The External Appeals Provisions of the Senate-Passed Bill:

· Mandate that the managed care plan select and contract directly with the external entity responsible for appointing the reviewer.

· Could preempt independent external processes in nineteen (19) states where either the state selects the reviewer or creates a random process for selection.

· Allow plans to define whether care is medically necessary or experimental in nature.

· May not apply conflict-of-interest protections to the managed care system and the external reviewer.

· Do not provide for a de novo review.

· Create the possibility that the reviewer's determination is not binding on the plan, in cases where the external reviewer does not adhere strictly to the guidelines.

· Permit the plan to wait a full month (i.e. 30 days) before notifying a beneficiary of the outcome of an external review.

· Create an indefinite timeframe for the review process.

The External Appeals Provisions of the Bipartisan Bill:

· Permit a state to select the reviewer or create a random process for selection if the state so chooses. Otherwise, the plan selects the external appeals entity.

· Provide that the external appeal entity determines whether care is medically necessary or experimental in nature.

· Include conflict-of-interest protections between the managed care system and the external reviewer.

· Provide for de novo review.

· Make external reviewer's determination binding on the plan.

· Require that parties be notified as soon as possible about the outcome of external appeals.

· Create a definite timeframe for completion of an external appeal.

Why is an Effective External Review Important?

The Bipartisan Consensus Managed Care Improvement Act (Bipartisan bill), provides approximately 161 million Americans who are currently enrolled in managed care systems with meaningful consumer protections. All of those patients deserve patient protections, enforceable through a fair external review process. In contrast, the Senate passed bill's patient protections would primarily cover only the 48 million Americans in self-insured plans. Simply put, the Senate bill maintains the current federal and state patchwork of laws including most of its loopholes.

In order for external review to be truly independent and unbiased, state and federal agencies should be allowed to select reviewers that do not have unfair incentives to rule in favor of health plans. By mandating that health plans select and contract directly with the review entity, the Senate passed bill creates an inherent incentive for the reviewer to side with the plan (the promise of future contracts). Instead, the Bipartisan bill allows states if they so choose to select the reviewer or create an unbiased process for selection. Otherwise, the plan selects the external appeals entity.

The Senate-passed bill creates a complicated process for determining whether a medical dispute is appealable. The bill limits external appeals to covered benefits which are medically necessary and appropriate and that have not been determined to be experimental in nature. Further, the disputed care must meet a financial threshold or the health of enrollee must be in jeopardy. Plans can define whether a covered benefit is medically necessary or not. An enrollee is also granted an external appeal if the plan fails to meet an adverse coverage determination deadline. The Bipartisan bill, however, is clear that covered benefits that are both medically necessary and require a medical judgement are appealable. The Bipartisan bill, like the Senate-passed bill, grants an external appeal if the plan fails to meet an adverse coverage deadline. The bill also provides that the external appeals entity decides whether the covered benefit is medically necessary or not. By permitting the external appeals entity to make this determination about medical necessity, the Bipartisan bill ensures that best medical practices serve as criteria for granting an appeal as opposed to an individual plan's guidelines.

In addition, the Senate-passed bill establishes an ambiguous timeframe for conducting an external review, which could be indefinite. The bill establishes that the plan has five working days after a request for an appeal to appoint an external appeals entity. The external appeals entity then has 30 working days to select an external reviewer(s). Furthermore, the external reviewer then has 30 working days to conduct a review - a timeframe that might not begin until the entity receives all necessary information. Plans are required to release all necessary information 10 days from the initial request for a review. The above timeframe could allow a delay of several months until the reviewer has reached a decision, and even after reaching a decision, the plan is permitted to wait an additional 30 days before informing the patient about the reviewer's determination. In comparison, the Bipartisan bill requires that an external review be completed within 21 days from the initial request at which time the patient must be informed.

The external appeals process in the Senate-passed bill is deficient because it fails to include safeguards that ensure a fair process. First, the bill does not provide for a de novo, evidence-based review by a neutral review entity of the internal appeals decision. Second, the bill does not explicitly prohibit any type relationship between the external reviewer and the managed care system but it does explicitly prohibit any type of relationship for all other vested parties in the dispute. Third, the GOP bill is binding on the plan, only if the reviewer adheres strictly to the guidelines for conducting an external review. In contrast, the Bipartisan bill includes a de novo review, provides conflict-of-interest protections between the managed care system and the reviewer, and is binding on the plan without any exceptions.

Action Needed?

All managed care consumers deserve a truly independent and external review of their grievances and appeals. They deserve access to an appeals process whenever their health plan wrongly denies care for any reason and for any price. And they deserve a final decision before it is too late. Consumers Union strongly supports the Bipartisan bill and urges all lawmakers to do the same.