May 7, 2002
Many covered by ERISA plans cannot appeal denials of care
AUSTIN, TX — Consumers benefit when they ask for independent review of their health maintenance organizations’ care denials, a Consumers Union study released today says. But many consumers have no access to this process because federal law does not require their self-funded employer plan to offer independent review.
“The primary reason for low participation numbers is that nearly half of the people with health insurance are covered by employer self-funded plans which offer independent review on a voluntary basis,” said Lisa McGiffert, senior policy analyst with the Southwest Regional Office of Consumers Union. Although HMOs make thousands of coverage decisions a week, Texas independent reviewers settled a total of only 587 disputes in 2001. “Only Congress can fix that problem by passing the Patient Protection Act with an independent review process similar to the one in Texas.”
Consumers Union evaluated 263 appeals filed with Texas Department of Insurance during a six-month period, from March 22 through September 26, 2001. This sample included all three Independent Review Organizations (IROs) in Texas and 63 health plans. The study can be downloaded from http://www.consumersunion.org/health/iro/review_exe.htm.
The study found that 55% of Texas consumers who appeal their health plan denials to an independent reviewer received some additional treatment, in other words, the denials were fully or partially overturned. But for treatment for mental illness, the rate was much higher: 70 percent of denials were overturned or partially overturned.
The rate of overturned cases for certain medical conditions indicates that some consumers may not be getting the healthcare coverage they need. Among the areas are mental illness, gastric bypass, eating disorders and substance abuse care.
“The independent review process is helping consumers gain access to needed medical care and providing necessary oversight of HMOs,” said Lisa McGiffert, senior policy analyst with the Southwest Regional Office of Consumers Union. “However, the large number of appeals in areas like mental illness and the likelihood that the independent reviewers would overturn these denials raises a red flag. HMOs may need to reevaluate some of their policies and guidelines to improve their coverage and prevent unnecessary appeals.”
The study concludes that after five years in existence, the independent review process balances the medical needs of consumers with the need to review costly care. Consumers Union recommends:
· The independent review system should be expanded to include Employment Retirement Income Security Act (ERISA) plans through final passage of federal legislation, and should cover consumers in all states.
· A state agency analysis of independent review decisions should be done regularly and should identify procedures or conditions where reviewers tend to overturn HMO denials. HMOs should be directed by licensing agencies to review their internal guidelines for these conditions and correct them to avoid unnecessary requests for review.
· Health plans should review and modernize their guidelines for approval of gastric bypass, eating disorders, and substance abuse care. Patients who meet medical standards should be granted access to a higher level of care. Not all conditions can be adequately treated using outpatient methods, although they might be less expensive initially.
· The independent review process should be available to all denials based on retrospective reviews of medical necessity.
Consumers Union concludes that all consumers can benefit from the Texas experience with independent review but, like Texas, Congress must pair independent review with the right to sue health plans when patients are harmed due to denial of care.
“Independent review saves our healthcare system money, encourages HMOs to make the right decision early on, and has a deterrent effect on lawsuits. It contributes to patient safety and well being.” McGiffert said. “However, independent review cannot help patients already harmed because of denial of care – they must have access to the courts.”
Consumers Union Southwest Office
Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.