Kids and Health Care: Three States Deal with Claims Disputes
Since health insurance is usually regulated at the state level, it's useful to consider how several larger states deal with claims disputes.
Pennsylvania's Act 68 is a state law that spells out how the claims process will work for managed care plans. Act 68 distinguishes between complaints (issues not related to a medical necessity) and grievances (issues of medical necessity).
The complaint procedure still begins with a two-step review at the company level. The grievance process includes the two-step review but adds an expedited review for urgent situations. And, the new law allows providers to pursue grievances.
For example, a physician could file a grievance if he or she wanted to provide treatment that the consumer's plan would not cover.
At the Pennsylvania state Health Department level, grievance appeals are assigned on a rotating basis to a certified physician, licensed psychologist or group of physicians or psychologists for a decision. (The Health Department makes sure none has any conflicts of interest.)
In June 2002, the New York Department of Insurance -- citing a litany of bungled claims, improper treatment denials, unlicensed health insurance agents and poorly performing claims processors using out-of-date software -- fined Aetna/US Healthcare and United Healthcare $2.5 million.
The NY DOI described poorly processed claims and violations of the state's insurance code in two recently released market conduct exams. The results of the exams forced both insurers to create an appeals process for claims that had been partially or fully denied during certain time periods. Aetna agreed to review claims it partially or fully denied between July 1994 and September 2001; United Healthcare agreed to review claims it partially or fully denied between July 1994 and December 2001. (New York law requires insurers to keep all paperwork associated with a claim for six years after the claim is resolved.)
In its June 1997 decision of a case involving man-aged-care giant Kaiser Permanente, the California state Supreme Court ruled that HMO members can file lawsuits if they demonstrate that their health plan's arbitration system is unfair. The court admonished Kaiser for intentionally delaying the selection of arbitrators and otherwise manipulating the process for its benefit.
Among other things, the court pointed to one of Kaiser's own surveys, which showed that in the mid1980s an arbitrator wasn't appointed for nearly 674 days -- almost two years after the enrollee had asked for one. Kaiser had promised to name an arbitrator within 60 days of a patient's demand.
In response to the ruling, Kaiser earlier this year announced an overhaul of its arbitration system. The company, which for more than two decades had operated an in-house arbitration process, began using an independent system like those used by competing health plans.
