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TESTIMONY

~ ~ R ~ I M E N T ~ HEALTH PENNSYLVANIA ... in pursuit of good health HOUSE OF REPRESENTATIVES

INSURANCE COMMITTEE

REP. NICHOLAS A. MICOZZE, CHAIRMAN

STACY MITCHELL DIRECTOR

BUREAU OF MANAGED CARE -

AUGUST 8,2000

Pennsylvania Department of Health

House hsurance Committee Hearing August 8,2000

Testimony

Good Afternoon Chairman Micozzie and members of the committee. My name is Stacy Mitchell and I am the Director of the Bureau of Managed Care in the Pennsylvania Department of Health. This morning I am going to give you an update on the Department's proposed managed care regulations and data concerning complaints and grievances since Act 68's passage.

Since we last met on December 17, the Department published proposed regulations on December 18,1999. Over 1420 comments fTom 77 commentators have been received on the proposed regulations. As you may recall, the Department's proposed regulations are very extensive because we are updating the HMO regulations as well as including Act 68 regulations into the same document. We have analyzed the comments and are considering making several changes to the proposed regulations accordingly. One of the areas of greatest concern to commentators was what appeared to be the absence of the fundamental fairness rules around complaints and grievances. In fact, the Department issued fundamental fairness rules in 1991 to all HMOs in the form of an administrative directive. These rules had neither the force nor the effect of law but were nevertheless generally followed by health plans. Some of these rules were made obsolete by Act 68, such as the time frame for reviews and the make up of the plan review committees. The Department is considering making changes to address certain areas of the fundamental fairness rules in the regulations such as advance notice of hearings, reasonable accommodation of hearing location and times, enrollee access to plan documents relevant to the case, requirements for the contents of committee decision letters, and information for enrollees concerning the next steps to take to continue the appeal process.

In addition to these changes, there are several areas of significance that have been identified and are currently being reviewed by the Department. We expect to resolve these issues by the end of this month at which time we will be releasing the regulations for review by the Governor's OMices of General Counsel, Budget and Policy. Our goal is to issue them to the House and Senate standing committee by November 1,2000 at the latest.

The next area I am going to address is interagency cooperation and enrollee complaints. As you know, both the Department of Health and the Insurance Department have jurisdiction over the subject of enrollee complaints. Our goal has been to work together to ensure that enrollees are not needlessly shuffled between agencies, but that reviews are handled by the appropriate agency in a seamless process. The Department of Health and the Insurance Department have made significant progress in coordinating activities concerning the review of complaints and addressing process and procedure issues. The Departments have created a single complaint form to be used by enrollees when submitting complaints for agency review. We are proposing that

plans include this form with all committee decision letters when the plan has completed its second level review and decided to continue to deny coverage. This form gives the enrollee clear notice of the 15-day deadline for filing and directions on how to file, while at the same time providing information necessary to identify the enrollee, the plan, and the issue so that we can determine the appropriate agency for the review and obtain the case file from the plan. A sample of this form is included in your materials.

In addition, we have developed a single database for both agencies to use to track complaints, mievances and review decisions. We call this svstem "GRACE" which stands for Grievance - &cording &d complaint Entry. The ~ e ~ a r t m k n t of Health has been using a prototype of GRACE since the beginning of 1999 to track complaints and grievances. Modifications have - been made to the system to make the database more robust inits tracking capabilities, and we are currently working with the Insurance Department to work out the details concerning their access to GRACE. We intend to make this .tracking system available to both agencies before the end of the summer. GRACE is an important tool that will significantly improve our efforts to process and track complaints on a timely basis. We will be able to identify trends relative to plan performance and reasons for complaints.

Before I share with you the Department's data, the last issue I would like to address is the distinction between complaints and grievances. Act 68 defines grievances as appeals that concern the medical necessity and appropriateness of a health care service and it goes on to give 3 clear examples. Complaints are defined as appeals that involve health care providers or a health plan's coverage, operations or management policies. Toward the end of last year, the Department received several third-level complaints that appeared to be centered on medical decisions and medical policy. In each case, the health plan classified the cases as a complaint because they viewed the issues to be contractual, an example being a contract exclusion for coverage of experimental or investigational procedures. However, upon closer examination, it became apparent that these cases should have been classified and processed as grievances based on the fact that the health plans made the decision to cover or deny the services based on clinical factors.

As an example of this, one case involved a request f o ~ coverage of External Enhanced Counter Pulsation (EECP) treatment for a cardiac patient with unstable angina and an extensive history of cardiac interventions including bypass surgery and multiple angioplasties. EECP involves placing the patient on a treatment table where the lower trunk is wrapped in a series of three compressive air cuffs that are inflated and deflated in synchronization with the patient's cardiac cycle. The health plan denied coverage using a contract exclusion that read "Any treatment, senice, procedure, facility, equipment, drug, device or supply (intervention) determined by (the plan.. .) to be experimentaUinvestigative". The underlying plan medical policy stated that "investigationaUexperimenta1 services are not generally accepted by the medical community as proven safe or effective for diagnosing or treatment. It is not accepted as standard medical treatment andlor federal or other government approval has not been granted." There was evidence in the case file that the FDA had approved EECP for use in patients with unstable angina as well as documentation from the Federal Health Care Financing Administration that approved Medicare payment for EECP when used for patients with unstable angina. The health plan denial in this case was clearly based on its medical policy and the Department reclassified

the complaint as a grievance and sent it out for external grievance review. The External Grievance Review decision overturned the plan's denial on the basis that EECP had been well studied and was accepted by the medical community as a proven therapeutic modality and not an experimental procedure.

Another typical example is coverage for skilled nursing services but not for custodial care. In these cases the enrollee and the enrollee's physician believe the level of service denied as custodial is really skilled and should be covered. And then there is always the cosmetic procedure issue. Cosmetic surgery is generally covered by managed care plans when associated with restoring a functional impairment due to injury, disease or congenital defect. Examples of this would be repair of cleft palate or the ligation of varicose veins. Determining when there is sufficient clinical information supporting functional impairment versus when there is not is a decision that must be made by an independent physician reviewer.

At the core of all of these issues is the application of medical policy and as such the only way to review these cases fairly and accurately is to send them to an external independent physician reviewer. In short, the Department has been reclassifying these types of complaints as grievances and sending them to a certified external grievance review organization as required by the Act 68. Because complaints are also sent to the Insurance Department, we discussed this issue with them and as a result, have developed guidelines both agencies will use to distinguish between complaints and grievances for uniform application. The guidelines first include the lack of a specific contract exclusion regardless of medical need. Beyond that we look for evidence of recognition, approval or coverage by regulatory agencies, large health plans and recognized provider associations which indicate the service is an appropriate treatment accepted by providers and payors. Any grievances identified by the Insurance Department are transferred to the Department of Health and are sent out for external review.

There were over 4,500 first-level grievances filed and reviewed by health plans statewide last year with 49% of the cases decided in favor of the enrollees. Preliminarily, our data suggests 12%, or just over 500 cases, were then appealed to the second level, with 43% of cases decided in favor of the enrollee. This early data suggests that only 1% of all grievances are appealed all the way to the third level of review.

Pursuant to Act 68, the Department has certified four entities to conduct independent external grievance reviews: KePro, Federal Hearings and Appeals, National Medical Review and PRO. The number of grievances reaching the third level increased significantly in the year 2000 over last year. In 1999, there were a total of 28 third level grievances filed with the Department. Just over seven months into 2000, there have been 44 cases filed so far. We believe this is due in part to the Department's reclassification of complaints to grievances and plans voluntarily reclassifying cases at earlier levels. When the Department reclassifies a complaint as a grievance, we notify the plan before the case is assigned to an external review entity. So far, the Department has reclassified 7 complaints as grievances and 6 of those cases were withdrawn and paid by the plan without the need for external review. Enclosed in your material are charts that further breakdown the activity in terms of the decision outcomes by health plan, decision outcomes by issue category. The last two charts include comprehensive detail of the decision outcomes and issue categories by the external review entities and also by plan.

Page 3

Of the 54 third level grievances reviewed to date, in 39% of the cases, the CRE overturned the health plan and in 61% of the cases the CRE upheld the health plan. Eight cases were brought by health care providers, all involving the level or amount of a senice. In 4 of the 8 provider appeals, the plan was overturned and in 1 of the cases, the plan approved coverage before external review was obtained.

With regard to complaint data, the Department has reviewed 396 third level complaints since January 1, 1999. Of these, 235 were processed under the pre-Act 68 procedure and 161 were processed according to the Act 68 process. The combined activity resulted in a 22% rate of plan overturns, and an 88% rate of plan upholds. The number of complaints (and the decisions) per health plan is included in your materials. The Insurance Department and the Health Department have also developed a list of 22 major categories of complaints to assist in trend analysis. A breakdown of the decisions by issue category is also included in your materials. The third and fourth charts in your materials breakdown the Act 68 complaints by issue by health plan according to the pre-Act process and the Act 68 activity to date.

As you review this data, I would caution that it is not adjusted by plan population and should not be used for plan performance comparisons.

At this time I would like to answer any questions you may have.

Pennsylvania Department of Health Bureau of Managed Care

Complaint Decisions by Plan 1999 Activity - PreAct 68 Procedure

Complaints by Plan 1/1/99 to date -Act 68


Complaint Decisions by lssue Category 1999 activity - PreAct 68 Procedure

Complaint Decisions by lssue Category 1/1/99 to date -Act 68


PreAct 68 Process 1999 Complaint Activity

irled Necessity &

Pennsylvania Department of Health Act 68 Complaint Activity per Plan 8/8/2000 Bureau of Managed Care 1/1/99 To Date


Grievance Decisions by Issue Category 1/7/99 To Date

Grievance Decisions by Plan 1/1/99 To Date


Grievance Activity by Plan 1/1/99 To Date

;rand Total


Grievance Activity By CRE 11111999 To Date

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