Complaint and appeal procedures are regulated by a patchwork of federal and state law. No federal standards, however, prescribe how complaint and appeal systems are to be structured and administered. For example, the Employee Retirement Income Security Act of 1974 (ERISA), a federal law governing most employer-sponsored health plans, simply requires that covered health plans provide a mechanism to permit participants and beneficiaries to appeal a plan’s denial of a claim. Another federal law, the Health Maintenance Organization Act of 1973, simply requires that plans provide “meaningful” and “timely” procedures for hearing and resolving complaints in order to become federally qualified HMOs. Numerous bills mandating specific features of health plan complaint and appeal procedures have been introduced before the current Congress. One bill, for example, would set standards for the timeliness of plan response to appeals and the professional qualifications of appeal reviewers and would require external review of plan decisions in certain circumstances. In addition, the Presidential Advisory Commission on Consumer Protection and Quality in the Health Care Industry recently issued a “Consumer Bill of Rights and Responsibilities” that included recommendations for handling consumer complaints and appeals. Many states have laws regulating or affecting HMOs. According to the American Association of Health Plans (AAHP), which represents managed care organizations, nearly all HMO coverage offered to employees is governed by state grievance and appeal requirements. HMOs have frequently argued, however, that in certain circumstances ERISA prevents state law from applying to them. These arguments arise because ERISA prohibits states from regulating employee health plans, although it expressly permits states to regulate insurance purchased by employers. Most states require HMOs to describe their grievance procedures when applying for a license or certificate of authority. Many states require that plans inform members about grievance procedures at least upon enrollment and sometimes annually. Some states mandate that HMOs inform patients of grievance rights and procedures upon each denial of service, when this information is most pertinent. Some states require plans to submit an annual report on the number of complaints filed, their underlying causes, and their disposition. Some states have prescribed detailed requirements in the area of complaints and appeals. For example, some states require that HMOs resolve member appeals of decisions within certain time periods (for example, 20 days); some have required that HMOs allow members the option of having complaints and appeals reviewed by an external, independent panel. However, provisions in state laws vary considerably. (See app. II for specific information provided by the National Conference of State Legislatures (NCSL) on state laws governing complaint and appeal processes.) A number of elements have been identified by regulatory, consumer, and industry groups as being important to a complaint and appeal system. These elements fall into three general categories: timeliness, integrity of the decisionmaking process, and effective communication with members. Several nationally recognized groups have developed guidelines for complaint and appeal systems. We reviewed standards promulgated by two private accrediting bodies, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and the National Committee for Quality Assurance (NCQA). We also reviewed the guidelines established by groups representing industry, consumer, and regulatory interests: AAHP, Families USA (FUSA), and the National Association of Insurance Commissioners (NAIC), respectively. (See app. III for more information on these five organizations.) In all, we identified 11 features considered important to a complaint and appeal system by at least two of the groups. As table 1 shows, several elements were recommended by most of the groups, while other elements were highlighted by only two groups. However, a particular group’s omission of certain elements does not necessarily mean that the group considered those elements and rejected them as unimportant. To help ensure that member complaints and appeals are resolved in an appropriately timely fashion, several groups identified two elements as being important: explicit time periods and expedited review. Time periods refer to specified amounts of time, set out in plan policies, within which HMOs resolve complaints or appeals. JCAHO, for example, emphasized the importance of “defined time frames in which the member can anticipate response to an appeal.” The groups differed in specifying the number of days allowed for resolution; while NAIC’s criterion stated that plans have up to 30 days to resolve first-level appeals, for example, JCAHO simply called for plans to have established time periods without specifying what they should be. Expedited review refers to a plan policy of processing appeals more quickly in situations in which, were the plan to follow its usual time period for processing the appeal, the patient’s health might be jeopardized. Again, the groups differed in the extent to which they specified the time within which expedited appeals were to be processed. NAIC and FUSA said that expedited review must be completed within 72 hours of the appeal, while the other groups said simply that plans must provide a resolution appropriate to the clinical urgency of the situation. In the interest of perceived fairness and member empowerment, four factors were identified as being essential to maintaining the integrity of the decisionmaking process: (1) a two-level appeal process, (2) the member’s right to attend one appeal hearing, (3) appeal decisions made by medical professionals with appropriate expertise, (4) and appeal decisions made by individuals not involved in previous denials. A two-level appeal process is one in which, after a member appeals an initial denial of payment or service, the member may appeal to the plan a second time. Two groups (NAIC and NCQA) identifying a two-level process as important also stated that plans should allow members to appear before plan officials during at least one of the appeal proceedings. This allows members the opportunity to provide to plan officials information or evidence that the member believes is important and ensures that the member’s perspective is presented to the plan. Three groups—FUSA, NAIC, and NCQA—stated that appeal decisions should be made by medical professionals with appropriate expertise. Both NAIC and NCQA stated that such professionals should be involved in decisions regarding denials of clinical services; FUSA did not specify instances under which review by medical professionals should take place. According to AAHP, medical necessity determinations should involve a physician’s review, while determinations about whether a benefit is covered under the terms of the contract might not involve a physician. FUSA, NAIC, and NCQA stated that plan officials determining the outcome of an appeal should not be the same officials who were involved in either the initial denial or the first-level appeal. NCQA’s standards state that no one performing a first- or second-level review should be previously involved in the case. NAIC echoed this statement for first-level reviews; regarding second-level reviews, the organization stated that the majority of the second-level panel deciding the appeal should comprise persons who had not previously participated in the case. Elements of effective communication identified as important included the provision of written information about the appeal process in an understandable manner; acceptance of oral complaints and appeals; the inclusion of appeal rights when notifying enrollees of a denial of care or payment of service; and written notice of appeal denials, including appeal rights. NCQA, for example, emphasizes the importance of clear and complete information about member rights and responsibilities. NCQA requires that plans provide information that is easily accessible—for example, in a member handbook or provider directory or on a membership card—rather than relying exclusively on technical or legal documents. The President’s Quality Commission notes that consumers have the concomitant responsibility to become knowledgeable about their health plan coverage, including covered benefits, plan processes, and appeal rights. FUSA and NCQA also noted the importance of plans’ acceptance of oral complaints and appeals. In its accreditation standards, NCQA notes that “following standards for high-quality interactions with members means that any problems expressed by a member receive prompt and appropriate attention, whether those problems involve clinical care or service, and whether they be oral or written, major or minor.” Four groups emphasized the importance of informing members of their right to appeal at the time a service is denied or terminated. Regarding the plan’s response to an appeal of a denial, two of these groups also highlighted the importance of written notice of appeal denials, including appeal rights. Including appeal rights in the written denial notice ensures that plan members are aware of the steps they need to take in the event they are dissatisfied with the plan decision. An official from the Center for Healthcare Rights, a California-based consumer group, also noted that denial notices should contain information about the nature of what was denied, the basis for the decision (for example, the medical information or plan contract terms the HMO relied upon in making the determination), and information about what factors the HMO would consider in an appeal. The HMOs in our review had most of the 11 elements identified by the groups in our study as being important to complaint and appeal systems, although they varied considerably in the mechanisms adopted to meet them. However, two recommended elements—appeal decisions made by individuals not involved in previous decisions and acceptance of oral appeals—were not commonly present in the complaint and appeal systems of the HMOs in our study. The extent to which HMOs in our study implement the policies they reported to us, however, is unknown. Much similarity existed in the complaint and appeal systems of the HMOs we reviewed. As table 2 shows, 9 of the 11 elements identified as important to a complaint and appeal system were generally incorporated by HMOs in our study. Not all 38 HMOs in our study, however, provided data on each of the elements. Several HMOs provided information on some elements but not others. Much of this uniformity may be attributed to the influential role played by NCQA, which includes all these elements in its accreditation standards. That is, NCQA accreditation is important to public and private purchasers, who view it as an indicator of HMO quality. A growing number of plans have obtained or are seeking accreditation.