Indemnity Health Plans:

Key Features of Consumer Complaint and Appeal Systems

HEHS-98-189: Published: Jun 30, 1998. Publicly Released: Jul 31, 1998.

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Bernice Steinhardt
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Office of Public Affairs
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Pursuant to a congressional request, GAO reviewed the key features that are important to indemnity plans' complaint and appeal systems, focusing on: (1) the elements that are considered important to a system for processing indemnity plan member complaints and appeals; (2) the extent to which indemnity plan complaint and appeal systems contain these elements; and (3) how indemnity plans compare with health maintenance organizations (HMO) in the extent to which their complaint and appeal systems incorporate recommended elements.

GAO noted that: (1) guidelines issued by the regulatory and consumer advocacy groups in GAO's study identified nine elements as important to indemnity plan complaint and appeal systems, falling into three general categories: (a) timeliness; (b) integrity of the decisionmaking process; and (c) communication with members; (2) nearly all the recommended elements were present in the policies of at least half of the plans in GAO's study; (3) five elements--explicit time periods for resolving member appeals, appeal decisions made by medical professionals with appropriate expertise, provision of information on how to register a complaint or appeal, plan acceptance of oral complaints, and inclusion of appeal rights in notice of denial of coverage or payment--were included in the policies of a large majority of indemnity plans in GAO's study; (4) however, the remaining four elements--expedited review of appeals in urgent situations, appeal decisions made by individuals not involved in the initial decision, plan acceptance of oral appeals, and written notice of appeal denials including further appeal rights, were present in the policies of only two-thirds or fewer of the plans reporting; (5) taken together, a smaller proportion of indemnity plans in GAO's study incorporated recommended elements in their complaint and appeal systems than did HMOs in GAO's previous study; and (6) when compared with HMOs operated by the same carrier, indemnity plans generally incorporated about the same proportion of recommended elements as did HMOs.

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