HMO Independent Review Process Helps Consumers, but Some Medical Conditions Raise Red Flag (May 2002).

55% of consumers who appeal HMO decisions prevail; 70% for mental illness

AUSTIN, TX -- Texas consumers benefit when they ask for independent review of their health maintenance organizations' care denials, a recent Consumers Union study says. But the rate of overturned cases for certain medical conditions indicates that some consumers may not be getting the health care 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 can be downloaded from: www.consumersunion.org/health/iro/review_exe.htm.

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 found that 55% of the 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.

Despite the strong likelihood of getting additional treatment, only a small number of consumers are appealing their cases. Although HMOs make thousands of coverage decisions a week, independent reviewers settled a total of only 587 disputes in 2001. To encourage more widespread use, McGiffert recommended that the TDI review all notices sent to persons being denied care so it is clear to consumers that the review is independent of their health plans and can help them get the care they need.

The report indicates there may be many reasons why few consumers are appealing their HMOs' care denials. They may be denied access to independent review because the denial of care was done retrospectively or they are insured by an employer self-funded plan (known as ERISA plans) which only voluntarily participate in independent review. Health plans may be making better coverage decisions now that independent reviewers can evaluate these cases. And, it could be that few consumers have the time and confidence in the system to pursue an independent review after a discouraging internal review process.

"The bottom line is that many consumers are either unaware of the independent review process or are frustrated by it, and they may not be getting the health care treatment they deserve," McGiffert said.

The study concludes that after five years in existence, the Texas 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.

• TDI should regularly conduct an analysis of independent review decisions and identify procedures or conditions where reviewers tend to overturn HMO denials. TDI should direct HMOs 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.

McGiffert said other states can benefit from Texas' experience with independent review. "Independent review saves our health care system money," she said. "It encourages HMOs to make the right decision early on and has a deterrent effect on lawsuits. Above all, it contributes to patient safety and well being."