-.  .. 
Department  of Health  and Human  Services 
OFFICE OF 
INSPECTOR GENERAL 
MEDICARE  HMO  APPEAL  AND 
GRIEVANCE  PROCESSES 
Beneficiaries  Understanding  OFFICE  OF  INSPE~OR  GENERAL 
The  mission  of the  Office  of Inspector  General  (OIG),  as mandated  by Public  Law  95-452,

is to  protect  the  integrity  of the  Department  of Health  and  Human  Semites  programs

as well  as  the  health  and  welfare  of beneficiaries  served  by  them.  This  statutory

mission  is carried  out  through  a nationwide  program  of audits,  investigations,

inspections,  sanctions,  and  fraud  alerts.  The  Inspector  General  informs  the  Secretary

of program  and  management  problems  and  recommends  legislative,  regulatory,  and

operational  approaches  to  correct  them.

Office  of  Evaluation  and  Inspections 
The  Office  of Evaluation  and  Inspections  (OEI)  is one  of several  components  of the

Office  of  Inspector  General.  It  conducts  short-term  management  and  program

evaluations  (called  inspections)  that  focus  on  issues  of concern  to  the  Department,  the

Congress,  and  the  public.  The  inspection  reports  provide findings and

recommendations  on  the  efficiency,  vulnerability,  and  effectiveness  of departmental

programs.

The  OEIS  Kansas  City  Regional  Office  prepared  this  report  under  the  direction  of

James  H.  Wolf,  Regional  Inspector  General.  Principal  OEI  staff  included:

KANSASCITY REGION  HEADCNJARTERS

Linda  Paddock,  Project  Leader  Stuart  Wright,  Program  Specialist

Jennifer  Collins,  Program  Analyst  Barbara  Tedesco,  Mathematical

Hugh  Owens,  Program  Analyst  Statistician

Brian  Ritchie,  Program  Analyst 
DALLASREGION 
Judith  Tyler,  Program  Analyst 
To  obtain  a copy  of this  report,  call  the  Kansas  City  Regional  Office  at  (816)426-3697.  Department  of Health  and Human  Services 
OFFICE OF

INSPECTOR GENERAL

MEDICARE  HMO  APPEAL  AND 
GRIEVANCE  PROCESSES 
Beneficiaries  Understanding 
p$ sERVICq 
&+  ~q 
+ 
GIBBS  BROWN 
$  JUNE 
2 Inspector  General
2 
% 
%@-+$  DECEMBER 1996 
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> 0EI-07-96-O0281  EXECUTIVE  SUMMARY

PURPOSE 
To  determine  whether  Medicare  beneficiaries  enrolled  in risk-based  Health 
Maintenance  Organizations  (HMOS)  understand  their  appeal  and  grievance  rights. 
BACKGROUND 
Beneficiaries  mayjoin  arisk  HMOthrough  the  Medicare  program.  Fora 
predetermined  monthly  amount,  theHMO  provides  Medicare- covered  medically 
necessa~  services.  Thegoals  ofthis  coverage  are  to  provide  coordinated  medical 
care,  offer  comprehensive  benefits,  and  contain  costs  by using  the  most  cost-efficient 
methods  of treatment  and  preventing  unnecessary  care.  As  a protection  for 
beneficiaries,  the  Social  Security  Act  requires  Medicare  HMOS  to  have  two  separate 
and  distinct  processes,  an  appeal  and  a grievance  process,  to  handle  beneficiary 
complaints. 
In  order  to  protect  beneficiaries  from  inappropriate  denials  of  services  or  payment, 
the  Act  requires  that  Medicare  HMOS  establish  an  appeal  process  to  handle  these 
types  of  complaints.  If an  enrollee  disagrees  with  the  HMO  decision  to  deny  services 
or  payment,  the  enrollee  has  60 days  to  file  a request  for  reconsideration.  If the 
HMOs  decision  is against  the  beneficiary  in whole  or  in part,  the  HMO  is required  to 
automatically  send  the  case  to  the  Network  Design  Group  within  60  days  for  an 
independent  Federal  review. 
All  other  complaints  such  as those  relating  to  quality  of care  are  processed  under  a 
separate  internal  grievance  procedure.  Under  this  procedure,  there  are  no  specific 
time  frames  or  preordained  levels  of review  established  by law.  However,  HMOS  are 
responsible  for  timely  transmission,  an  investigation,  decision,  and  notification  of the 
results. 
We  collected  information  about  beneficiaries  experiences  with  appeal  and  grievance 
rights  through  a mail  sumey  of 222  randomly  selected  enrollees  and  204  disenrollees. 
We  supplemented  the  mail  survey  with  telephone  intemiews  of  17 beneficiaries  who 
indicated  that  they  had  filed  a complaint. 
FINDINGS 
Eighty-sixpercentof respondentswereknowledgeableabouttheirgeneralrightto makea 
formalcomphzintabouttheiiHMOISmedicalcareorservices. 
Most  respondents  stated  that  they  know  they  have  the  right  to  complain  about  their 
plans  medical  care  or  services.  Sixty-six  percent  of respondents  stated  that  they  were 
informed  of their  appeal  and  grievance  rights  when  they  first  joined  the  HMO. 
i  IIoweve~ beneficimieswerelessawareof specificinstanceson whichtheymightexemise 
theirap~al andgrievancen!ghm 
The  level  of beneficiaries  understanding  of specific  appeal  and  grievance  situations 
was  lower  than  their  general  knowledge.  For  example,  59 percent  of enrollees  were 
aware  they  could  complain  about  the  HMO  refusing  to  pay  for  emergency  care  and 
only  49 percent  of enrollees  knew  they  could  appeal  an  early  discharge  from  the 
hospital.  Also,  disenrollees  were  significantly  less  informed  than  enrollees  (e.g., 
enrollees  were  twice  as  likely  as disenrollees  to  be  knowledgeable  of their  right  to 
appeal  a non-hospital  admission  or  early  hospital  discharge,  and  three  times  as 
knowledgeable  of their  ability  to  contest  the  plans  refusal  to  pay  a doctor  or  hospital 
for  emergency  care  for  which  they  were  billed). 
Additionally,  45 percent  of the  respondents  did  not  know,  or  were  not  sure  that 
certain  complaints  are  classified  as  appeals  while  others  are  classified  as  grievances. 
The  distinction  between  appeals  and  grievances  is important  to  beneficiaries  because 
appeal  cases  (denials  of services  or  payment)  are  subject  to  independent  Federal 
review  for  appropriateness  of the  HMO  decision  while  grievances  (such  as  quality  of 
care  issues)  are  only  subject  to  HMO  internal  reviews. 
Most of the beneficiarieswho consideredtheyweredeniedsmces orpaymentwerenot 
giveninitialdeterminationnotices. 
Thirty-four  of the  41 respondents  who  believed  their  primary  doctor  refused  to  refer 
them  to  a specialist  indicated  they  did  not  receive  a denial  letter  (called  an  initial 
determination  notice),  as required  by Federal  regulations.  Also,  only  21  out  of 39 
respondents  who  reported  their  plan  refused  to  pay  a claim  for  services  indicated 
receiving  a letter  furnishing  their  appeal  rights. 
V&ryfew respondentreported@kg  aformalcompkzint.AU of thesecomplaintswere 
resolvedat the initialdisputekvel 
Only  26 respondents  reported  having  filed  complaints.  Thirteen  reported  receiving  a 
favorable  resolution,  seven  received  unfavorable  decisions,  five were  not  sure  if their 
decision  was  favorable,  and  one  beneficiary  did  not  respond.  All  complaints  were 
resolved  at  the  initial  HMO  dispute  level,  or  simply  dropped  by  the  beneficiary.  No 
one  requested  further  review  of their  denied  complaints. 
RECOMMENDATIONS 
Health  Care  Financing  Administrations  (HCFA)  Office  of Managed  Care  is making 
substantial  efforts  to  improve  the  HMO  appeal  and  grievance  processes.  It has 
recently  created  a work  group  - Managed  Care  Appeals  and  Grievance  Initiative  -
organized  to  make  program  improvements  in these  functions.  Appeals  language  has 
been  standardized  in lock  in and  Evidence  of Coverage  notices,  which  are  sent  to  all 
beneficiaries  when  they  enroll  in an  HMO.  In  addition,  appeal  and  grievance 
ii  information  was  included  in the  1996  Medicare  Handbook,  and  expanded  information 
on  appeals  was  incorporated  into  HCFAS  Managed  Care  Directory.  Currently  HCFA 
is working  with  HMOS  to  develop  national  guidelines  for  marketing  materials. 
HCFA  also  announced  plans  to  produce  a Managed  Care  Appeals  Publication,  an 
HMO  Comparability  Chart,  a national  data  base  of managed  care  Questions  and 
Answers,  and  a Managed  Care  Fraud  and  Abuse  Publication.  They  are  continuing  to 
educate  outside  entities,  including  advocacy  groups,  by providing  more  information  on 
managed  care  matters,  as well  as highlighting  beneficiary  rights  and  protections  in  a 
managed  care  setting.  While  HCFAS  efforts  should  continue  to  have  favorable 
impact,  we  believe  there  is still  room  for  improvement. 
To  receive  full  benefits  of the  appeal  and  grievance  protections,  beneficiaries  need  to 
be  aware  of the  processes,  understand  how  the  processes  work,  and  when  to  use  them. 
In  that  vein,  HCFA  should 
  activeZymonitorHMOS to ensurebenqjkiariesareissuedwrittendeterminations, 
includingappal rights,and emphasizethe needfor benejichzri~to cornnu.ucuate 
clearlyany disagreementthq have withHMO dkkions to &my semcesor payment 
for services. This  can  be  accomplished  by: 
- continuing  HCFAS  extensive  efforts  to  make  beneficiaries  aware  of  appeal 
and  grievance  provisions  and  of the  need  to  communicate  clearly  any 
disagreement  they  may  have  with  a physicians  decision  to  deny  a requested 
service  and 
- emphasizing  to  HMOS  the  requirements  to  make  beneficiaries  aware  of 
appeal  and  grievance  rights  and  to  provide  written  initial  determination 
notices  when  the  patient  communicates  disagreement  with  a decision  to  deny 
a requested  service  or  payment. 
Federal  regulations  are  intended  to  protect  the  rights  of beneficiaries  to  appeal 
the  denial  of services  by HMOS,  while  maintaining  the  ability  of the  physician 
to  treat  the  patient  in line  with  his  or  her  medical  judgement.  It  is not  always 
possible  at  the  time  of service  for  the  physician  to  know  whether  a beneficiary 
believes  that  a service  has  been  denied  unless  the  beneficiary  specifically 
communicates  this  to  the  physician.  Therefore,  future  HMO  marketing, 
enrollment,  and  awareness  sessions  with  Medicare  beneficiaries  and  physicians 
should  emphasize  the  importance  of clear  and  open  communication. 
  workwithHiUOsto establishstandardizedappealand~evance language 
requirementsin rnarketingkmrollmemntaterialandoperatingprocedures. 
- In  marketing  materials,  provide  up  front  information  to  beneficiaries  on  their 
rights  under  the  appeal  and  grievance  processes  and 
... 
111  - In  enrollment  materials,  more  thoroughly  educate  beneficiaries  about  their 
specific  rights  under  the  appeal  and  grievance  processes,  including 
--a  detailed  overview  of the  types  of services,  lack  of services,  or 
situations  which  may  be  appealed  or  grieved. 
--when  and  under  what  circumstances  further  levels  of  appeal  are 
permitted. 
--clarification  that  only  appeals  and  not  grievances,  are  subject  to 
independent  Federal  review. 
--the  difference  between  the  definitions  of emergency  and  urgent  care  at 
the  time  medical  semices  are  being  sought. 
AGENCY COMMENTS 
We  solicited  and  received  comments  on  our  draft  report  from  HCFA.  They  agreed 
with  the  conclusion  of  our  reports  that  improvements  are  needed  and  indicated  that 
they  are  working  to  implement  a number  of our  recommendations.  We  are  pleased 
that  HCFA  agrees  that  improvements  are  needed  in the  appeal  and  grievance 
processes,  and  we  recognize  that  changes  are  in the  process  of being  made  through 
the  Medicare  Appeals  and  Grievance  Initiative  (MAGI).  However,  because  HCFAS 
response  does  not  specifically  address  the  recommendations  contained  in  our  reports, 
we  are  unsure  whether  the  problems  identified  in our  report  will  be  fully  addressed 
through  this  initiative.  As  a result,  it will be  important  for  HCFA  to  include  in their 
response  to  the  final  report  an  action  plan  that  specifically  addresses  each 
recommendation. 
The  full  text  of HCFAS  comments  is included  as  an  appendix  to  this  report, 
iv  TABLE  OF  CONTENTS

PAGE 
EXECUTIVE SUMMARY

RELATED REPORIS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...1

INTRODU(XION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

FINDINGS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

  Most  Respondents  Knowledgeable  About  General  Rights  . . . . . . . . . . . . . . . . .  5

 
Beneficiaries  Less  Aware  of Specific  Issues  . . . . . . . . . . . . . . . . . . . . . . . . . . ..5

  Initial  Determination  Notices  Not  Received  . . . . . . . . . . . . . . . . . . . . . . . . . . .  7


Very  FewReport  Filing  A  Formal  Complaint  . . . . . . . . . . . . . . . . . . . . . . . . ..9

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...11

Agency Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...13

APPENDICES

k  Analysis  of Respondents  vs. Non-respondents  . . . . . . . . . . . . . . . . . . . . . . . .  A-1

B:  Estimates  and  Confidence  Intervals  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..B-l

C:  HCFAResponse  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..C-1
 This  is one  of a series  of four  reports  relating  to 
Medicare  risk  HMO  appeal  and  grievance  processes. 
The  four  reports  are: 
Medicare  HMO  Appeal  and  Grievance  Processes: 
Overview,  (OEI-07-94-O0280), 
Medicare  HMO  Appeal  and  Grievance  Processes: 
Beneficiaries  Understanding,  (OEI-07-94-00281), 
Medicare  HMO  Appeal  and  Grievance  Processes: 
Survey  of HMOS,  (OEI-07-94-O0282), 
Medicare  HMO  Appeal  and  Grievance  Processes: 
Review  of  Cases,  (OEI-07-94-00283), 
1
 INTRODUCTION

PURPOSE 
To  determine  whether  Medicare  beneficiaries  enrolled  in risk-based  Health 
Maintenance  Organizations  (HMOs)  understand  their  appeal  and  grievance  rights. 
BACKGROUND 
Le@diUion 
Sections  1833and  18760fthe  Social  Security  Act  specify  the  requirements  that  HMOs

must  meet  in orderto  enter  into  a contract  with  the  Health  Care  Financing

Administration  (HCFA)to  furnish  Medicare  covered  sefices  to  beneficiaries.  The

goals  of HMO  coverage  are  to  provide  access  to  medical  care  while  containing  costs

by using  the  most  cost-efficient  methods  of treatment  and  preventing  unnecessary  care.

In  addition,  HMOS  can  reduce  the  medical  management  complexities  experienced  by

elderly  patients  with  multiple  chronic  conditions,  the  paperwork  burden  of  a

fee  for  service  system,  and  financial  barriers  to  obtaining  preventive  and  medically

necessary  health  care.

Unlike  traditional  fee  for  service,  HMOS  are  designed  to  coordinate  care  through  a

primary  care  provider,  offer  comprehensive  benefits,  and  reduce  or  contain  the  costs

of medical  treatment.  They  operate  under  a fixed  annual  budget,  based  on  the

prepaid  premiums  by patients.  Except  for  fees  of a few  dollars  for  each  doctors  visit

or  prescription,  the  premium  is to  cover  all  of a patients  medical  needs  which  include

everything  from  checkups  to  open-heart  surgery.

Risk and Cost Plans 
There  are  three  types  of Medicare  HMO  plans  included  in the  Act.  Generally,  the 
differences  involve  the  method  used  by HCFA  to  reimburse  the  HMO  for  providing 
semices  and  delivering  medical  services  to  beneficiaries.  The  three  types  of  contracts 
are  risk-based,  cost-based,  and  Health  Care  Prepayment  Plan  (or  HCPP)  HMOS.  The 
latter  two  types  are  paid  on  a reasonable  cost  basis,  wherein  any  differences  in  actual 
costs  and  interim  payments  are  reconciled  and  adjusted  with  HCFA  at  the  end  of the 
year.  Risk-based  are  reimbursed  on  a prepaid  cavitation  basis  with  no  retrospective 
adjustment.  While  cost-based  and  HCPP  HMOS  give  beneficiaries  a choice  of 
physicians  that  they  see,  a risk-based  plan  requires  enrollees  to  be  locked  into  only 
its  contracted  physicians  unless  emergency  or  urgent  care  is needed. 
As  of March  1, 1996,  there  were  197 risk-based  HMO  plans,  27  cost-based  plans,  and 
54 HCPPS  nationwide,  which  accounted  for  almost  4 million  Medicare  HMO  enrollees, 
or  10 percent  of the  total  Medicare  population.  While  Medicare  enrollment  in 
managed  care  has  increased  67 percent  since  1993,  HCFA  reports  that  enrollment  in 
risk-based  plans  has  grown  105 percent. 
2
 Ap~als  & GrievanceBocesses 
One  of the  most  effective  ways  HMOS  contain  costs  is by using  family  practitioners  or 
internists  as  gatekeepers  to  control  a patients  access  to  services.  The  patient 
chooses  one  doctor  as  a primary  care  physician;  from  then  on  that  doctor  seines  as 
first  arbiter  for  any  treatment.  The  primary  care  physician  provides  medical 
examinations  and  treatments,  and  serves  as  a gatekeeper  to  specialty  care,  except  in 
emergency  and  urgent  care  situations. 
Because  the  payment  mechanism  of HMOS  provides  a strong  incentive  to  manage 
utilization  of  enrollee  medical  services  (including  the  institution  of  a physician 
gatekeeper  and  use  of medical  practice  guidelines),  the  Act  requires  that  HMOS 
establish  an  appeal  process  to  handle  disputes  Medicare  enrollees  have  involving  a 
denial  of or  payment  for  services  they  believe  should  be  covered  by the  HMO.  Other 
kinds  of complaints  such  as quality  of care  received  are  handled  under  a grievance 
procedure.  Prior  to  May  1995,  only  risk  and  cost-based  plans  were  required  to  have 
these  processes.  HCPPS  now  must  also  comply  with  these  requirements. 
HCFA  directives  require  HMOS  to  inform  beneficiaries  of their  appeal/grievance 
rights  at  enrollment,  in member  handbooks,  and  annually  through  a newsletter  or 
other  communication. 
Appeals  m-ocess  - According  to  42 CFR,  Sections  417.600-638,  an  appeal  is any 
dispute  involving  a denial  of services  or  ayment  for  services  made  by the  HMO. 
P 
Federal  regulations  and  the  HMO/CMP  Manual  require  a five-step  process  and  time 
limits  for  each  step.  HMOS  must  make  an  initial  determination  upon  receiving  an 
enrollees  request  for  services  or  payment  for  services  within  established  time  frames 
(24  days  if the  case  is complete  and  no  later  than  60 days  if development  is needed). 
Each  plan  is required  to  make  a decision  on  information  they  currently  have  within 
this  time  frame.  If the  decision  is to  deny  services  or  payment,  the  enrollee  has  60 
days  from  the  date  of the  initial  determination  to  file  a request  for  reconsideration  in 
writing  unless  good  cause  can  be  shown  by the  beneficiary  for  the  delay.  The  HMO 
then  has  60 days  to  make  a reconsideration  decision. 
If the  HMOs  reconsideration  decision  is against  the  beneficiary  in whole  or  in part, 
the  HMO  is required  to  automatically  forward  the  case  to  HCFA  for  an  independent 
review  to  determine  if the  decision  is appropriate.  Due  to  the  increasing  numbers  of 
appeal  cases,  HCFA  contracted  with  Network  Design  Group  (NDG)  in January  of 
1989  to  fulfill  this  function.  The  number  of appeals  reviewed  by  NDG  has  varied  in 
the  last  3 years  from  a high  in  1993  of 3,806,  to  2,945  in  1994,  and  3,691  in  1995. 
Beneficiaries  whose  cases  are  not  resolved  fully  in their  favor  at  the  NDG  level  can 
request  a hearing  before  an  Administrative  Law  Judge  (AU)  if the  disputed  amount  is 
at  least  $100.  After  this  level,  any  party  (including  the  HMO)  may  request  a review  by 
the  Department  of Appeals  Board  if there  is dissatisfaction  with  the  ALJs  decision  or 
dismissal.  The  final  recourse  in the  appeals  process  is a Federal  court  review  if the 
~ Competitive Medical Plan 
3
 Board  denies  the  partys  request  for  review,  and  the  amount  in  controversy  is $1,000

or  more.

Grievance  process  - Grievances  are  any  complaints  about  a Medicare  enrollees

experience  with  the  health  plan  and/or  its  providers,  excluding  determinations

involving  payment  for  semices  or  denial  of services  (which  are  subject  to  the  appeals

process).  Examples  of grievable  issues  include  quality  of care,  physician  behavior,

involuntary  disenrollment  concerns,  and  waiting  times  for  services.

Guidance  for  processing  grievances  is found  in 42 CFR,  Sections  417.600  and  417.606,

and  in Section  2411  of the  HMO/CMP  Manual.  The  guidelines  do  not  provide  for

time  frames  or  specify  levels  of review,  but  call  for  timely  transmission,  an

investigation,  decision,  and  notification  of the  results.  While  appeal  cases  that  are  not

resolved  in  favor  of the  beneficiaries  are  subject  to  independent  HCFA,  ALJ,  Appeals

Board,  and  Federal  court  review,  beneficiary  grievances  are  only  subject  to  internal

levels  of review  within  the  HMO.

The  Office  of Managed  Care  (OMC)  within  HCFA  is responsible  for  policy  and

oversight  of HMOS  and  ensuring  there  is compliance  with  the  appeal  and  grievance

regulations.  To  assist  plans  in these  processes,  OMC  has  created  the  appeal  and

grievance  sections  in the  HMO/CMP  Manual.

METHODOIX)GY 
We  identified  our  universe  of currently  enrolled  and  recently  disenrolled  beneficiaries 
from  the  July  1995  update  of the  Group  Health  Plan  master  file  maintained  by  HCFA. 
This  universe  consisted  of 2,171,946  beneficiaries  who  were  enrolled  on  January  1, 
1995  and  had  not  disenrolled,  and  381,871  beneficiaries  who  had  disenrolled  between 
June  1, 1994  and  June  30,  1995.  From  this  universe,  we  selected  a stratified  random 
sample  of 410  enrollees  and  500  disenrollees.  Three  beneficiaries  were  dropped  from 
the  enrollment  sample  file  as  one  had  died  and  two  had  disenrolled  since  the  update. 
We  also  dropped  113 beneficiaries  from  the  disenrollment  sample  due  to  death.  The 
final  sample  contained  794  beneficiaries  (407  enrollees  and  387  disenrollees).  We 
received  426  questionnaires  from  respondents  (222  enrollees  and  204  disenrollees), 
representing  a response  rate  of 54 percent.  We  analyzed  the  two  groups  (enrollees 
and  disenrollees)  separately.  We  also  conducted  an  analysis,  as  explained  in Appendix 
A,  of respondents  versus  non-respondents  to  test  for  any  bias  of the  sumey  results. 
We  supplemented  the  mail  sumey  with  more  in-depth  telephone  interviews  with  those 
individuals  indicating  complaint  experience.  Of  the  426  beneficiaries  who  responded, 
only  26  (6 percent)  said  they  had  filed  a complaint.  We  were  able  to  recontact  17 of 
these  beneficiaries  and  10 of them  indicated  they  filed  formal  complaints. 
We  conducted  our  review  in  accordance  with  the  Qualdy  StandarAfor Inspections 
issued  by  the  Presidents  Council  on  Integrity  and  Efficiency. 
4
 FINDINGS

EIGHTY-SIX PERCENT OF RESPONDENTSWERE KNOWLEDGEMM 
ABOUT THEIR GENERAL RIGHT TO MAKE A FORMAL COMPLAIIWl 
ABOUT THEIR HMOS MEDICAL CARE OR SERVICES. 
c	 In  comparison,  an  earlier  Office  of Inspector  General  study2  found  that  75 
percent  of beneficiaries  were  aware  of the  ability  to  file  appeals  and  grievances. 
.	 Sixty-six  percent  of respondents  indicated  they  were  informed  of their  appeal 
and  grievance  rights  when  they  first  joined  the  HMO.  In  the  telephone  follow 
up  survey,  six respondents  who  indicated  they  were  @  informed  when  they 
first  joined  were  asked  when  they  learned.  Three  of the  six learned  of their 
right  to  appeal  when  the  payment/sexvices  were  denied  (two  learned  when  their 
referral  was  refused  and  one  called  the  HMO  when  an  out-of-plan  hospital  bill 
was  received).  Of  the  remaining  beneficiaries,  two  responded  that  they  just 
knew  of their  rights  and  one  was  still  unaware. 
HOWEVER  BENEFICIARIESWERE LESSAWARE OF SPECIFICINSTANCES 
ON WHICH THEY MIGHT EXERCISE THEIR APPEAL AND GRIEVANCE 
RIGHTS. 
	 More  than  one  third  of beneficiaries  did  not  know  or  were  not  sure  of their 
right  to  complain  about  specific  problems  for  which  appeals  and  grievances  are 
possible.  Only  45 percent  of respondents  knew  they  could  appeal  when  the 
plan  decided  to  discharge  them  from  the  hospital  when  they  believed  they 
should  stay.  Also,  47 percent  of beneficiaries  were  aware  they  could  complain 
about  non-admission  to  the  hospital.  (See  Appendix  B for  the  weighted 
analysis  for  those  answering  either  no  or  not  sure  to  these  questions.) 
.	 A majority  of enrollees  were  aware  of their  right  to  complain  about  specific 
problems,  but  the  level  of understanding  of the  specific  cases  was  lower  than 
their  general  knowledge.  (See  Table  1 for  these  unweighed  percentages.)  For 
example,  66 percent  of enrollees  knew  they  could  complain  about  not  being 
provided  Medicare  covered  services.  However,  only  49 percent  of  enrollees 
knew  they  could  appeal  when  the  plan  decided  to  discharge  them  from  the 
hospital  when  they  believed  they  should  stay. 
.	 Among  disenrollees  the  understanding  was  lower,  as  demonstrated  by Table  1. 
Enrollees  were  twice  as likely  as  disenrollees  to  be  knowledgeable  of their  right 
to  appeal  a non-hospital  admission  or  early  hospital  discharge.  Additionally, 
20ffice  of  Inspector  General,  Department  of Health  and  Human  Setices,  1994, 
Beneficiary  Perspectives  of Medicare  R&k HMOs.  (OEI-06-91-00730). 
J  enrollees  were  three  times  as knowledgeable  of their  ability  to  contest  the 
plans  refusal  to  pay  a doctor  or  hospital  for  emergency  care  for  which  they 
were  billed.  Enrollees  were  also  more  aware  of their  ability  to  grieve  about  an 
HMO  physicians  behavior  or  their  HMO  facilities. 
Table 1

BeneficiaryAwarenessof Appeal/Grievance Issues*

Not  No, Cannot File

Sure  ADDeal/Grievance  Yes

Appeal Issues  Disenrouees  Enrollees  Disenrouees  Enrollees  Dkenrollees  Enrollees 
your HMO refusing to pay a doctor  12%  10%  68%  31%  m%  59% 
or hospital for your emergency care  (17)  (20)  (95)  (59)  (27)  (112) 
that you were billed for? 
your HMO deciding to discharge you  10%  19%  71%  32%  19%  49% 
from the hospital when you believe  (13)  (35)  (92)  (60)  (24)  (92) 
you should stay? 
Not  No  Cannot File 
Sure  AtmeaI/Grievance  Yes 
Grievance rssues  Enrollees  Disenrotlees  Enrollees  DisellrolkesEnrollees 
delays in getting to see a specialist?  6%  10%  54%  30%  40%  60% 
your primary HMO doctor not taking  8%  9%  55%  27%  37%  64% 
your health complaints seriously?  - (13)  (17)  (82)  (52)  (55)  (125) 
*Multipleresponseswerepermitted inthe sumeydocument andnot allbeneficiariesresponded to everyquestion.  See 
Appendix B for the weighted analysk and confidence intervals for those who answered either no or not sure to these 
questions 
6
 Appendix  B furnishes  the  weighted  analysis  and  confidence  intervals  for  those  who

answered  no  and  not  sure  to  these  questions  (see  Table  1 for  the  unweighed

percentages).  When  weighted,  the  sample  approximates  the  disproportionate

distribution  of  enrollees  and  disenrollees  in the  universe.  A  Chi-square  test  was

performed  to  test  for  independence  between  being  informed  and  enrollees  versus

disenrollees  (see  Appendix  A).  This  test  showed  that  these  two  factors  are  dependent

with  significant  chi-square  test  statistics.  However,  the  response  rates  to  these

questions  were  much  less  than  the  overall  response  rate  to  the  survey.  The

disenrollees  responses  ranged  from  129-151  while  the  enrollees  responses  ranged

from  187-197.  Therefore,  the  response  rate  for  disenrollees  for  these  questions  was  as

low  as  33 percent  and  the  response  rate  for  enrollees  was  as  low  as  46 percent.

	 Forty-five  percent  of the  respondents  did  not  know,  or were  not  sure  that 
certain  complaints  are  classified  as  appeals  while  others  are  classified  as 
grievances.  The  protection  afforded  by  external,  impartial  review  in  the 
appeals  process  is not  afforded  to  grievance  disputes.  Beneficiaries  who  are 
unaware  that  their  complaint  is an  appeal  could  potentially  be  denied  the  right 
to  due  process,  or  an  independent  Federal  medical  review  for  appropriateness 
of the  HMO  decision.  The  effect  of this  lack  of knowledge  could  cause 
beneficiaries  out-of-pocket  liability  and  health  risks  from  denial  of needed 
services. 
The  distinction  between  appeals  and  grievances  can  be  complicated.  Even  the

HMOS  who  administer  this  program  do  not  completely  understand  it.

Additional  support  for  this  finding  is found  in the  OIG  companion  reports3

which  show  that  50 percent  of the  HMOS  are  incorrectly  identifying  appeals  as

grievances.  Likewise,  review  of actual  appeal  and  grievance  case  files  revealed

that  all  of the  plans  visited  incorrectly  processed  appeals  as grievances  in  26

percent  of complaints  reviewed.

MOST OF THE BENEFICIARIESWHO CONSIDERED THEY WERE DENIED

SERVICES OR PAYMENT WERE NOT GIVEN INITIAL DETERMINATION

NOTICES.

Inherent  in  the  concept  of managing  care  is the  plans  ability  to  choose  among 
acceptable  alternative  approaches  to  care.  This  means  that  beneficiary  access  to  some 
services  may  be  restricted,  even  if the  beneficiary  wants  or  thinks  the  services  are 
necessary. 
30ffice  of Inspector  General,  Department  of Health  and  Human  Semites,  1996, 
Medicare  HMO  Appeal  and  Grievance  Processes:  Survey  of HMOS.  (OEI-07-94-00282). 
Office  of Inspector  General,  Department  of Health  and  Human  Services,  1996, 
Medicare  HMO  Appeal  and  Grievance  Processes:  Review  of  Cases.  (OEI-07-94-00283). 
7  The  issues  involving  these  decisions  not  to  provide  or  pay  for  particular  services  and

how  they  are  resolved  differ  between  fee-for-service  and  managed  care.  Inthe

fee-for-service  environment,  beneficiaries  are  free  to  seek  treatment  from  another

provider  iftheir  physician  does  not  believe  aparticular  seficeshould  be  provided.  By

contrast,  managed  care  beneficiaries  recourses  may  be  limited  to  disenrollment  or

being  held  financially  liable  for  obtaining  services  outside  the  plan.

Because  of these  lock-in  provisions  of risk  HMOS,  the  appeals  and  grievance

regulations  were  established  to  provide  a recourse  for  Medicare  beneficiaries  when

they  disagree  with  an  HMOs  denial  of a setice  or  payment  for  a semice.  This

indication  of  disagreement  by  the  patient  can  be  verbal  or  in writing,  directly  with  the

HMO  physician  when  receiving  health  services  or  later  with  designated  HMO  offices,

such  as  customer  services.  When  a beneficiary  disagrees,  the  HMO  is required  to

issue  a written  determination  notice  to  the  beneficiary  reflecting  the  reasons  for  the

denial  and  the  beneficiarys  right  to  seek  a reconsideration.  The  HMO/CMP  Manual

instructs  HMOS  to  Educate  plan  physicians  and  representatives  on  beneficiary  appeal

rights,  including  how  and  when  a member  may  file  an  appeal.  If a physician  denies  an

enrollees  request  for  a service,  he/she  should  ask  the  enrollee  if he/she  would  like  to

appeal.  The  plan  must  issue  a written  determination  to  the  member  whenever  the

member  disagrees  with  the  physicians  decision  or  wants  to  appeal  a service  denial.

It was  our  design  in the  survey  to  find  out  if beneficiaries  who  believed  that  they  had

been  denied  a referral  to  a specialist,  or  had  been  denied  payment  for  a medical

service,  had  received  proper  written  notification.  Although  we  did  not  validate  their

responses  with  their  respective  HMOS,  our  survey  does  indicate  that  some

beneficiaries  who  considered  that  they  were  denied  services  or  payment  were  not  given

initial  determination  notices.  We  found  that:

	 Forty-one  respondents  believed  that  they  had  been  refused  referral  to  a 
specialist.  Only  three  of these  41 stated  they  received  a letter  explaining  why 
they  could  not  get  this  care.  Thirty-four  of the  41 indicated  they  did  not 
receive  a notice  that  the  referral  was  denied.  Three  others  were  not  sure  if 
they  got  a letter  and  one  did  not  respond  to  this  question. 
	 Thirty-nine  respondents  stated  their  plan  refused  to  pay  a claim  for  services. 
Of  these  39,  21 indicated  receiving  a letter  furnishing  their  appeal  rights.  Nine 
respondents  did  not  receive  a notice,  six were  not  sure,  and  three  did  not 
answer. 
We  understand  that  the  subject  of written  initial  determinations  is quite  complex. 
Patients  do  not  always  clearly  express  a request  for  referral  to  a specialist  or  clearly 
indicate  to  their  primary  care  physician  that  they  believe  such  a referral  has  been 
denied  them.  Likewise,  this  ambiguity  can  lead  patients  to  believe  that  services  have 
been  denied  while  the  prima~  care  physician  believes  that  additional  diagnostic  or 
alternative  treatment  protocols  are  being  pursued  prior  to  making  a final  decision  on 
referral  to  a specialist.  However,  the  explanation  may  simply  be  that  the  HMO  has 
8
 not  adequately  educated  both  the  physician  and  the  beneficiary  about  how  and  when  a 
member  can  appeal  denials  of services.  Furthermore,  the  procedures  for  providing 
these  notifications  may  simply  be  inadequate. 
This  is consistent  with  a companion  report4  on  case  file  reviews  which  found  27 
percent  of  appeal  files  lacked  documentation  that  an  initial  determination  was  issued. 
In  that  inspection,  we  also  found  that  five  HMOS  sent  initial  determinations  in  six 
cases  without  including  the  required  appeal  rights. 
VERY  FEW RESPONDENTS REPORTED  FILING A FORMAL  COMPLAINT. 
ALL OF THESE COMPLAINTS WERE RESOLVED AT THE INITIAL DISPUTE 
LEVEL 
Twenty-six  respondents  reported  filing  complaints.  We  telephoned  those  who

authorized  contact,  to  obtain  greater  insight  into  beneficiary  knowledge.  We  were  able

to  reach  17 beneficiaries,  10 of which  indicated  they  actually  filed  a formal  complaint.

Three  of the  remaining  seven  acknowledged  they  did  not  file  complaints;  two

characterized  their  complaints  as informal;  one  complained  to  the  nursing  home;  and

one  attempted  telephoning  the  HMO  but  was  unsuccessful.  This  follow-up  data

suggests  that  only  a small  number  of beneficiaries  may  be  attempting  to  resolve  access

and  payment  for  service  problems  through  the  appeal  and  grievance  processes.

.	 Thirteen  of the  26 mail  respondents  who  filed  complaints  reported  they 
received  a favorable  resolution,  however  5 were  not  sure  (see  Table  2).  Seven 
received  unfavorable  decisions  and  one  beneficiary  did  not  respond.  This  is 
supported  in the  telephone  survey  we  conducted,  where  only  5 of the  10 who 
formally  complained  indicated  receiving  a favorable  resolution  (See  Table  3). 
Despite  this  favorable  decision,  two  of the  five  beneficiaries  switched  to  a 
different  plan  and  one  returned  to  fee-for-service. 
.	 Of the  seven  beneficiaries  reporting  an  unsatisfactory  outcome  in  the  mail 
survey,  six were  disenrolles  (See  Table  2).  We  did  not  determine  if the 
disenrollees  returned  to  fee-for-service  or whether  these  beneficiaries  switched 
to  another  plan.  A  slightly  lower  percentage  of disenrollment  was  experienced 
by those  who  appealed  based  upon  our  follow-up  telephone  survey;  4 out  of  10 
received  an  unfavorable  decision  and,  when  asked,  3 of these  4 switched  to 
another  plan  (See  Table  3).  The  fourth  beneficiary  stayed  with  the  HMO  but 
switched  their  primary  care  physician. 
40ffice  of  Inspector  General,  Department  of Health  and  Human  Services,  1996, 
Medicare  HMO  Appeal  and  Grievance  Processes:  Review  of Cases.  (OEI-07-94-00283). 
9  Table 2 
Mail Survey 
Table 3 
Telephone Sumey 
Filed Complaint =  10  Yes  No  Not Sure 
SwitchedHMOS  2  3  1 
SwitchedPCP  o  1  0 
  One  of the  three  respondents  notified  of a refusal  to  refer  filed  a complaint. 
Only  6 of the  34 beneficiaries  @  notified  filed  a complaint. 
  Eight  of the  21 respondents  notified  of a claim  denial  filed  a complaint.  Only 
one  of the  nine  who  were  @  notified  complained. 
  All  complaints  were  resolved  at  the  initial  dispute  level,  or  simply  dropped  by 
the  ben~ficiary.  No  one  in either  of our  surv~ys  requested  fur{her  re~i~w  of-
their  denied  complaints.  This  supports  a study  conducted  by NDG5  in which 
they  found  that  the  majority  of enrollees  who  jump  out  of plan  (usually  out  of 
dissatisfaction),  do  not  first  attempt  to  resolve  differences  with  plan  providers 
or  through  plan  grievance  systems. 
The  low  number  of beneficiaries  who  did  not  file  a formal  complaint,  out  of those  who 
considered  they  were  denied,  could  be  due  to  many  reasons.  Possible  reasons  include: 
the  beneficiaries  did  not  want  to  contest  the  HMO  decision;  they  agreed  with  the 
physician;  or  the  beneficiaries  did  not  know  they  could  file  an  appeal. 
5Richardson,  David  A.,  James  Phillips,  Dean  Conley,  Jr.,  A Study  of  Coverage 
Denial  Disputes  Between  Medicare  Beneficiaries  and  HMOS,  Network  Design  Group, 
Inc.,  under  HCFA  Cooperative  Agreement  No.  17-C-90070/2-Ol,  September  1993. 
10  RECOMMENDATIONS

Health  Care  Financing  Administrations  (HCFA)  Office  of Managed  Care  is making

substantial  efforts  to  improve  the  HMO  appeal  and  grievance  processes.  It has

recently  created  a work  group  - Managed  Care  Appeals  and  Grievance  Initiative  -

organized  to  make  program  improvements  in these  functions.  Appeals  language  has

been  standardized  in  lock  in and  Evidence  of Coverage  notices,  which  are  sent  to  all

beneficiaries  when  they  enroll  in  an  HMO.  In  addition,  appeal  and  grievance

information  was  included  in the  1996  Medicare  Handbook,  and  expanded  information

on  appeals  was  incorporated  into  HCFAS  Managed  Care  Directory.  Currently  HCFA

is working  with  HMOS  to  develop  national  guidelines  for  marketing  materials.

HCFA  also  announced  plans  to  produce  a Managed  Care  Appeals  Publication,  an

HMO  Comparability  Chart,  a national  data  base  of managed  care  Questions  and

Answers,  and  a Managed  Care  Fraud  and  Abuse  Publication.  They  are  continuing  to

educate  outside  entities,  including  advocacy  groups,  by providing  more  information  on

managed  care  matters,  as well  as highlighting  beneficiary  rights  and  protections  in  a

managed  care  setting.  While  HCFAS  efforts  should  continue  to  have  favorable

impact,  we  believe  there  is still  room  for  improvement.

To  receive  full  benefits  of the  appeal  and  grievance  protections,  beneficiaries  need  to

be  aware  of the  processes,  understand  how  the  processes  work,  and  when  to  use  them.

In  that  vein,  HCFA  should

	 activelymonitorHMOS to ensurebeneficiariesareksued writtendeterminations, 
includingappal rights,and emphasizethe needfor beneficiariesto commurucate 
clearlyanydisagreementtheyhavewithHMO deczkionstodenyserwcesorpayment 
for senacex This  can  be  accomplished  by: 
- continuing  HCFAS  extensive  efforts  to  make  beneficiaries  aware  of appeal 
and  grievance  provisions  and  of the  need  to  communicate  clearly  any 
disagreement  they  may  have  with  a physicians  decision  to  deny  a requested 
service  and 
- emphasizing  to  HMOS  the  requirements  to  make  beneficiaries  aware  of 
appeal  and  grievance  rights  and  to  provide  written  initial  determination 
notices  when  the  patient  communicates  disagreement  with  a decision  to  deny 
a requested  service  or  payment. 
Federal  regulations  are  intended  to  protect  the  rights  of beneficiaries  to  appeal 
the  denial  of services  by HMOS,  while  maintaining  the  ability  of the  physician 
to  treat  the  patient  in line  with  his  or  her  medical  judgment.  It is not  always 
possible  at  the  time  of service  for  the  physician  to  know  whether  a beneficiary 
believes  that  a service  has  been  denied  unless  the  beneficiary  specifically 
communicates  this  to  the  physician.  Therefore,  future  HMO  marketing, 
11  enrollment,  and  awareness  sessions  with  Medicare  beneficiaries  and  physicians 
should  emphasize  the  importance  of clear  and  open  communication. 
  workwithHMOS to establkhstandardtiedappal andgrievancelanguage 
requirementsinmarketinglenroi+lmrennatteriahandoperatingprocedures. 
- In  marketing  materials,  provide  up  front  information  to  beneficiaries  on  their 
rights  under  the  appeal  and  grievance  processes  and 
- In  enrollment  materials,  more  thoroughly  educate  beneficiaries  about  their 
specific  rights  under  the  appeal  and  grievance  processes,  including 
--a  detailed  overview  of the  types  of services,  lack  of services,  or 
situations  which  may  be  appealed  or  grieved. 
--when  and  under  what  circumstances  further  levels  of  appeal  are 
permitted. 
--clarification  that  only  appeals  and  not  grievances,  are  subject  to 
independent  Federal  review. 
--the  difference  between  the  definitions  of emergency  and  urgent  care  at 
the  time  medical  services  are  being  sought. 
12
 AGENCY COMMENTS

We  solicited  and  received  comments  on  our  draft  report  from  HCFA.  The  complete 
text  of their  response  is included  as  an  appendix  to  this  report.  A  summary  of their 
comments  and  our  response  follows. 
The  HCFA  agreed  with  the  conclusion  of our  reports  that  improvements  are  needed 
and  indicated  that  they  are  working  to  implement  a number  of our  recommendations. 
We  are  pleased  that  HCFA  agrees  that  improvements  are  needed  in  the  appeal  and 
grievance  processes,  and  we  recognize  that  changes  are  in the  process  of being  made 
through  the  Medicare  Appeals  and  Grievance  Initiative  (MAGI).  However,  because 
HCFAS  response  does  not  specifically  address  the  recommendations  contained  in  our 
reports,  we  are  unsure  whether  the  problems  identified  in  our  report  will  be  fully 
addressed  through  this  initiative.  As  a result,  it will be  important  for  HCFA  to  include 
in their  response  to  the  final  report  an  action  plan  that  specifically  addresses  each 
recommendation. 
Although  HCFA  acknowledges  the  case  review  report  identifies  mistakes  made  by 
health  plans,  they  expressed  concerns  about  the  sample  sizes  and  number  of cases 
reviewed.  We  agree  that  this  sample  could  not  be  used  to  make  national  projections 
of the  incidence  of mistakes.  However,  the  number  of cases  reviewed  and  outcomes 
of the  reviews  are  more  than  adequate  to  indicate  the  existence  of significant  problems 
in HMO  processing  of  appeals  and  grievances. 
Finally,  HCFA  raised  questions  about  the  knowledge  and  expertise  of the  individuals 
who  prepared  the  HMOS  responses  to  our  survey  documents.  We  requested  and 
must  assume  that  knowledgeable  HMO  staff  completed  our  survey.  We  also  note  that 
beneficiaries  making  inquiries  regarding  appeals  and  grievances  are  likely  to  be 
interacting  with  these  same  individuals  or  their  staff. 
13
 APPENDIX  A

ANALYSISOF RESPONDENTSVS.NON-RESPONDENTS 
An  important  consideration  in  surveys  of this  type  is the  bias  that  may  be  introduced 
into  the  results  if the  non-respondents  are  different  than  those  who  responded  to  the 
survey.  As  a test  for  the  presence  of any  bias,  we  obtained  information  from  the 
Enrollment  Database  on  all  of the  individuals  whom  questionnaires  were  sent.  The 
variables  we  analyzed  were  selected  because  they  might  determine  whether  an 
individual  would  respond  to  the  sumey,  as well  as affect  the  individuals  actual 
response.  For  all  794  individuals  selected  for  the  sample,  we  analyzed  age,  race  and 
sex.  Race  and  sex  are  categorical  variables  which  were  tested  using  a chi-square  with 
the  appropriate  degrees  of freedom.  Age  is a continuous  variable  which  was  tested 
using  the  t-statistic.  for  a difference  between  means. 
The  results  are  presented  in the  attached  table.  The  Chi-square  values  given  in  the 
table  provide  a test  of the  difference  in the  distribution  of the  respondents  versus  the 
non-respondents  for  the  variable  of interest.  Also  provided  in  the  tables  are  the 
response  rates  by the  difference  values  of the  variables. 
The  Chi-square  test  statistic  was  not  significant  when  the  variable  sex was  analyzed. 
Therefore,  we  conclude  that  whether  or  not  an  individual  responded  was  not  related 
to  their  sex. 
When  the  respondents  vs. non-respondents  were  analyzed  by  race,  the  response  rate 
was  dependent  on  race.  Race  was  categorized  by white  vs. non-white  since  the 
numbers  would  have  been  too  small  to  analyze  if all five  race  categories  were  kept 
separate.  To  determine  the  effect  of the  relationship  between  response  rate  and  race, 
we  undertook  an  analysis  of the  non-respondents.  Assuming  that  the  non-responders 
would  have  responded  the  same  as the  responders  by  enrollee  and  disenrollee,  we 
calculated  a hypothetical  global  response  to  the  question  of being  informed  of 
grievance  and  appeal  rights  when  first  joining  the  HMO.  This  calculation  gave  an 
estimate  of those  claiming  they  were  informed  of their  appeal  and  grievance  rights 
when  they  first  joined  of 64.5  percent  which  differs  by  2.1 percentage  points  from  the 
66.4  percent  overall  rate  found  among  responders. 
Age  was  analyzed  using  a comparison  of means  with  the  t-test.  Although  the  t-statistic 
was  significant,  the  difference  in the  mean  ages  for  responders  vs. non-responders  was 
only  1.26 years.  Since  the  sample  size  was  794,  this  small  difference  was  significant. 
Had  a smaller  sample  been  selected  this  difference  would  not  have  been  significant. 
Therefore,  no  adjustments  were  made  based  on  a bias  of age. 
The  tables  below  show  the  results  of the  chi-square  for  the  sex  and  race  variables  and 
t-test  for  the  age  variable. 
A-1
 RESPONDERS VS. NON-RESPONDERS 
SEX 
EE  SB  BE 
CHI-SQ=  1.70 
DF=l 
Resp{ 
White  391 
Non-White  32 
Overall  423 
CHI-SQ=22.54* 
DF=l 
T-TEST FOR AGE 
Respondents  368  73.67 
I 
1 
IINon-Respondents  I  426  I  72.41 
t =2.09 
df=792 
*Statistically  significant  at  the  95 percent 
A-2
 APPENDIX  B

ESTIMATESAND CONFIDENCE INTERVALS 
The  chart  below  summarizes  the  estimated  proportions  and  the  95 percent  confidence 
intervals  for  key  statistics  presented  in this  report.  The  estimates  refer  to  the 
beneficiaries  understanding  of their  appeal  and  grievance  rights  as well  as their 
knowledge  of various  situations  for  which  they  may  file  complaints. 
95% 
Weighted  Confidence 
Survey Question  Percent  Interval 
Finding  #1,  Most Respondents  Are Knowledgeable  About The General Right To Ffle Appeals  And 
Grievances 
Proportion  of beneficiaries  who knew they have the right  to

complain  86.2V0  82.2%  - 90.2%

Proportion  of beneficiaries  who knew they could complain  when

they first joined  66.47.  60.890- 72.19Z0

Finding #~  However, Beneficiaries Are Less Aware Of Speeilic  Grounds On Which They Might 
Exercise Their Appeal  And Grievance Rights.  Proportion  of beneficiaries who did not know or 
were not sure they could complain about: 
not  being  provided  Medicare  covered  services  38.3T0  32.5ZO-44.170 
delays in seeing  primary  physician  46.0%  40.Oqo -52. Iyo 
their  HMO  refusing  to pay for emergency  care  47.2%  41.170- 53.2% 
their  primary  physicians behavior  42.7%  36.7%  - 48.6% 
their  prima~  physician  not  taking  health  complaints  seriously  39.770  33.9%  - 45.6% 
non-admission  to the  hospital  52.7IZo  46.6%  - 58.9% 
early discharge  from  the hospital  55.470  49.297. - 61.6?Z0 
non-referral  to a specialist  43.6%  37.6%  - 49.6%0 
delays in seeing  a specialist  43.2%  37.1%  - 49.2% 
the HMO  facilities  (such as cleanliness  or safety)  44.370  38.270- 50.4% 
Finding  #4,  Almost  Half Of The Respondents  Did Not Understand The Difference  Between 
AP- and Grievances 
Proportion  of beneficiaries  who did not know or were not  sure

their  complaints  could  be either  appeals  or grievances  45.070  39.2%  - 50.8?Z0

B-1
 APPENDIX  C 
Health Care FinancingAdministration 
Response to Report 
c-1  [.8%-%

4
L DEPARTMENT  OF HEALTH & HUMAN  SERVICES  Haalth Care Financing Administratbn 
%.m
The Admlnlstratu 
Washlngtun,  D,c,  20201 
DEC12W6 
DATE: 
TO; June Gibbs Brown 
Inspector  General 
FROM BruceC. Vladeck 
Administrator 
suBi-Ec-RO ffice of Inspectm  General  (OIG)  Draft  Reports:  Medkme HMO Appeal
and GrievanceProcesses-ovemiew:  (OEI-07-9440280);  Medicare 
HMO  Appeal  and Grievance  pWtMCW-B~db~eS  Understanding, 
(OEI-07-94-00281);  Medicare  HMO Appealand Grie~ce  Processes--
Sumey of HMOs,  (OEI-07-94-00282);  Medicare  HMO Appeal and 
GrievanceProcessesReviewof Cases,(OEI-07-94-00283) 
We reviewedthe above-referenced  reports that examine the operatkm  of the Nkxbre 
risk-based  HMOS appeal  and grievance  processes. We agreewith the conclusion  of your 
report  that improvements  are needed  and are working  to implement  a number  of your 
recommendations.  Our detailed  wnunents  are attached, 
Thrmk  you  for the opportunity  to review  and comment  on this report, 
Attachment  Health Care FimmcinE Administration  (HCFA} Comments 
on Office  of InsuectorGeneral(OIG) 
DraftReports:Medicarc!HealthMaintenance 0) Atmeal and 
@ZflIlkZ8tiOIM  (KM 
&iwance  Processes  Overview. @EI-07-94-00280k  MedicareHMOAppe@ apd 
Grievance  Processes:  Beneficiaries  Understantig  (OEIa7-94a2811:  ~eficwe 
HMoAPDeaandlGrievanceProcewes:SurveYof Ii?l@s.  (OEI-07-94-00282);
Medicare  HMO  Armeal and (3IIevance ProGesses: Review of Cases, 
[OEI-07-94-00283] 
OIG Racmnmendations 
OIGrecommends  that IICFAtakethefollowing =tions  to  addressproblemsl@hl@ted 
in tic above studies: 
o  Actively  monitor HMOS to ensure beneficiaries  am issued vnittm determinations, 
o	 Work with HMOS to establish  stmkdze - d appeal  and gcievan6e language 
requirements  in marldngknrolhnent  materhls  and operating procedures, 
o  Ensure that HMOS comectly distinguish  and process  appeak  and grievances. 
o	 Require  HMOS to report Medicare  contract-specific  data on appeal and grievance 
cases, 
o  Mod@  the HMO/CMP  Manual  to clar&  and  spe@  key reqtiemmts. 
o  Broaden  efforts to formally  train IIMOS ontheappealandgrimmce processes, 
EKI?A Rewonse 
We agree thatimprovements  are needed.  We  have  a comprehensive  effort undemay 
called  the Medicare  Appeals and Gbance  Initiative  (MAGI)  which includes  a number 
of objectives  that am direetly related  to the recommendations  in your reports. Our 
objectivesincludeidenti&ingand meetingthe information  needs of beneficiaries 
regarding  their appeal rights; promoting  hd~  plan accmmtabiily  by developing  and 
inqhovitig inflmnation  on appeals  and making  memingfid  information  mo~  available; 
and refining  mechanisms  for monitoring  and assisting in the continuousixnpro~elnent  of 
lIealth  phm performance.  Page 2 
OIG and HCFAjointly issued a Medicare beneficky  advisorybulleti  entitl~  What 
Medicare  Beneficiaries  Need to Know About HMO Arrangements:  Know Your Rights. 
This easy-to-mad  docunmt  conta@  information  cm appeal rights, filing compltiti,  and 
rights to emergency  and urgently needed  services.  Copies  of this bulletin  are being 
distributed  nationally.  Additionally,  significant  changes  were made to improve the 
managed Gare portions of the Medkare Handbook wtich was seti to ~  bemfkmw  MS 
year.  New  datareportingrequirements  on phm-level  reconsidmtions  m under 
development  andmaybe instituted  as earlyasmid-1997. We alsoplantorwtructureand 
shortenthetimelinesfor handling health  care decisions  ad  reconsiderations  by,health 
plans. 
Beneficiaries  Understanding 
We are pleasedto seethehighlevel of knowledge  among Medicare  knrollees &arding 
their right to appeal and file complaints,  This is an improvement  over M earlier finding, 
andonewe believeresultsfrombothFederalprogramandplw effiirts;ateducating 
beneficiaries and providingnotices, With regard t.uthe fintig  that benefkiwim  bd  a 
lesser level  of awareness  as to when to exercise  their appealrights, forthcotig 
regulationsclari&ingtherightto appeal when servic&  are reduced  or tcrminate~  and 
when  to provide  notices of nonGoverage at these points  in ewe managemen~  should 
significantly  help address&isproblem, We will considerthe recomnwndatkmisn this 
area. 
Survey HMOS 
Incorrect categorization  of appeals as grievances  is an area for improvement  identiled  in 
our MAGI initiative.  However,  we question  the percentage  and methodology  set forth in 
this report. Becausecertainstaffwithinthe organizationalstructureofanHMO,01staff 
at delegatedmediealgroupswithintheHMOsnetwork aregenerallyresponsiblefor 
assigningGompkintsto theappealsor  tiacl$it wouldbe importanttohow 
@Gvance 
who responded  to the two questions  asked on this subject  and what role i%eyplay in this 
partkular proms, Wewillbemoving
toititi@  theSQWW  problem,  NXh  asSW

mmw  andconfi.tsionoverdil%eienceisn Federal andstateterminology. 
The type of statistical  information  sought by OIG staff has not been a requirement  for 
Medicare-contracting  health plans.  Thereforq  it is not surprising  that many plsns 
aggregate  the appeals information  across ~,o~ercj~  Medic~e,  and Medicaid rqembers. 
New plan-leveI  appeals reporting  requirements  should resolve the need fox Medicare-only 
infommtion,  and respond to yow recommendation.  Page 3 
Rew GWOfc%ses
We have  concerns  about the smallsamplesizes and number  of cases used to present 
findings  in this repoti  However,  the report identifiesthetypesof mists@  healthplans 
makeinoperatinganappealssysterq  audtheneedsthatplanshavefor clear,distinct 
informationandtminingabout the Medicare managed  care requirements  (and how these 
diffiz  ftom  state requirementsfor their commercial  and Me&aid  enrollees),  We will 
consider tie retxxnrnendationpsresented.