Consumers Encounter Barriers in External Review Programs
Originally published by Reuters Health, March 19, 2002
NEW YORK (Reuters Health) — Americans rarely take advantage of state programs for settling disputes with their health plans, even though consumers prevail in 45% of the cases brought to the programs, according to a study released on Tuesday by the Kaiser Family Foundation.
Over a one-year period, consumers filed fewer than 4,000 appeals in the 42 states that now have so-called "external review" programs in place, the study found. Even in New York, which had more appeals than any other state, just 10.7 cases were filed for every 100,000 covered individuals.
The Georgetown University researchers who conducted the study suspect that numerous factors have a hand in squelching consumer participation in external review programs.
"There are a lot of barriers at the door of external review," lead author Karen Pollitz of Georgetown's Institute for Health Care Research and Policy told Reuters Health.
In California, for example, a patient may appeal a health plan's decision to deny a service as not medically necessary if the plan rejects coverage before the patient gets treatment. But individuals are not allowed to retrospectively appeal for coverage of services that they received on their own or that they received without prior approval.
There also are "a lot of barriers before you get to that door," Pollitz said. In all but one of the 42 states, for example, individuals must exhaust their health plans' internal appeals processes before turning to the state for help.
"I think the big picture policy implication is that we have gotten to a healthcare system that is so complicated that people don't know what to do," Pollitz continued. "What we found was that external review, when it works, seems to be a pretty good thing. But if you're the least bit cynical, you begin to wonder why we're making this so hard."
While there's no way to know whether the appeals rate cited in the study is higher or lower than it should be, there is evidence to suggest that plans are improving their internal appeals processes, said Susan Pisano, a spokeswoman for the American Association of Health Plans (AAHP). Still, "it's important that any barriers that exist should be examined carefully," she said, noting that external review helps to ensure health plan accountability and assures consumers that the decisions made by health plans are based on medical science.
Drew E. Altman, president of the Kaiser Family Foundation, argued that the foundation's own surveys indicate a much larger percentage of people have problems with the coverage of healthcare services than the number of external appeals would indicate. "I think what it says is that passage of a law doesn't necessarily solve a problem." It points to a "tremendous need for public education," he said.
Despite the potential benefits of external review, the future of such state programs remains "somewhat in doubt," the Georgetown team noted. Some of the uncertainty stems from differing versions of patients' rights legislation passed by Congress.
A Senate version would preserve state external review programs that meet or exceed minimum national standards but preempt weaker state programs. The House bill would require all state programs to meet federal standards, even if a state's program exceeds those standards.
The tougher federal requirements would extend external review privileges to individuals covered by self-insured employer-sponsored health plans, which are exempt from state regulation.
The managed care industry favors independent external review but has lobbied vehemently to prevent Congress from passing a patients' bill of rights that expands the right to sue health plans. AAHP, the industry trade group, has argued that additional litigation would drive up healthcare costs.
A pending Supreme Court case also could affect the future of state external review programs. The case calls into question whether the decisions of external review programs are legally binding on health plans that offer coverage purchased by employers.
"If the Court decides that state programs are preempted by ERISA," which is the federal law governing employee health plans, "it could put this protection in a state of flux for consumers," the Georgetown team noted.
In the meantime, consumers need to know that they have a place to turn if a health plan inappropriately denies treatment, said Pollitz.
