Consumer Protection in Private Health Insurance: The Role of Consumer Complaints

Oregon

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A. Jurisdiction and Responsibility for Consumer Complaints Systems

The organization of health insurance complaints management in Oregon is relatively straightforward, compared to most of the other states studied. The lead agency is the Department of Consumer and Business Services. Within the Department's Insurance Division, the Consumer Assistance Unit is directly responsible for consumer complaints.

Complaints considered outside the jurisdiction of the Insurance Division include those relating to:

1. the Oregon Health Plan which among other things extends Medicaid eligibility to all state residents with incomes below the federal poverty level, and is administered by the Office of Medical Assistance Programs within the Oregon Department of Human Services; and
2. Medicaid - any complaints are referred directly on to the Oregon Department of Human Services.

The Consumer Assistance Unit deals with complaints about self-funded trusts identically to complaints about health plans, because of the sizeable number and growth of trusts. It contacts the plan administrator, attempts to iron out the problem and generally has outcomes similar to other health plan complaints. While the Unit will often receive quite substantive responses from these plans, the response letters regularly refer to the fact that the entity is an ERISA plan which is under no regulatory obligation to the Unit. The Unit also educates the consumer on regulatory authority and informs them of their right to seek assistance from the U.S. Department of Labor.

The Unit also handles Medicare supplement complaints, although the number has decreased substantially over the last decade, following federal action to standardize benefit packages. Oregon has an extremely active Senior Health Insurance Assistance Benefits (SHIBA) program, with the educational and outreach activities undertaken by this program helping to reduce complaints.

Complaints about Medicare HMOs are handled in the same way as those involving commercial HMOs. All the Medicare plans are owned by companies domiciled in Oregon, allowing the Unit to have reasonable leverage over them.

Ombudsman

Oregon does not have an Ombudsman program for insurance complaints. However in 1987 the legislature mandated the establishment of a Consumer Advocacy section within the Insurance Division (Senate Bill 323, ORS 705.117). Complaints from individual consumers are dealt with by the Compliance Officers in the Unit, whereas the Consumer Advocate takes a broader systemic approach. The Consumer Advocate reports to the Manager, Consumer Protection Section, separately from the Consumer Assistance Unit.

The 1987 Annual Report for the Oregon Insurance Division notes that the primary purpose of the Consumer Advocacy Section is to administer the Division's public education program, develop legislative concepts and make recommendations for administrative action to resolve consumer issues. Regulators noted that the position description for the Consumer Advocate has recently shifted somewhat to be more collaborative working within the Insurance Division, including examining trends in complaints, monitoring the implementation of the Patient Protection Act 1997 (SB21) and working closely with the market conduct section. Another new focus is to undertake more consumer outreach.

Under Section 20 of the Patient Protection Act a Health Care Consumer Protection Advisory Committee was established as a rulemaking committee to implement the provisions of the Bill. This Committee has since disbanded.

B. Jurisdiction and Liaison with Health Plans

Unlike some states where health departments have a role in the quality regulation of HMOs, the Oregon Insurance Division has full jurisdiction over both traditional indemnity health plans and HMOs. The Oregon legislation uses the term "Health Care Service Contractors" for a HMO or other type of health insurance plan that contracts with doctors, hospitals and other medical providers to offer services on a prepaid basis.

One issue is the rapidly changing delivery system in Oregon which makes it difficult to keep up with newly emerging forms. Insurance plans are using "delegated entities" which involve paying capitation to an intermediary administrator of plans. These entities vary with some plans delegating functions such as utilization review, claims administration, customer service and referral management services. The degree of delegation varies by contractual arrangement. The Insurance Division position on delegated entities is that the authority is clear. While delegated entities may act as agents of the insurers, the insurer is bound to do business as regulated by the Division and is ultimately responsible for the performance of any functions it delegates or contracts out. In addition, the Division is undertaking an audit of delegated functions during current market conduct examinations.

Health insurers are required under the Patient Protection Act 1997 (PPA) to disclose certain information, including publicizing the existence of the Insurance Division. Most commonly, this is included in Member Handbooks, but some companies are also putting the information in their explanation of benefit reports. The PPA also puts an obligation on plans that where grievances are upheld, the plans are required to advise their members of their right to seek assistance from the Insurance Division.

The Insurance Division also interacts with the industry through formal channels including the Insurance Advisory Committee which meets quarterly to discuss issues across all lines of insurance. In addition to representatives from the insurance industry, agents, business/labor and consumer representatives participate in this forum.

C. Complaints Reports

Introduction

The Insurance Division produces (or disseminates) three different reports containing complaints data:

1. Consumer Guide to Oregon Insurance Complaints (Attachment 1);
2. Oregon Complaint Report Part II (Attachment 2); and
3. Insurance Company Annual Reports (Attachment 3).

In brief, the Consumer Guide to Oregon Insurance Complaints is the annual complaints "report card" providing comparative complaint indices and rankings, organized by line of business, including health insurance plans and Health Care Service Contractors (HCSCs). The Part II report provides a more detailed listing of all consumer complaints filed against every insurance company with the type and disposition of each complaint, but is not designed as a comparative report. The Insurance Company Annual Reports are prepared by health plans, as a requirement of the Patient Protection Act 1997, and include grievance statistics, utilization review summaries, quality assessment summaries and scope of network summaries. These reports are available on the Insurance Division's internet site for individual plans, with no summary report available across all plans.

For each of these reports this study describes the major features, analyzes the data, and assesses the usefulness of the report from both the perspective of consumer friendliness and its value in monitoring the implementation of patient protection legislation.

1. Consumer Guide to Oregon Insurance Complaints

Features

The major features of the Consumer Guide report are as follows.

Scope - the report covers consumer complaints filed against major insurers in six lines of business: automobile, homeowner, life, annuities, health and health care service contractors. Health Care Service Contractors (HCSCs) include HMOs or other types of health insurance plans that contract with doctors, hospitals and other medical providers to offer medical services on a pre-paid basis.

Coverage (size) - the report only includes companies or groups that earned at least $1m in premiums in Oregon or had at least 10 complaints. These exclusion criteria result in the report including data on 90% of health plan complaints and 92% of HCSC complaints.

Coverage (groups) - the report provides complaint indices and rankings for insurance groups, rather than individual companies. However it also includes raw data on complaints and premiums for individual companies, allowing consumers to check the performance of their particular company.

Complainants - While not directly specified, the report is based on consumer complaints as it has been the Division of Insurance policy since 1990 to only accept consumer complaints and not generally to accept provider complaints.

Complaint index - the index is based on complaints closed in a previous calendar year, with no distinction made between whether complaints are justified or not. The index denominator is the amount of premiums earned by the company. An index of 1.00 means that a group's share of all complaints is equal to its share of business, while an index of 3.00 means that a group has three times its share of complaints.

Other performance measures - the report also includes data on the actual number of complaints for both groups and individual companies. It includes a ranking of groups based on the complaint index where 1 is the highest performer.

Type of complaints - the report provides no breakdown of complaints according to categories such as rating, quality or policy administration.

Complaint categories - the Insurance Division uses the same complaint categories as the NAIC and was one of the first states to report to the NAIC Complaints Database System. This report does not, however, disaggregate complaints by reason for complaints.

Data analysis

Trends in total complaints - The last three annual reports with data for calendar years 1996, 1997 and 1998 were analyzed to produce Table 6.1 indicating trends in complaints. The two most significant findings are:

• the substantial increase in complaints against HCSC between 1997 and 1998. Regulators believe this is largely attributable to greater public awareness following the implementation of the Patient Protection Act. Regulators also indicated that this trend had continued in 1999 (for which published data are not yet available), with about a 68% increase in complaints between 1998 and 1999. A further reason suggested by regulators may be the growth of managed care market share during this time period.
• the higher complaint rate against traditional health plans than HMOs. It is interesting given the "managed care backlash" that the complaints rate against HMOs is less than half that against traditional plans. Regulators suggest that the lower complaints rate may indicate the integral nature of the appeals process for managed care plans. Regulators indicated that some of the large HMOs worked very hard to take care of dissatisfied consumers, resulting in lower complaints rate made to the Insurance Division. The absence of similar well-established complaints handling processes in traditional plans may account for the disparity in complaints rates. However as of 1998 Oregon law began requiring uniform grievance procedures for all types of health benefit plans.

Table 6.1: Trends In Complaints, Oregon, 1996-1998

Range of performance across plans - The complaints rates/$100,000,000 premium were calculated for HCSC for 1997 and 1998 (Figure 6.1). Within any year, there is substantial variation across plans in their complaints rate. There is also substantial variation between plans as to the growth rate in complaints; however this is not very meaningful without looking at the raw volume of complaints. For example, SureCare's 160% increase in the complaints rate is really about an increase in the number of actual complaints from 2 to 3.

Figure 6.1: Complaints Ratios for Health Care Service Contractors, Oregon, 1997 -1998

Assessment of the report

Broad aggregate snapshot - The annual report provides consumers with a snapshot of the comparative performance of health plans and HCSCs. However because it does not include data on the type of complaints (such as denial of care), it may be less valuable to consumers who want information on particular aspects of a plan's performance. It should be noted that this need is partly met, however, by the Oregon Complaint Report Part II which provides consumers with the option of obtaining detailed information on complaints type and disposition for individual companies.

Conceptual difficulty of an index - A complaints index may also be more difficult for some consumers to understand compared with a complaints rate, for example, based on the number of complaints/10,000 members. The absolute nature of an index makes it difficult for consumers to know their risk or probability of experiencing a complaint. Consumers have some familiarity with risks in other industries or situations, such as the risk of dying in a car crash compared with an airplane crash (expressed as say 1 person dying/40,000 miles).

No trend or industry performance data - Another problem with an index is that it provides no information on the relative performance of an industry or trends across time. While the complaints index allows consumers to compare the relative performance across health insurance groups, it provides no advice as to whether the overall industry complaints performance is at a level considered unacceptably high by some consumers.

Complexity of numerical rankings vs. average groupings - The use of rankings also makes the report overly quantitative and may encourage some consumers to place more importance on the relative rankings than is warranted (for example, is there a substantive difference between the insurers ranked 1-12 in the 1998 data, all of whom recorded zero complaints, but have been ranked according to their premium volume?). Regulators are aware of this problem and are considering removing the rankings on the basis of fairness. A numerical ranking is harder to understand for consumers than a simple grouping of insurers into "above average", "average" and "below average".

Future plans - Regulators are not currently considering including trend data in the Annual Consumer Guide. The Guide has been published since 1988 when it was an Interim Report. The other focus for the Consumer Advocate is working on developing a Company Profile report on the Web which could be done in a more timely fashion than the current consumer complaints report guide. This company profile report may contain: complaints statistics for the last three years, grievance data, NCQA indicators and financial information.

2. 1998 Oregon Complaint Report Part II

Features

Scope - This report comprises all complaints closed in Oregon in 1998 against all companies covering all lines of insurance business (e.g. property and casualty, automobile etc). The report provides a more detailed breakdown of the "reason" and the "disposition" of the complaint - information that is not included in the Consumer Guide to Oregon Insurance Complaints. The report includes a summary table for all closed complaints, summary tables for each insurance line (with the relevant line being Accident and Health) and tables for every individual company showing the complaint reason and disposition.

Data analysis

In 1998 there were 1190 complaints closed against accident and health insurance. The most common reasons for complaints included: denial of claim (28%), other claims handling (23%) and unsatisfactory settlement offer (11%). See Table 6.2 below for additional detail.

Compared to some other states such as Texas, Oregon has a relatively low share of "claims handling delays" complaints at 7.6% of all accident and health complaints. While the Oregon Unfair Claims Settlement Act does include reference to prompt payment, the low rate of these claims may reflect the fact that the Insurance Division since about 1990 has followed a policy of only accepting claims from patients rather than providers. The decision not to accept provider complaints reflects the Division's view that it would prefer not to have a major role as a debt collector for providers. It occurred in response to a 1990 initiative by a Californian private company which provided seminars to medical office bookkeeping staff advising them to routinely file complaints with state insurance departments and giving staff sample complaints letters. While the Insurance Division has, since 1990, advised providers to get consumers to make the complaint directly, it is considering relaxing this position somewhat given the emergence of new complaints issues arising solely between the provider and plan (e.g. the status of contracts).

Of the 334 denial of claim complaints, the disposition was as follows:

• 37% company position upheld;
• 16% additional payment;
• 13% claim settled;
• 8% other no relief;
• 7% claim reopened;
• 6% other relief;
• 5% coverage extended;
• 4% no jurisdiction;
• 3% question of fact; and
• 1% insufficient information.

Table 6.2: Reasons for Complaints, All Closed Accident and Health Complaints, Oregon, 1998

Assessment of the Report

Provides complaint categories - The report provides a more detailed breakdown relative to the Consumer Guide of complaint categories and disposition. It is of most use for people interested in examining the detail of individual companies.

Difficulty of company comparisons - The report is not designed to allow easy comparisons of types of complaints across individual plans. While one could theoretically examine issues such as "denial of claims" across individual plans, this is complicated by the fact that the report does not include premium volume data allowing the calculation of complaints rates. Also the report provides data on companies which may offer insurance across multiple lines of business. Thus while it may be reasonable to assume that all complaints about Regence HMO are to do with health insurance, the same cannot be implied for other companies providing multiple insurance products.

Patient protection implementation - As the complaint categories are quite broad (e.g. denial of claim) the report is of limited use in tracking patient protection legislation implementation.

3. Insurance Company Annual Reports (Grievance data)

Features

Scope - Under the Patient Protection Act 1997 insurers are required to file annual reports on grievance statistics, utilization review procedures, quality assessment summaries (managed health care plans only) and scope of network summaries (managed health care plans only). The first reports were submitted for the calendar year 1998.

Grievance categories - The Insurance Department requires that these reports provide breakdowns of grievances using the following nine categories:

• Access problems including timeliness and availability of a provider - grievances related to availability of primary care providers, contracted and non-contracted specialty services, time frames in accessing services at provider offices and other access problems;
• Referral issues - grievances related to referral denials outside physician organizations, within insurer contracted provider panels, and delay in processing of referral authorizations, referral problems affecting continuity of care, and other referral issues;
• Denials based on medical necessity - grievances related to the denial of services or treatment that are based on medical necessity including preauthorization and case management decisions;
• Denials based on other coverage laws, including denials based on the service being out of the plan, out of the area or not a covered benefit - grievances related to the denial of services that are not a covered benefit of the plan including health maintenance services received out of contracted provider network, coordination of benefits, and other third party recovery situations;
• Eligibility - grievances related to initial eligibility, monthly eligibility, COBRA and portability options and other eligibility situations including the timeliness of processing paperwork;
• Quality of clinical care - grievances related to care received from a provider of service, care not provided and other quality of plan service issues;
• Quality of plan services - grievances related to customer service provided by the plan within all levels including sub-contracted entities, i.e. pharmaceutical administrators, physician organizations, and vision administrators, and other quality of plan service issues;
• Emergency services - grievances related to all emergency situations including after hours care, urgency care settings, emergency rooms, ambulance or 911 services;
• Administrative issues and issues other than those otherwise listed in this section - grievances related to issues that do not fit into categories listed above.

Data Analysis

A summary analysis (Figures 6.2 & 6.3) has been prepared based on downloading the Grievance and Appeal 1998 Annual Summary reports for the five largest Health Care Service Contractors reporting (comprising 80% of the premium volume) - Kaiser Permanente, Regence HMO Oregon, Regence BCBS, Providence Health Plan and Pacificare.

Figure 6.2: Types of Grievances, Five Largest Health Care Service Contractors, Oregon, 1998

Of interest, only 39% of grievances were reversed which is lower than the general rule of about 50% applying to external review processes. However there were wide disparities in reversal rate according to the type of grievance. Grievances most likely to be reversed in favor of the consumer were those concerning emergency services (71%), while those least likely to be reversed included access problems (1%), quality of care (4%) and quality of plan services (4%). The most common grievance, "other coverage/not covered" which accounted for 45% of all grievances was reversed in 47% of cases, which is similar to the related grievance category of "medical necessity", reversed in 41% of cases.

Figure 6.3: Share of Grievances Reversed in Favor of Consumer, Five Largest Health Care Service Contractors, Oregon, 1998

Assessment of the Report

Data reliability - The Insurance Division has issued Bulletins (Attachment 4) as to the required format for grievance reports. However regulators believe that it is too early to form a view as to the quality of data submitted by managed care plans under this requirement. The Division is examining the grievance data and its categorization as part of the current market conduct audit, which is targeting domiciled companies. The first stage involved targeting policies and procedures to verify that companies could comply with the reporting and disclosure requirements of the PPA, with the second stage involving auditing actual reporting compliance.

Consumer friendliness - Regulations require that insurance companies submit annual reports in a flexible electronic format, to the extent that the insurer engages in activities including utilization review, quality assessment practices or scope of network monitoring procedures. This regulatory flexibility means that the Annual Reports are somewhat cumbersome to download, with some of these reports being scanned in electronically and containing handwritten rather than typed information. It is currently a time consuming process to compare the performance of insurance companies from the Insurance Division's web site as each of the four measures (grievances, utilization review, quality assessment summaries and scope of network must be downloaded separately for each company.

Monitoring patient protection implementation - Regulators are relying heavily on market conduct examinations to monitor the compliance with the Patient Protection Act since domiciled insurance companies provide coverage for the majority of the population. The market conduct examinations will demonstrate whether or not insurance companies have the required policy and procedures in place. The true compliance will be determined by whether the insurance companies are actually following the regulations by performing procedure test audits.

Regulators believe that the grievance data, as distinct from complaints received directly by the Unit, will be of value in monitoring the implementation of patient protection legislation. The Consumer Advocate has begun examining these data, although as noted previously it is too early to say much about the quality of the data reported by plans. One example which the Consumer Advocate is examining is grievances relating to emergency services. Early analysis indicates that a high number of such grievances are being reversed, suggesting that the plans may not be properly applying the prudent person standards. However it will also be necessary to examine trends in grievance management, with only 1998 calendar year data currently available.

Future plans - The Division is considering publishing the grievance data in a comparative report. It has not been decided at this stage whether grievance data should be included in the existing Consumer Guide to Oregon Insurance Complaints or whether it should be combined with other data such as NCQA indicators, given that it does include information on quality of care issues.

D. Public education activities

Publications

The Insurance Division produces the following material relevant to health insurance complaints:

Consumer Guide to Oregon Insurance Complaints - This is the most popular of the complaints publications. In the three weeks since the report covering 1998 complaints became available, the Division mailed out 1,800 copies. The Unit receives written and phone requests with publicity also generated through the SHIBA program. The demand for hard copy reports may be decreasing slightly as more people access the report electronically. However it is not possible to measure the number of Internet hits to the specific Guide page.

Oregon Complaint Report Part II - While this report (costing $25) is distributed to all major libraries in the state, it does not generate substantial demand (possibly 25 requests annually). It appears to be most popular with insurance companies and other groups interested in monitoring the relative performance of insurance plans including differences in the disposition rates of complaints. It does not appear to be requested by individual consumers.

Oregon Insurance Division - Protecting the Insurance Buying Public - This brochure lists the general services provided by the Division and contact details.

Free Help with Medicare and Other Health Insurance Brochure - This brochure explains the SHIBA program, its services and provides sponsor contacts.

Demand for Publications

The Insurance Division provided the following estimate of the 1999 publication distribution based on inventory tracking (as at 11 February 2000):

• Protecting the Insurance Buying Public - 5,250 copies distributed;
• Consumer Guide to Oregon Insurance Complaints - 2,410;
• Consumer Guide to Medicare Supplement Insurance - 14,200;
• Free Help with Medicare and Other Insurance - 15,000;
• Your Medicare Health Plan Choices - 7,300; and
• Long Term Care Insurance - 6,000.

Outreach

The Insurance Division does not have a Speakers Bureau, but this responsibility falls within the Consumer Advocate position for health insurance. While a more active public speaking function is under consideration, the current focus is on developing more hard copy consumer brochures.

Media

The Commissioner is tending to take a more proactive position. The Division issues press releases for almost all significant actions taken against insurance companies to promote public awareness. The Consumer Guide to Oregon Insurance Complaints is also heavily publicized in the media.

E. Agency Performance Measures

Staffing

The Consumer Assistance Unit (which does not include the Consumer Advocate position) has nine staff, including the Manager. This represents a 50% increase, up from 6 staff, in 1987. Of the staff, three are employed full-time on life & health complaints, 5 work on property and casualty complaints, while the Manager works across all insurance lines.

Financial Savings to Consumers

The Annual Report noted that in 1998 the Division was responsible for the recovery of $6.9 million in claims for consumers across all insurance lines. However this performance measure is not promoted strongly as there are various definitional issues.

External Audit

The Unit has not been subject to external audit. The Oregon Insurance Code gives the Commissioner overall responsibility for protecting insurance consumers, with the legislation not specifying a requirement for a consumer protection unit per se.

Consumer Satisfaction Surveys

The Unit has not undertaken consumer satisfaction surveys on a regular basis. One previous postcard survey was undertaken with a low response rate, although good outcomes. The Unit largely relies on internal mechanisms of providing explanations to consumers if their complaint cannot be resolved and why.