Bill of Rights. Washington, DC; 1997.

Atkins G, Bass L and K. ERISA Preemption: The Key to Market Innovation in Health Care. New York: Corporate Health Care Coalition; 1995.

Butler P, Polzer K. Private Sector Health Coverage: Variation in Consumer Protections under ERISA and State Law. Washington, DC: National Health Policy Forum, George Washington University; June 1996.

Citizen Action. Campaign for Health Security Managed Care Principles. Washington, DC; January 1997.

Committee on Choice and Managed Care. Assuring Public Accountability and Information, Improving the Medicare Market: Adding Choice and Protections. Washington, DC: Institute of Medicine; 1996.

Dame L, Wolfe SM. Serious Problems for Older Americans in Health Maintenance Organizations. Public Citizen's Health Research Group; May 1995.

Families USA. HMO Consumers at Risk: States to the Rescue. Washington, DC; 1996. Update March 1997.

Joint Commission on Accreditation of Healthcare Organizations, 1996. Accreditation Manual for Hospitals. Chicago; 1996.

Kinney ED. "Resolving Grievances in a Managed Care Environment." Health Matrix 1996 winter; 6:147-165.

Kinney ED. "Protecting Consumers and Providers under Health Reform: An Overview of the Major Administrative Law Issues." Health Matrix 1995; 5:83-138.

Medicare Rights Center. Medicare Appeals and Grievances: Strategies for System Simplification and Informal Consumer Decisionmaking. New York; 1996.

National Association of Insurance Commissioners (NAIC). Health Carriers Grievance Procedure Model Act. October 1996.

National Committee on Quality Assurance (NCQA). "Standards for Members' Rights and Responsibilities." Surveyor Guidelines; April 1, 1997.

Physician Payment Review Commission. Annual Report to Congress 1997. Washington, DC; 1997.

Public Policy and Information Fund of New York. The Managed Care Consumers' Bill of Rights. New York; October 1995.

Richardson DA, Phillips J, Conley D Jr. A Study of Coverage Denial Disputes between Medicare Beneficiaries and HMOs. Pittsford (NY): Center for Health Dispute Resolution, Network Design Group, Inc.; September 1993.

Rodwin MA. "Managed Care and Consumer Protection: What are the Issues?" Seton Hall Law Review Winter 1996; 26:1007-1054.

Stayn SJ. "Securing Access to Care in Health Maintenance Organizations: Toward a Uniform Model of Grievance and Appeals Procedures." Columbia Law Review June 1994; 94:1674-1720.
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1. The right to external appeals does not apply to denials, reductions, or terminations of coverage or denials of payment for services that are specifically excluded from the consumer's coverage as established by contract.

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