Most States Have Laws For MCO Independent Review

As the number of consumers receiving their health care through managed care plans has grown, disagreements over covered services have multiplied. In response to concerns about the impartiality of health plan benefit coverage decisions coupled with the failure of passage of a Patients' Bill of Rights at the federal level, 44 states and the District of Columbia have enacted independent review laws. Only six states have yet to enact such laws (Idaho, Mississippi, Nebraska, North Dakota, South Dakota, and Wyoming).

URAC (formerly the Utilization Review Accreditation Commission) defines independent review as “a process, independent of all affected parties, to determine if a health care service is medically necessary, medically appropriate, or investigational. Independent review typically, but not always, occurs after all appeal mechanisms available within the health benefits plan have been exhausted. Independent review is sometimes referred to as external review.”

The independent review process gives insureds an opportunity to have impartial expert medical professionals review disputes. The reviews are conducted by one expert or a panel of experts not affiliated with the health plan. Decisions are binding in most states. Approximately 50 percent of the coverage disputes taken to independent review result in a reversal of the previous denial.

While a Patients' Bill of Rights was considered by Congress in the 1990s, it never became law. Instead, most states moved ahead with legislation to allow consumers to appeal outside their health plans through external or independent review organizations (IROs). Thus, after exhausting internal appeals to the health plan, a patient or his/her physician may appeal to the state IRO in accordance with established procedures. State laws vary in how these appeal mechanisms are administered and funded and the extent to which they are prompt, binding, and truly independent.

Self-insured plans that are overseen by ERISA (the federal Employment Retirement Income Security Act) are the exception to this procedure, since they are exempt from all state regulation including that involving IROs. The appeal of denials under ERISA must be made within the plans; the only additional appeal beyond the internal review is a complaint filed with the U.S. Department of Labor Public Disclosure Office.

There seems to be a general lack of public awareness and education about the independent review process. Independent reviews have not achieved their potential of resolving coverage disputes because patients generally do not avail themselves of this right despite claims-denial letters advising them of its existence. The Kaiser Family Foundation and Consumers Union have put together a helpful guide for patients titled “A Consumer Guide to Handling Disputes With Your Employer or Private Health Plan, 2005 Update,” posted at<www.kff.og/consumerguide/7350.cfm>. The guide provides specific information on how to access the IROs in each state that has established an independent review process.

In September APA's Council on Healthcare Systems and Financing accepted recommendations from the Committee on Managed Care for three actions dealing with the external review process: (1) ask the district branches in the six states that do not have an external review process if they are aware of or need model legislation to establish these mechanisms in their states, (2) survey all district branches with external review organizations about their satisfaction with the appeals mechanisms, and (3) educate district branches and members about appeal mechanisms. ▪