Six New York HMOs covering 7.5 million people agreed last week to spell out explanations for enrollees when treatments are deemed medically unnecessary. The agreement was part of a settlement with state Attorney General Eliot Spitzer. Spitzer's office said similar agreements with other HMOs are in the works.
Spitzer said the collective agreement was the first of its kind in the nation between the managed-care industry and a state attorney general's office. Other states may use the strategy to address patient complaints about their HMOs. In late September, the Minnesota attorney general's office reached an agreement with Allina Health System and its recently spun-off health plan, Medica, but that settlement dealt with the pair's corporate business practices (Oct. 1, p. 14). Still, both actions highlight the greater oversight role that state attorneys general are playing regarding health insurers as federal patient-protection legislation languishes on Capitol Hill.
Although Spitzer's office characterized the agreement as a landmark, Susan Pisano, spokeswoman for the American Association of Health Plans, said it reflects a voluntary trend already under way.
For example, plans seeking accreditation by the National Committee for Quality Assurance are required to have explanations accompany any denials of care, she said.
"It seems to me that this investigation was being conducted at a time when practice and regulation have been changing," Pisano said. "It's part of a larger trend of transparency. I think there's a lot of evidence of the health plan process being more open."
The agreement-intended to help consumers prepare for possible appeals of coverage decisions-stems from a two-year probe of HMO practices by the attorney general's office after a steady stream of consumer complaints. In any given year, the office's Health Care Bureau receives 1,250 complaints about utilization review denials, said Christine Pritchard, a spokeswoman for Spitzer's office.
State law requires health plans to disclose their clinical rationale for denying coverage, but in the past the plans have done so only in general terms, Spitzer's office said. The new agreement also requires the HMOs to send denial notices to doctors and hospitals so they, too, can exercise their right to appeal.
The six HMOs are Aetna U.S. Healthcare/Prudential Health Plan of Hartford, Conn.; Excellus Health Plans, Rochester, N.Y.; Group Health, New York; HIP Health Plan of New York; Oxford Health Plans, Trumbull, Conn.; and Vytra Health Plans of Long Island, N.Y. They will contribute $1 million to cover investigation costs.
In a written statement, the New York Health Plan Association noted that the investigation focused on 2-year-old cases and said the settlement "reaffirms existing practice." The agreement "builds on an ongoing commitment of plans to providing consumers with information to help them make appropriate healthcare decisions," the trade group said. It also said the attorney general's findings related only to technical issues and never raised questions regarding inappropriate denials or quality of care.
The investigation examined how HMOs authorized or denied care from Jan. 1, 1999, through June 30, 1999. Plans used generic phrases to explain decisions to deny coverage for extended hospital stays and for recommended treatments for anxiety, depression and substance abuse. Frequently, the only reason given for denying an extra day's hospital care to critically ill post-surgical patients was that "care could have been provided in an alternate setting," the attorney general's office said.
In other situations, plans told doctors and hospitals treating addicted and suicidal patients that psychiatric hospital care would no longer be covered because "the proposed service or treatment was not medically necessary," the office said.
Despite consumer advocates' concerns, investigators found that qualified medical personnel, not accountants or business office workers, were making coverage decisions.
Spitzer's office will monitor the HMOs until January 2004 to ensure compliance. The Health Care Bureau can extend the monitoring an additional year if necessary.