Consumer clamor for health care reform has state and federal lawmakers scrambling to enact pateint protection legislation before the year is out. But in over one-third of the states, laws have already been enacted that have established an independent, impartial process for appealing denials of coverage.
The programs are quick, hassle-free and inexpensive, and patients have about a 50-50 chance of getting negative decisions from their health plan overturned.
But a Kaiser Family Foundation report and Stateline.org research shows that programs remain obscure and infrequently used by health plan members.
"It is a combination of people not knowing that they have a right (to appeal to an external program) and then having the patience to pursue it," said Karen Pollitz of the Institute for Health Care Research and Policy at Georgetown University, and the lead author of the Kaiser Foundation report.
Another reason for the limited use of the programs is that self-insured healthcare plans provided by many large employers are specifically exempted from state law by the 1974 Employee Retirement Income Security Act (ERISA).
The programs, known as external or independent review, already exist in 18 states, the District of Columbia and in Medicare, the federal government insurance program for the elderly. Michigan started the trend in 1978; Florida followed suit in 1985 and Pennsylvania in 1991.
A survey by the National Conference of State Legislatures found that 17 more states will introduce bills that provide for external review in 1999. But as more states consider enacting the programs, they could be becoming less consumer-friendly. Features such as filing fees, deadlines to appeal and financial thresholds for treatment often have to be met before consumers can file a complaint under some of the proposals.
In states where external review already exists, fewer than 3,500 cases have come up in the last five years. Florida topped the list with 911 cases going to external review between 1993 to January 1999. Most other states have heard only 70 or less between 1993 and 1998.
Texas received the second most requests408 between November 1997 and January 1999but the Texas Department of Insurance expected as many as 4,000 a year to start.
"We have not had anywhere near what we thought we would get with external review. The early stats were so low that we were worried that HMOs were not up to speed with the requirement or not telling people," said Texas Department of Insurance Spokesman Lee Jones.
Texas lawyer George Parker Young, who specializes in managed care litigation, praises the "dramatic success" of the state's independent review organization but estimates that only about 10 percent of health plan members and few litigation lawyers know of the program's existence.
The same rule that set up external review in Texas also opened the doors for patients to sue their HMOs. To date, only two lawsuits have been filed, Young said.
"I think one of the reasons for so few lawsuits has been because of the success of the IRO (Independent Review Organization)," Young said. "These are folks (using independent review) that otherwise, as a last resort, and sadly, would have had to go to the courthouse. I am a big fan of the IRO."
Managed care industry representatives suggest that the small number of cases going to external review "reflects the generally high quality of care provided by plans and the effectiveness of their internal appeals systems," the Kaiser report said. But state regulators have expressed concern over the infrequent use of external review. They cite lack of consumer awareness as a principal reason, followed by the burden of illness.
Pollitz found that before consumers can bring their case to external review, they must exhaust their health plan's several levels of internal review. She said denial letters must tell the patient that they can appeal the decision and how to do it. But only a small percentage of people turned down by their health plan actually follow through.
Using preliminary data from Rhode Island, Pollitz determined that at each level of the appeals process, only about half of the patients have the endurance to continue to the next level: In 1997, 4,200 individuals were turned down for what they considered medically necessary care. Of those cases, 1,100 appealed the decision, and 630 were turned down; from those cases, 256 went to the second level of the health plans appeal system; 160 made it to level three and of those cases, 59 went all the way to the state's external review organization. Of the 59 cases, 68 percent were decided for the patient.
Major findings of the Kaiser Family Foundation report, which was released late last year:
Some representatives of the healthcare industry are not convinced that external review programs are the solution to consumer health care woes.
"Mandates, no matter how well intended, raise the cost of health insurance," said Chip Kahn, president of the Washington D.C.-based Health Insurance Association of America, a health insurance trade association.
Kahn said that most private health plans already feature consumer protections and that state or federal mandates will only drive up the price of healthcare.
About a half-dozen healthcare plans have independently adopted external appeals programs. In January Aetna-U.S. Healthcare became the largest to allow consumers to appeal denials of insurance coverage to independent physicians.
Aetna's new policy starts in July, and will affect its 6 million HMO members and another 2.7 million members it expects to gain with its proposed purchase of Prudential Health Care.