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News Release
FOR RELEASE
September 17, 2002
RAND STUDY GIVES NEW INSIGHT INTO CONSUMER
CONFLICTS WITH MANAGED CARE ORGANIZATIONS
WASHINGTON - A new RAND study finds most disputes between patients and their HMOs don't involve denials of coverage for medically necessary and potentially life-saving care—despite widespread media and political attention to legal wrangling over this type of conflict.
RAND researchers analyzed more than 10,000 appeals of coverage denials filed by enrollees of two of the nation's largest HMOs. The lead author of the study, appearing in the journal Health Affairs, is Dr. Carole Roan Gresenz, a RAND economist. Other authors are: Dr. David M. Studdert, an assistant professor at the Harvard School of Public Health, Nancy Campbell, a senior programmer analyst at RAND, and Dr. Deborah R. Hensler, a professor at Stanford University Law School and a senior fellow at RAND.
The study of conflicts between patients and their HMOs is the first of its kind and gives new insight into issues underlying the consumer backlash against managed care that has fueled efforts to legislate a Patients' Bill of Rights. Roughly 87 million Americans with private health insurance are enrolled in HMOs—about half of those with private insurance, according to 1999 statistics.
About half of all appeals dealt with health services that a patient had already received. More than three-fourths of these appeals were successful.
A key source of conflict between patients and their health plans is payment for emergency medical services. Laws in California and in other states require health insurance companies to pay for emergency room visits if "a reasonable person" would think that emergency services were necessary. But, patients and those determining whether or not a claim will be paid often interpret the standard differently. The study found the success rate of appeals was "particularly striking" when the appeals involved care already received in emergency rooms. Researchers said 95 percent of patients who filed such appeals with the two HMOs studied won their appeals.
In some appeals over denials of services that patients requested but had not yet received, patients wanted their HMO to pay for a medical service or treatment the HMO determined was not medically necessary.
In other cases—about 20 percent of all appeals—patients wanted their HMO to pay for care from a doctor that was outside of the network of the insurance plan. The success rate was lower for appeals of HMO decisions denying coverage for services that were requested but not received, but at one plan 70 percent of such appeals were successful.
Gresenz said: "Many of the payments made by HMOs in response to appeals for services already received are 'goodwill payments' in which the HMO decides to pay for a service even if it is not required to do so."
The researchers hypothesized that the HMOs may make goodwill payments because the cost of reviewing an appeal may sometimes be greater than the cost of paying for the contested service, or because the HMOs realize patients, or their providers, can make honest mistakes when trying to follow rules and procedures for obtaining care.
Although the study found that people insured by HMOs usually win when they appeal, Gresenz noted that "people denied coverage may refrain from appealing for several reasons—they may not know they can file appeals, they may just not understand the process, or they may think they have little chance of success."
The study was funded by the U.S. Department of Labor.
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