Legislative Program Review and Investigations Committee

Regulation and Oversight of Managed Care
Chapter IV - Final Report

---

Regulation and Oversight of Managed Care
Chapter IV  Consumer Protection Efforts
 

Customer Satisfaction  

Managed care has become more prevalent with about one million of the state=s population now belonging to HMOs compared to less than 600,000 only four years ago.  According to employers and some unions, employees have gone to managed care willingly because of the reduction in paperwork and less out-of-pocket expenses. They claim that when given a choice between traditional indemnity and managed care plans the vast majority of employees will choose managed care for these same reasons.  

Once an HMO is chosen, most people appear to like their managed care plans.  Standards of accreditation show very high rates of satisfaction.  To be accredited by the National Committee on Quality Assurance (NCQA) each HMO must annually survey its members on satisfaction, and while there is no passing grade, NCQA does require corrective action if subscribers rate the HMO poorly.  In Connecticut, most HMOs have received satisfaction ratings above 90 percent.  

Because HMOs themselves often conduct the surveys, the results are often questioned.  A more objective measure of Connecticut=s satisfaction level with managed care are the results of a recent CONNECTICUT POLL, jointly conducted by the Hartford Courant and the University of Connecticut=s Institute of Social Inquiry. The poll asked 500 state residents several questions concerning health care and satisfaction levels.  Sixty-seven percent of those polled stated they have insurance through some type of managed care organization. As shown in Table IV-1, satisfaction results were the same with managed health care as with other coverage.  

In addition, HMO complaints received by the Connecticut insurance department have declined even as the population in these organizations increased.  Further discussion on the number of health care complaints is provided later in this chapter.  A decreasing number of complaints with HMOs, especially when the overall population enrolled in these plans has grown dramatically, suggests a more satisfied clientele.  Elsewhere, a further endorsement of managed care occurred on Election Day 1996 when California residents rejected two propositions on the ballot in that state that would have increased regulation of managed care organizations.  

Satisfaction ratings with HMOs are not as high among sicker populations. A study conducted by the Harvard School of Public Health shows that non-elderly sick or disabled people in managed care plans were generally more dissatisfied with their health care than similar people in other health plans, although a percentage was also dissatisfied with fee-for-service.  

Given the general support of managed care, the program review committee believes that improving processes for consumers to seek corrective action when they have a problem is the appropriate regulatory route and makes recommendations to this end.  The committee believes this is a better direction than to change managed care while it is still evolving.  It would be premature to make radical changes to managed care now -- when it appears to be improving the affordability of health care overall, increasing the coverage statistics for Connecticut residents, and receiving generally good satisfaction ratings from the public.  

Although the program review committee concludes that consumers are generally satisfied with managed care, some regulatory changes are needed. Efforts are still needed to educate consumers about health care services as well as protecting and assisting them when they have a problem with their plans. Government, accreditation agencies, employers/purchasers, and health plans themselves all have a role to play in these efforts. In addition, consumer groups and the media scrutinize, evaluate, and rate plans that also help individual enrollees with health care decisions.  This chapter summarizes current consumer protection mechanisms available both through government and private organizations, cite where these efforts may be deficient and gaps still exist, and offer recommendations for increased education and protection for the health care consumer.  

Member Complaints and Grievances  

When medical costs were less rigorously scrutinized health plans paid for most procedures or tests physicians ordered.  Now that health plans are more active in the managing health care costs, beneficiaries at times disagree with their health plan over whether a benefit or type of treatment is covered. The following describes the grievance and appeal procedures available to consumers.  

There are a number of places consumers may submit complaints about health care services. He or she may submit complaints to the health plan itself for internal review or to the Department of Insurance=s Division of Consumer Affairs.  If they have a complaint concerning a particular physician, consumers may submit complaints to the Department of Public Health. In addition, complaints relating to ERISA plans may be brought to the attention of federal Department of Labor.  

HMOs=  Internal Consumer Complaint Process.  Connecticut law requires each agreement issued by an HMO contain a description of the enrollee grievance procedures and affords any aggrieved party the right to complain to the state insurance department. The committee reviewed the consumer complaint process outlined in the HMO subscriber agreements filed at the insurance department. (A synopsis of HMOs= internal grievance procedures are summarized in Appendix X.) In general, subscriber agreements reviewed state a member may use the grievance process to address issues including, but not limited to, the denial of claims, interpretation of benefits, plan policies and procedures, or issues with participating providers.  The process may be used by member enrollees or their participating provider on their behalf.  Almost half of all HMOs have established time limitations for submission of complaints. This ranges from 90 days to a year from the time the incident occurred.  

In general, HMOs offer a three-tiered complaint process. The first stage is usually an attempt by a member service representative to reach an informal resolution. Most HMOs will take the initial complaint either by phone or in writing.  A few require the complaint to be in writing and at least one HMO indicates what information should be included.  Half of the agreements do not indicate what their response time will be in the initial stage, but the ones that do claim response times ranging from 48 hours to 30 days.  Some indicate when and how notification will be delivered.  

If the determination at the first level is not satisfactory, the member may go to the second stage. This is usually a reconsideration or review of the informal resolution. Most HMOs require members to submit a written request for this stage review.  In addition, there are usually some time restraints for submission.  At this level the complaint is reviewed by a management committee which may include the executive director, medical director, and/or other member services staff.  The management committee may conduct a hearing or formal presentation of the facts. These hearings are usually held at the discretion of the company but occasionally are at the request of the member and, in at least one instance, automatically held.  The turnaround time for hearings held in the second phase is between 14 and 30 days although a few state that a determination will be made within a Areasonable@ time.  Member notification of the final determination is usually in writing and a few will indicate the reasons for the disposition.  

A member may appeal the second level review.  The member must file a written request, within a certain time period of receiving notice of the second level resolution of the complaint. This level appeal is reviewed by senior management or a subcommittee of the board of directors.  There may be a hearing or presentation made, usually at the discretion of agency.  The member may or may not be invited to present further testimony at the hearing. The response time for this stage is between 14 and 60 days.  Notification is made in writing.  Finally, almost all of the HMOs indicate that further review is available through the Connecticut Department of Insurance.  

The committee requested appeals information from all Connecticut HMOs.  Table IV-2 shows the appeal outcomes for the eight that replied.   As the table shows, the number and percentage of appeals upheld and overturned varies from plan to plan.  Overall, 65 percent of the reported 443 appeals heard by an internal HMO committee were upheld. Thirty-four percent were reversed and one percent were partially upheld/partially reversed.  

Department of Insurance Complaint Process.  The Division of Consumer Affairs within the Department of Insurance responds to insurance complaints and inquiries from consumers, businesses, and others who have general or specific questions or problems with insurance. The division may ask complainants to state their complaint in writing if the problem is complex, although, if quickly resolvable, staff may handle a complaint over the phone. The complaint is then either referred to the insurance company with a request by the division for a written reply or an examiner may phone an insurance company representative and request information pertaining to the complaint.  According to department staff, companies usually respond within 30 to 60 days but may take longer depending on the complexity of the case.  

Information supplied by an insurance company is carefully reviewed. On occasion, complaints may be referred to another division for support or additional information. The examiner checks the company=s filed materials as well as the department=s bulletins and statutory guidelines for non-compliance. If the examiner finds that an error has been made by the insurance company, the division informs the company and asks for a written reply outlining what corrective action will be taken. Once received, the examiner informs the complainant of the problem and the action that will follow. If no problem is detected, the complainant is provided with an explanation of why the complaint is invalid. In addition to the paper file, basic information relating to the complaint is coded and filed in the department=s automated system.  

U.S. Department of Labor.  As mentioned earlier, there is one category of complaints outside the purview of the Department of Insurance. Complaints relating to self-funded plans are subject to ERISA regulation. ERISA requires that employers providing health benefits also provide a mechanism for employees to contest plan decisions about coverage and claim denials. Employers usually delegate this authority to their plan administrators due to their greater medical expertise. When an employee and the health plan disagree, the plan administrator typically makes a judgement as to whether a given benefit is covered or treatment is necessary. Thus, an employee will file a claim or request approval for a procedure, and the plan administrator will approve or deny the claim.   

Every ERISA employee benefit plan is required to provide written notice to any participant or beneficiary when his or her claim for benefits under the plan has been denied as well as afford a participant whose claims have been denied a reasonable opportunity to a full and fair review of the denial.  As described above, most health plans establish an internal dispute resolution process for enrollees to appeal these decisions. When self-insured complaints arrive at the state Department of Insurance, department staff will try to intervene whenever possible on behalf of the participant, but their jurisdiction is clearly limited. They also provide information and direct the complainant to the U.S. Department of Labor.  

Under its authority to protect employee welfare plans, the U.S. Department of Labor can investigate problems that appear to be plan-wide and affect multiple participants.  ERISA does not, however, explicitly empower the Department of Labor to pursue administrative or judicial remedies on behalf of individuals disputing health plan benefit denials.  Due to limitations on its legal authority and resources, the Department of Labor generally does not act on individual disputes between a participant and the plan, recommending instead that dissatisfied plan participants seek legal advice.  

Under ERISA, enrollees dissatisfied with their health plan=s decisions can sue to enforce their rights either to have a claim paid or the benefit provided. Many courts have required exhaustion of internal plan claim procedures as a prerequisite to bringing suit for benefits under ERISA. However, the application of the exhaustion doctrine is left to the discretion of the trial court and as will be discussed in Chapter VI, there are limitations to ERISA remedies.  

Department of Public Health.  Another measure of consumer protection is the licensing and oversight of physicians and other health care providers by the Department of Public Health. The majority of activities within the department of public health involving the regulation of health care delivery are consolidated within the Bureau of Health Systems Regulation. The bureau contains the Division of Medical Quality Assurance that has overall responsibility for the regulation of health care professionals. The division investigates complaints against regulated health care providers and, as warranted, may take disciplinary action, restrict an individual=s practice, or revoke their right to practice in the state.  

Most complaints are received by mail and from a toll-free consumer hotline located within the unit. Complaints are referred by consumers, health providers, health care institutions, professional organizations, local authorities, and other sources.  In addition, the division may initiate its own investigations. Upon receipt of a complaint, it is assigned to an investigator who, after collecting evidence and other pertinent information, prepares an investigative report.  This report is then reviewed by a division supervisor and legal advisor to determine whether there is sufficient evidence to pursue disciplinary action or whether the matter should be dismissed. If grounds for disciplinary action are found, the department may seek to settle the case informally with a consent agreement.  If the case cannot be settled, formal charges are filed. The licensing board or commission that regulates that profession hears the evidence in an administrative hearing and renders its decision on the evidence. This decision may include disciplinary action against the licensee.  Licensees who have been subject to a disciplinary action involving a period of probation are monitored by the division to ensure they comply with the terms of the action. All disciplinary actions taken must be reported to the federal National Practitioners Data Bank (discussed below).  

Table IV-3 presents the number of complaints received against physician and surgeons from calendar years 1990 to 1995. As can be seen, the number of complaints received have increased dramatically while the number of  licensees has somewhat decreased. Table IV-3 also presents the number of complaints received per 100 licensees, which has increased as well. According to the department, there are a few reasons why complaints against physicians and surgeons is on the rise. First, media reporting on malpractice cases stimulates the number of complaints the department receives. Second, the medical profession itself has become more vigilant and willing to bring forth problematic providers. Finally, consumers as a whole have become a more litigious group and may file an administrative complaint to support their position in a judicial lawsuit.   

National Practitioner Data Bank. Operational since 1990, the National Practitioner Data Bank (NPDB) was established to ensure that unethical or incompetent medical practitioners do not compromise health care quality.  The data bank is administered by the U.S. Department of Health and Human Services and maintains records of disciplinary actions taken against health care practitioners and malpractice payments made on their behalf.   

Specifically, the databank acts as a central repository of information about: 1) malpractice payments made on behalf of physicians and other health care practitioners; 2) licensure disciplinary actions taken by state medical boards against physicians; and 3) adverse professional review actions taken against physicians and other health care practioners by hospital and other health care entities, including health maintenance organizations, group practices, and professional societies. This information is made available upon request to hospitals, health maintenance organizations, state licensing boards, professional societies engaged in professional review, and other quality assurance and credentialing authorities to serve as an information source and to assist them in their professional review activities.  

The data bank tries to ensure that complete and accurate information is in the reports it receives and in the information it provides to queries. Each practitioner about whom a report is filed receives a copy. If a practitioner believes a report is misleading or inaccurate, he or she may file a personal statement which is disclosed whenever the data bank record is disclosed. He or she may also formally dispute the factual accuracy of the report and request that the reporting entity change it. If the reporting entity fails to change the report to the satisfaction of the practitioner, he or she may request a review of the matter by the Secretary of the Department of Health and Human Services. The Secretary will investigate and will modify or void the report as necessary.  

Table IV-4 provides NPDB information on the number of malpractice and reportable actions per 1,000 physicians in various states.  Reportable actions includes licensure revocations, suspensions, reprimands, clinical privileges revocation, suspensions and other similar actions lasting longer than 30 days.  

With respect to malpractice data, it is important to keep in mind that the number of malpractice reports may have been affected by the Acorporate shield@ effect. This occurs when individual practitioners who would otherwise be reported to the data bank may have worked out settlements in which they are not named.  If a malpractice payment is made for a hospital rather than a practitioner, for example, no report is filed with the data bank. The extent of the corporate shield effect cannot be conclusively measured with the available data.  

However, even considering the effect of the Acorporate shield@ both in Connecticut and nationwide, it is much more likely that a physician would incur a malpractice settlement or award than be disciplined by the state licensing board. As the table points out, the malpractice activity is three to four times as frequent as the state disciplinary actions taken.  

Department of Insurance: Complaint Analysis  

The committee reviewed complaints drawn from the insurance department=s automated system.  As discussed earlier, there is no single definition of managed care. Acknowledging that, the committee examined the department=s coding system and selected certain categories in an attempt to capture the spectrum of complaints involving managed care.  

Complaint ratios and trends.  In 1995, the Department of Insurance received 1,578 complaints related to health plans. Close to 80 percent (1,243) of these complaints involved insurance companies compared to 19 percent (299) dealing with HMOs. Internally, HMOs reportedly handled 361 grievances in 1995 according to their annual filings with the insurance department. This number represents less than half of a percent (0.4 %) of HMO enrollees. This low ratio is also reflected in Table IV-5, which presents the number of HMO complaints since 1993 received by the insurance department in relation to the number of HMO enrollees.  

In fact, complaints per 1,000 enrollees actually declined from 0.5 to 0.3 percent from 1993 to 1995. Of the complaints handled by the insurance department only a percentage are considered Ajustified.@ As the ratios show, less than 1 percent of enrollees have filed complaints through either the internal HMO grievance process or the insurance department. The committee thus finds that this low complaint ratio indicates that poor customer treatment by HMOs is not a widespread problem. This is also supported by employers interviewed by the committee who stated they rarely, if ever, heard complaints from their employees about HMOs.  

AMedical necessity@ complaints.  While the insurance department deals with a wide variety of complaint issues, one of the most difficult is the issue of medical necessity.  For calendar year 1995 to September 1996, the program review committee identified 236 complaints received by the department that were coded as Amedical necessity@ complaints.  

Figure IV-1 shows the breakdown of all Amedical necessity@ complaints identified by the committee.  As illustrated by the figure, slightly more than half of all medical necessity complaints are made against insurance companies, while 24 percent are filed against HMOs. Nineteen percent of the complaints are made against self-insured plans. Four percent of the complaints name a utilization review company.

Of the 236 Amedical necessity@ complaints, 26 are still open. The program review committee conducted a file review of all closed Amedical necessity@ complaints involving HMOs (39) and utilization review companies (7). Of the remaining 164 closed Amedical necessity@ complaints, the committee examined a random sample of case files relating to insurance companies (6) and self insured plans (3) for a total of 55 Amedical necessity@ complaints reviewed by the committee.  Specifically, the committee looked at both the content of the complaints and the process used to resolve them. Information was compiled on the nature, origin, and final disposition of each. The results are analyzed below.  

The complaint files reviewed by the committee contained general correspondence between the department, insurance companies, and complainants. The files typically included: the complainant=s written description of the problem; an examiner=s request to the insurance company for a written reply and information pertaining to the complaint; the company=s response indicating its position; and the notification letter to the complainant of the examiner=s determination of  whether the company=s response supports its position or, if appropriate, its corrective action.  

Nature of complaint.  Although each case is unique in its circumstances, the committee found that complaints coded as Amedical necessity@ fall into a few broad categories. One common type of problem involves the interpretation of covered benefits. This type of complaint usually occurs when the member seeks coverage for a service that he or she believes is medically necessary but is not covered under the schedule of benefits.  Examples of this include:  

Example: Subscriber agreement states that coverage includes up to 30 physical therapy visits. Health plan approves and pays for four visits. Member wants payment for 20 visits.  Member feels since the contract says 30 visits are allowed she is entitled to coverage up to the limit.  

Example: Member=s dependent is required to get Hepatitis B shots to participate in college program. Health plan denies claim on the basis of contract exclusion.  Health plan does not reimburse for requirements of school or other third parties.  

Another common type of medical necessity complaint is when the member had services rendered without prior authorization and the plan then denied or reduced coverage. Finally, a small number of medical necessity complaints actually deal with disagreements about diagnosis or appropriate course of treatment.

In its analysis, the committee found that 60 percent of the Amedical necessity@ complaints dealt with the interpretation of coverage.  Several of the complaints requiring interpretation of coverage involved physical therapy, mental health, or substance abuse. Another 18 percent concerned authorization problems. Many of the complaints regarding pre-authorization fell in the area of emergency treatment and referrals to out-of-network providers.  Of the files reviewed,  11 of the 55 complaints involved differing medical opinions. Two involved differences in diagnosis, and nine dealt with differences in the course of treatment.  

In some instances, a complaint will involve a number of these issues. This is illustrated in the following case example.  

Example:  Patient has a history of heavy and painful menstrual cycle.  After a conservative approach with drug therapy fails, doctor schedules a transvaginal hysterectomy.  Patient enters hospital and gets prepped for 11 a.m. surgery.  Twenty minutes prior to surgery, doctor=s secretary calls to inform patient that health plan will not authorize operation.  Patient=s doctor contacts the health plan=s medical director to discuss the case.  According to the complainant, the medical director was prepared to approve the operation until he found out the patient=s age.  Because the patient was not yet 30 but rather 26 years old, the health plan denied authorization.  The patient was released from the hospital without the procedure.  The patient appealed the denial, and the health plan sought a second opinion.  The second opinion concluded that the patient did in fact need the hysterectomy.  The health plan reversed its denial and authorized the operation.  In the meantime, the patient was billed for the hospital prep work completed during the first canceled procedure.  The health plan intervened and assumed the expenses.  The patient received the surgery and was not charged for any hospital costs.  

This case illustrates many of the problems of the Amedical necessity@ complaints. This example also illustrates the circumstance of dealing with patients who do not fall within the medical protocol guidelines.  It is unclear from the paper file if and when the doctor sought authorization prior to the first scheduled procedure. It is unknown whether the treating doctor was aware of the health plan=s medical protocols, including the age criterion. It is also unclear why the health plan initially denied the procedure prior to knowing the patient=s age.  In handling this case, the insurance department did not intervene in the medical decision-making but rather monitored that the health plan=s internal appeals process was followed.

Complaint handling.  The program review committee found that in the cases requiring interpretation of coverage, the insurance department relies on the schedule of benefits offered in the particular health plan.  Problems involving denial or reduction in coverage for services already incurred are a bit more complex. Usually, the issue in these cases is whether the plan received a claim without having authorized the services. The plan may pend or hold the claims to investigate whether an authorization actually does exist or should have been given. If an authorization for services ultimately is given, the claim is paid. If no authorization is forthcoming, the claim is denied. The plan may occasionally pay the claim even without an authorization if circumstances exist such as certain emergencies, an urgent problem out of the area, or it is a first instance of a new member not complying. In these cases, the committee found that miscommunication and misunderstanding was the major problem.  In cases of prospective denial or reduction of coverage, the committee found that health plans generally respond to the member with the exact contractual language upon which it bases its denial of coverage.  

Again, the more complex problem arises when there is a difference of medical opinion as to the diagnosis or treatment. In these cases, the department determines whether the health plan handled the cases according to its internal medical appeal procedures. It does not make or override medical decisions.  In its response to complainants, the department informs the complainant that the issue is out of its purview and sometimes suggests the complainant seek legal counsel. It is important to note, however, there are times when a service may be considered medically necessary but the plan does not cover it under its schedule of benefits.

The committee examined the final disposition taken by the department and found that although the department has several coding options for complaints, they generally have four outcomes.  Complaints are either determined in favor of the complainant or in favor of the licensee.  Otherwise, the problem is negotiated or a compromise found more or less to the satisfaction of the parties.  Finally, there are instances where the department determines it does not have jurisdiction or the authority to override a medical decision.  If the complaint is outside its purview, the department would likely suggest that the complainant seek legal advice.  

In the cases reviewed by the committee, 56 percent were determined in favor of the company, 14 percent in favor of the complainant, 13 percent had a negotiated compromise, and in another 13 percent the department had no jurisdiction. There were two cases in which the final determination was unknown or unclear.

Complaint Status.  Table IV-6 provides the status of all Amedical necessity@ complaints drawn from the insurance department=s automated system.  Of the cases that have been closed, 117 files were coded as Afurnished information@ or Asatisfactory explanation.@ In general, more Amedical necessity@ complaints were coded as unjustified (the licensee=s position is correct) than justified or questionable.  In a few instances, a company voluntarily reconsidered its position in favor of the complainant even though statutory, regulatory, or contractual support existed for their initial position.  

While the department has a basic procedural structure for complaint handling, the committee finds that its automated coding system is deficient. First, the codes are not mutually exclusive and thus do not aptly describe the status or complaint outcomes. In addition, there is a fair amount of examiner discretion and autonomy in the handling and coding of complaints.  As a result, there appears to be no uniform policy on coding complaints. For example, while some complaints are coded as Aunjustified@, other similar complaints are coded as Asatisfactory explanation@, which does not indicate whether the complaint was justified or not, unless the paper file is examined. Therefore, the program review committee recommends the Department of Insurance re-examine its= coding system.  Specific codes should be developed to deal with health insurance complaints. Written definitions for each code should be provided to department staff and training given to implement a uniform coding system to facilitate tracking of complaint trends and outcomes.  

Periodic analysis of these codes will allow the department to recognize problem areas and problem entities. It should also help the department evaluate its own regulatory action in response to complaints. Although the existing automated system does allow for some analysis, it is limited due to the complexity of the coding method. Currently, the department informally keeps track of trends. Given the lack of uniformity in present coding, however, accurate tracking would be difficult.  

Overall, the program review committee finds the insurance department handles complaints in a prompt manner, and to the extent of its regulatory authority, services consumers well. The department is vigilant of companies= timely responses and appears conscientious of keeping complainants informed of progress and complaint outcome.  In addition to the coding changes for complaints, the committee makes other recommendations in Chapter V that will assist in the handling of Amedical necessity@ complaints and improve communication to the provider and patient.  

In reviewing the nature of the complaints, the committee found that most complaints deal with interpretation, communication, and administration. The majority of complaints, as illustrated by the examples, involve consumer understanding of contract limits and exclusions as well as recognizing that health care coverage under a managed care system is not an absolute entitlement.  Although the committee noted problems with the HMOs= internal appeals processes, the problems often involve providers having difficulty getting through voice mail systems, dealing with health plan Aclerks@, and verifying authorizations.  While the committee noted one case where lost paperwork at the health plan delayed the appeals process, in general, complaints regarding the time frame limits set by the internal HMO grievance procedures were not found. Thus, the committee does not recommend statutorily mandating one uniform grievance process for all HMOs. However, the appeal process for complaints dealing with Amedical necessity@ or utilization review decisions can be improved.  For these reasons, the committee made recommendations clarifying and strengthening the utilization review statutes as described in Chapter V.  

Market Conduct  

In addition to handling individual complaints against health insurers or HMOs, the insurance commissioner has statutory authority to undertake market conduct evaluations of insurance companies.  The purpose of the evaluation is to detect violations of unfair trade practice laws and protect policyholders and claimants against companies operating contrary to insurance statutes and regulations.  If the report concludes that the organization is operating in an illegal or improper manner or otherwise in violation of regulations, the commissioner has power to order the organization to correct deficiencies and/or face sanctions and penalties. Although the department has established a regular schedule for insurance companies, the department has only recently started performing market conduct examinations on health maintenance organizations.  

The committee reviewed the most recent market conduct report prepared for all health maintenance organizations.  While there is some variation, most reports focus on the following evaluation areas: structure, claims administration, utilization management, quality assurance, and complaint/grievance procedures.  A summary of the report highlights is presented in Table IV-7.  

State Monitoring  

Although all Connecticut HMOs have quality assurance components within their organizations, external oversight of health plans is necessary in order to demonstrate their compliance with state laws and regulations and provide adequate information to consumers. Currently, external oversight of health plans is conducted by the insurance department through financial examinations, market conduct evaluations, and complaint investigations.  Much information is collected by the insurance department about HMOs= financial solvency in their quarterly and annual statements.  The annual reports also contain materials regarding many aspects of HMO operations including enrollment changes, percentages spent on medical costs and administrative expenses, profitability, and lawsuits filed. In addition, HMOs are required to file for approval all forms and policies related to the health care plans. Additional information is available through the department=s market conduct evaluations and consumer complaint reports.  Furthermore, information relating to the selection and composition of provider networks is maintained at the Office of Health Care Access.  While these are essentially public documents, the information is not compiled or presented in an informative or usable consumer format.  

Large employers have been the driving force behind the growing move to compare health care providers and plans on the basis of their performance.  More and more, health plans are responding to the demands of purchasers and consumers to collect and publish quality-of-care information. Much progress has been made in this area especially through NCQA=s HEDIS initiative. [6]

While several data sources exist, there is no compilation of this information in one place.  The committee believes the state through the insurance department should lead the efforts to provide this considerably extensive and comprehensive information in summary form to consumers. Collecting this information will serve to both monitor HMOs and provide guidance to consumers in comparing and choosing health plans.  The committee believes this would not duplicate employer or accreditation activities.  The state should build on the existing efforts of health plans and national accreditation organizations and compile a uniform data set, assess the accuracy of the data, and ensure it is released in a format useful to consumers.  The collection of existing materials along with some additional information will allow the state to prepare a Areport card@ on health plans.  

Therefore, the committee recommends the Department of Insurance be responsible for collecting information from health maintenance organizations in the following areas:  

C                  Organization and plan design - including but not limited to basic descriptive information such as the type of HMO, tax status, the number of years in service, enrollment figures, and accreditation status;

 

C                  Financial - a health plan=s premium change over three years, per-member per-month fees, percent of total premium revenues spent on medical care, and disclosure of how the plan compensates health care providers;

 

C                  Utilization - disclosure of the name or names of medical protocols being used and the utilization standards and rates for certain specific procedures chosen by the insurance department, the rate of physician visits per enrollee, the admissions to hospitals per enrollee, and the length of hospital stays per enrollee;

 

C                  Medical management - the provider-to-patient ratio by primary care and specialty care, the percent of primary and specialty care providers that are board certified, physician turnover rates, and whether local provider input was incorporated into protocols; and

 

C                  Customer satisfaction - the percentage of enrollees who re-enroll, the number of grievances received through the internal HMO grievance process, the number and final status of internal appeals, and the number of complaints received by the insurance department relating to the health plan or insurer and the number of Ajustified@ complaints.  

This information should be reviewed and published in an annual report card allowing for comparison of certain components. The department should annually analyze data from past and current years to determine trends that have formed in any of these areas. The report card should include a statement indicating that the information contained in the report card is a snapshot of selected HMO operations. Consumers should be instructed to read their subscriber contract carefully to determine limitations and exclusions.  Furthermore, consumers should be made aware that certain components can not be used to compare health plans to each other but rather as indicators against previous reports to note areas of change, growth, and improvement within a health plan.  

In all focus groups, testimony, and interviews held with providers, employers, and consumers, the committee repeatedly heard the same message -- more information is needed to make informed decisions about health care. Much of this information is already available through required filings at the insurance department, OHCA, or HEDIS reports, which health plans currently produce for employers.  

The Department of Insurance must require that health plans file all information necessary to compile the report cards. The insurance commissioner should assign the staff necessary to compile any information that is not available through other existing sources.  Health plans failing to submit the necessary information should be subject to a market conduct evaluation.  

Market conduct evaluations should also examine enrollee participation in determining HMO policies. Connecticut law already requires enrollee representation on the boards of non-profit HMOs and for-profit health maintenance organizations must provide subscribers the opportunity to participate in matters of policy and operation.  Compliance with this requirement provides another assurance that HMOs remain accountable to its members.  

The committee acknowledges that some of the report card data such as per-member per-month fees do not relate to traditional health insurers. However, efforts should be made, whenever possible,  to collect the other pertinent information from regular health insurers -- for example enrollment/disenrollment figures and grievance statistics.   

As demonstrated by the private sector=s own initiatives, information is the basis for a sound market driven health care system.  Although there is general agreement that the compilation of information is critical, there are some concerns about the type of data that should be released.  One concern is that consumers cannot understand the data.  For example, health plans are concerned that utilization data are subject to misinterpretation and consumers will believe that the higher the utilization, the better the health plan.  Some disagree about the usefulness or reliability of the data itself especially self-reported information.  Others question whether the release of imperfect data is fair to health plans, and if the release of the data would help ensure quality of care.  The committee acknowledges that preparing accurate and usable information is difficult, however, compilation of existing data is an efficient and effective way of providing information to all interested parties.  In terms of utilization data, the release of this information should not be an indication of the Acorrect@ level of service, but rather a comparative measure only.  Consumers can reach their own conclusions about under service or over service -- especially when compared to fees.  Because consumers may be overwhelmed with the amount and complexity of information they receive, the creation of a Areport card@ should allow for a user-friendly format.  

Furthermore, the various components required by a report card prepared by the insurance department will benefit all parties. For example, basic descriptive information as well as enrollment figures used to compare health plans in terms of utilization and complaint activity will help employers and consumers.  In addition, providers can use the report to compare plans in terms of medical management and utilization rates.  Finally, health plans themselves may benefit from a report card comparison in that it will illustrate differences among plans and promote competition and quality improvement. The development of a Areport card@ has been adopted by one other state -- Minnesota, which is frequently cited as a leader in managed care regulation.    

Information during open enrollment.  The development of a Areport card@ compiled by the insurance department will provide consumers with basic comparative information on a wide variety of health plans.  Of course, not all plans will be available to every individual. Just as important as broad comparative information to the consumer is a clear understanding of detailed benefits and exclusions and internal plan processes before a person signs on with a plan. It is too late to receive this important documentation after the consumer has enrolled.  Currently, the provisions of an HMO health care agreement, contained in the evidence of coverage, are provided to the group contract holder or individual contract holder as appropriate.  Every subscriber must receive an evidence of coverage from the group contract holder or the health care center (C.G.S. ' 38a-182). For consumers to make an informed decision, the committee believes this critical information must be made available for subscribers to examine prior to enrollment, and each receive a copy after enrolling.  

Therefore, the program review committee recommends employers and/or health plans shall make the evidence of coverage available for review to consumers during the open enrollment period.  In addition, the documentation must include a clear description of:  benefits being covered or excluded and any changes from the previous contract.  

The program review committee heard testimony from an employee who found out after signing with a plan that the coverage for a particular treatment had changed.  This should not happen, and would be less likely to happen if this recommendation were implemented.  Given the current judicial interpretation, the committee believes that self-funded plans could not be forced to comply with either the data submission mandates for the report card nor the full disclosure during open enrollment.  However, as a matter of good faith, public relations, and building employee trust, the committee would hope that these ERISA governed plans would voluntarily comply.  

Access to Care  

The availability and accessibility of health care providers greatly affects members= ability to obtain appropriate health care.  If a health plan lacks an adequate number of physicians, specialists, and institutional providers to serve its enrolled population, patient care may be compromised.  Insufficient provider ratios increase the waiting time for members to receive care and the stress level of practitioners trying to meet the members= needs.  Conversely, plans that have too many providers may over time gain an insupportable overhead cost as well as find it more difficult to control utilization of services.  The following is a discussion of some alternatives for ensuring accessibility.  

Mandated ratios.  In a review of other states= approaches to adequate access to care, the committee found that 24 states require through statute or regulation that HMOs maintain a Asufficient ratio@ or Asufficient number@ of physicians to serve their enrolled populations.  Nineteen of these states, however, fail to define what constitutes a minimum or adequate ratio.  Five states (CA, DE, PA, NJ, and SD) require HMOs to maintain a specific minimum ratio of physicians to patients.  However, California=s provision allows plans that cannot attain the required ratios simply to demonstrate an Aadequate@ ratio.  

In Connecticut, there is no mandate that enrolled populations be served by an adequate level of providers. However, all states, including Connecticut, initially review whether HMO applicants can adequately serve projected enrollee populations. Twenty-six states require HMOs to describe their physician/provider network in their applications for a certificate of authority to operate in the state. Sixteen of these states require HMOs to submit in their application a breakdown of the number and type of providers by specialty.  

In Connecticut, all networks, including HMOs and preferred provider organizations, are required to annually file with the Office of Health Care Access (OHCA) information including the list of providers in the network and their geographic service areas.  However, the filings are considered for informational purposes only because OHCA has no regulatory authority over these entities.  As of March 1996, the information filed at OHCA indicated there are 67 different provider organizations.  Due to its lack of enforcement authority, it is not clear whether the information compiled is complete and accurate.  The filings usually consist of copies of the organization=s provider directories listed by geographic area.  While this seems to satisfy the statutory mandate, it can be misleading it terms of network size.  Many times providers are listed more than once in directories because of their scope of practice. For example, a provider may be listed multiple times if he or she is considered both a primary care physician and specialist or if they have offices in various towns.  

The committee believes managed care entities should continue to meet the OHCA statutory filing requirements.  However, to provide an accurate picture of the network, the committee recommends that the OHCA filing requirement shall include a single count of:  1) primary care physicians, 2) speciality physicians, and 3) other contracting providers and facilities. In addition, the figures should indicate the number and percentage of each group=s capacity to accept new patients.  This information shall be provided to the Department of Insurance for incorporation into the annual report card.  The Department of Insurance, in conjunction with OHCA, may verify this information when it develops the annual report.  If the filing has not been submitted, the market conduct division within the insurance department should be notified.  In addition, the Department of Insurance should note in the consumer report card that the health plan has not complied with the network information filing requirement.  

While provider staffing ratios are useful guides for health plan management to use when addressing recruiting needs, the committee concludes that mandating a specific minimum ratio is of limited value.  Access depends on the capacity of contracting provider groups to serve members who have enrolled in their group.  If providers join a number of different panels so they exceed their capacity to handle the patient load, access may still be compromised.  Therefore, mandating specific provider ratios does not guarantee access.  

AAny willing provider@.  A controversial issue related to access is Aany willing provider@ legislation mandating HMOs to contract with any provider who is willing to meet the HMOs= terms and conditions.  Since 1994, three states (ID, KY, WY) prohibit a health plan from refusing to contract with any provider who will meet the health plans=s terms and conditions. Minnesota=s Aany willing provider@ legislation applies only to non-staff model HMOs with more than 50,000 enrollees and to non-physician providers.  In 1984, Virginia required PPOs to allow providers the opportunity to apply and become preferred providers.  Since then, three other states (GA, IN, TX) have added similar PPO mandates.  Fourteen states= Aany willing provider@ statutes cover pharmacy services only.  

Generally, HMOs oppose such laws, while provider groups favor them. HMOs argue that Aany willing provider@ legislation undermines their ability to keep costs down. Because Aany willing provider@ laws are relatively new, their impact on HMOs= ability to obtain financially advantageous contracts or on enrollees= choice of providers, is not yet clear. Moreover, Aany willing provider@ provisions do not address consumer concerns about potential access barriers within an HMO, like primary care referrals to specialists. 

Point-of-service mandates. A few states have begun to address provider concerns about access and choice of providers by mandating that HMOs offer point-of-service plans.  Through a point-of-service plan enrollees may obtain care outside the plan=s network. However, point-of-service plans generally require higher premiums and large deductions. In Connecticut, most HMOs already offer point-of-service plans.  Nevertheless, mandating health plans offer a point-of-service plan does not mean employers must purchase it, or employees will use out of network providers if point-of-service plan is selected.  The committee believes employers should not be mandated to purchase these products.  Requiring employers to obtain this product is an unnecessary intrusion in the health care market potentially raising health benefit costs.  Employers should be able to offer plans that are acceptable to employees but affordable.  Further, self-funded plans would still be exempt from purchasing such plans.  This would place an expensive mandate on the non-ERISA plans, which are typically small businesses.  For these reasons, the program review committee makes no recommendation that employers offer or purchase any particular product including point-of-service plans.  

Employer criteria for selecting health plans.  Consumers often cite the relationship with their provider as one of the most important features influencing their satisfaction with health care and their decision to join or leave a health plan.  To stay competitive, a health plan must be able to attract and maintain a panel of highly qualified providers.  Connecticut employers who have met with the committee indicate that provider networks always rank high on their criteria used when selecting an employee health plan.  This is supported nationally, as illustrated below, by the results of the 1996 Trends & Forecast [7] national survey of employee benefit managers representing nearly 1.4 million covered lives.  As shown in Figure IV-2, accessibility and breadth of the provider network is the second most important criterion used by employers when selecting an employee health plan.  The most important employer criterion in choosing a health plan is cost.  

NCQA accreditation. Accessibility is also examined by one of the leading national accreditation organizations.  The National Committee on Quality Assurance (NCQA) requires a managed care entity to establish its own standards for the availability of primary care providers and access (for example, establishing standards for access to routine, urgent, and emergency care; telephone appointments; and availability of member service lines).  Most Connecticut HMOs either have or are in the process of obtaining NCQA accreditation.  The committee believes health plans will voluntarily seek accreditation due to market demands and growing recognition of NCQA standards.  The health plans that do not will likely face a competitive disadvantage.  

HEDIS reports.  Accessibility to care and services is one area of HEDIS reporting used by many health plans.  A review of 1995 HEDIS measure indicates, as shown in Table IV-8, almost all Connecticut HMO enrollees are visiting their primary care physicians.  

In addition, HEDIS reports include two indicators that measure a health plan=s network management -- physician turnover and board certification rates.  Table IV-9 provides these rates as reported by Connecticut HMOs in their most recent HEDIS reports. Table IV-9 shows that approximately 80 to 90 percent of the HMO networks are board certified.  Physician turnover rates, with a few exceptions, are relatively low. The committee believes that these measures are good indicators of an organization=s medical management approach.  For these reasons, the program review recommends that health maintenance organizations should annually report provider turnover rates and percentage of providers that are board certified to the insurance department, which will incorporate the information into an annual report card made available to the public.  

Conclusions.  One of the ways that health plans can control costs is to negotiate discounts with providers who are guaranteed that they will have the exclusive right to treat the plan=s enrolled membership.  Mandates such as Aany willing provider@ or options that allow enrollees to use any out of network providers severely limit a plan=s ability to negotiate reasonable prices and contain costs.  A plan=s leverage in negotiating volume discounts with providers would be reduced because patients would be distributed across a greater number of providers.  Furthermore, these mandates also eliminate a plan=s ability to identify and exclude providers with questionable practice patterns and/or poor clinical outcomes.

The committee believes health care purchasers should be allowed to shop for health plans that are affordable for their needs.  Employers have stated that, next to cost, the adequacy of the health plan=s network is most important in deciding which plan to join.  To make these decisions, purchasers can refer to NCQA accreditation and HEDIS reports.  Health plans will have to conform and follow suit in order to compete.  

Furthermore, the committee believes health plans should be allowed to continue to freely select their panels. They should, however, provide accurate description about their networks to regulators and the public.  The OHCA filing requirements, as amended by the committee recommendation, will provide the insurance department the necessary information to annually determine whether health plans have adequate networks.  In addition, incorporating this information as part of a Areport card@ will allow purchasers/consumers to determine whether the number and percentage of network providers is sufficient to service its enrolled population.  

Confidentiality  

A fundamental principle of the provider/patient relationship is confidentiality. It is universally accepted that a patient must feel free to fully disclose information to the physician so the physician may most effectively provide needed services.  In addition to the medical ethic code, the legal requirement that patient information be kept confidential arises from several sources. State medical practice acts and physician licensing statutes require physicians to preserve the confidentiality of patient records. Similarly, hospital operating statutes also establish confidentiality requirements.  Federal and state laws also impose additional confidentiality requirements on psychiatric records, records of minors, and information regarding communicable diseases. Furthermore, there are state laws that prohibit the disclosure of personal and privileged information collected or received in connection with an insurance transaction.  

Recent federal legislation.  In late 1995, federal legislation was proposed regarding the privacy of medical records.  The bill, referred to as the Medical Records Confidentiality Act of 1995, tried to ensure personal privacy with respect to medical records and health care related information.  Although the bill initially received bipartisan support, it drew opposition from some patients= rights groups who believed the bill would not protect privacy but rather would allow for broad access by anyone employed by an organization receiving protected information.  Other criticisms included the bill would supersede state law and establish one loose standard of accessibility to patient records by allowing exceptions where the subjects consent is not required to release information.  At the close of the Congressional session, the proposal was still pending in the labor committee.  

The federal Health Insurance Portability and Accountability Act of 1996, known as the Kassenbaum-Kennedy bill, which did pass, also addresses confidentiality of medical records.  The act requires the Health and Human Services secretary to submit recommendations to Congress with privacy standards within 12 months of the law=s enactment date (August 21, 1996). The standards would establish rules for the collection and disclosure of confidential health information.  The law further requires Congress to act on the privacy standards within three years, or if it fails to do that, the secretary of Health and Human Services may take action within 42 months.  However, the law will not supersede a provision in any state that imposes a requirement, standard, or implementation more stringent.  

Access to medical records.  In Connecticut, there are a number of laws relating to the handling of confidential records by state agencies such as the Departments of Public Health, Safety, Social Services, and Mental Health and Addiction Services.  With certain exceptions, [8] Connecticut law ensures individuals access to their own medical records.  State law also allows individuals to obtain their own personal information from insurers by written request (C.G.S. ' 38a-982).  Furthermore, insurers may not disclose personal information received in connection with an insurance transaction without the written authorization of the subject. However, insurers may release information to determine an individual=s eligibility for benefits, payments, or to prevent fraud.  

Access to mental health records.  Federal and state law both address the confidentiality of mental health records. State law requires all communications and records relating to the patient/psychiatrist relationship be kept confidential.  Disclosure is limited to a few specifically mandated situations (C.G.S.' 52-146f). Connecticut law provides for certain safeguards on the release of psychiatric patient information by limiting the amount and type of information that can be required when a dispute arises over fees or claims.  The statute (C.G.S. ' 52-146f (3)) states that in cases where a dispute arises over the fees or claims or where additional information is needed to substantiate the fee or claim, the disclosure of further information shall be limited to the following: (a) that the person was in fact a patient, (b) the diagnosis; (c) the dates and duration of the treatment, and (d) a general description of the treatment, which includes evidence that a treatment plan exists and has been carried out and evidence to substantiate the necessity for admission and length of stay in a health care institution or facility.  

Confidentiality issues.  While health plans collect and create records containing information about individuals for a variety of reasons -- to determine eligibility, to track utilization trends, to identify indicators for preventive measures, the committee heard from provider focus groups and testimony at public hearings that there is a level of concern over the release of personal information.  The issue of confidentiality was repeatedly mentioned by mental health and substance abuse providers as an area of concern.  Providers contend that insurers are requesting more patient information than necessary and/or require confidential information be transmitted over phone or fax lines.  Another confidentiality related concern is that patients fearing employers may discover their condition will either pay for services themselves despite available coverage or not seek services at all.  

Although the general public does not have access to much of the personal information held by health plans, there is concern over the potential harm from release of information to employers. Specifically, breaches in the confidentiality of claims information and patient records that may hinder the ability of individuals to gain employment or obtain insurance.  It has become more common now for some large employers to require more information including utilization trends of their enrolled group as a requisite for offering a plan to their employees.  

In discussions with health plans, the committee was told that one safeguard of confidentiality is to prevent disclosure of personal and identifying information and permit disclosure of information about persons if no connection can be made between the subject of the record and the information itself.  The committee reviewed a number of HMO confidentiality provisions as detailed in their subscriber agreements as well as outlined in the provider contracts.  Most HMOs also provided their internal staff policies that dictate confidentiality. The committee found that most confidentiality provisions state that medical information about a member will not be disclosed without the member=s written consent.  However, members usually sign a waiver when they enroll in a health plan that allows the plan to access information from the member=s medical records for use by health plan staff and its affiliates to administer the contract, for use in bone fide medical research and education, for medical and financial auditing, and/or as otherwise authorized by law.  

Providers interviewed by the committee expressed concern that health plans conducting quality assurance reviews seek to obtain more information than they believe is necessary for the purpose.  Providers claim that health plans interpret contractual provisions relating to access to medical records very broadly.According to the providers, the health plans= interpretation of access would allow them to examine all of the provider=s files.  One example, cited by providers, was that when health plans conduct a file review of the provider=s medical records as part of the recredentialing process they will examine medical records of patients who are not members of the health plan.  Another example given by providers was health plans requesting parts of a member=s medical records even if the member or another party rather than the health plan paid for the services.  

Based on provider and consumer testimony, the committee believes there is a perceived threat to confidentiality in two areas: 1) broad interpretation of contractual access to provider records and 2) disclosure of personal information to third parties such as employers.  

With respect to contractual interpretations, the committee believes that when parties to a contract have a difference of opinion as to the interpretation of clauses, only a court of law can determine what the parties intended. As such, the committee does not make any conclusions about contractual provisions.  However, the committee believes that confidentiality and privacy of patient records are an important part of any health care delivery system.  This belief is supported by national accreditation organizations including the Utilization Review Accreditation Commission (URAC).  URAC standards specifically address the information upon which utilization review is conducted.  The standard specifies that utilization review organizations must collect only the information necessary to certify the admission, procedure, treatment, or length of stay.  The standard stipulates that the utilization review company must not routinely request copies of medical records on all patient reviewed.  If a difficulty develops in certifying the medical necessity or appropriateness of the admission or extension of stay, then only the pertinent sections of the records can be requested.  Finally, the URAC confidentiality standard states that summary data shall not be considered confidential, if they do not provide sufficient information to allow identification of individual patients.

Therefore, the program review recommends the Utilization Review Accreditation Commission standards relating to the access and handling of patient medical records be adopted through regulations promulgated by the insurance department before licensing a utilization review company. The regulations shall specifically indicate that health plans conducting quality assurance functions shall be limited to examining medical records of health plan members. The department, through its market conduct evaluations, shall be responsible for periodically verifying compliance.   

Although all plans address the confidentiality of information in their contracts, to a certain extent variation exists both in contracts and in internal policies. The program review believes that as long as plans are complying with relevant federal and state laws, there does not have to be one set manner for HMOs to internally deal with confidential information. In addition, there will be federal regulations  in this area pursuant to the 1996 legislation in the near future.  

With respect to the second issue, the committee believes that health plans, including HMOs and utilization review companies or any party with which a health plan contracts, that have access to medical information, should be prohibited from giving or disclosing individual records to employers or any other party without the individual=s consent. There is, however, no need for further state legislation since current Connecticut law prohibits the disclosure of personal and privileged information and has safeguards in place for any exceptions provided by law.  It is important to note that these prohibitions are not absolute.  Disclosure is allowed for certain auditing functions. Under federal and state law, self-insurers may be allowed disclosure of member information to perform necessary functions in connection with an insurance transaction involving the individual or to detect or prevent fraud, material misrepresentation, or criminal activity. In this capacity, employers requesting management audits of their health carriers may have access to employee utilization information.   

The committee contacted the National Association of Insurance Commissioners (NAIC) to discuss the NAIC model act upon which existing Connecticut insurance privacy laws are based. According to NAIC staff, new guidelines are currently being developed to revise the present privacy laws,  taking into consideration the emerging health care insurance industry. Among the issues NAIC hopes to handle is accessibility of health care information by third parties. The committee believes the new federal regulations in conjunction with the revised NAIC guidelines will address the concerns expressed by providers and consumers. Meanwhile, judicial intervention is available to individuals who believe their privacy has been illegally disclosed.