Specifically, the order required, among other things, that Medicare HMOs (1) issue denial notices within no more than 5 working days of the request for service or payment and at least 1 working day before the reduction or termination of treatment, (2) clearly state the reason for the denial in the notice, (3) expedite appeals when services are urgently needed (within 3 working days of the request), and (4) continue acute care services until a final appeal decision is issued when the beneficiary requests an expedited appeal. Medicare Beneficiaries Can Appeal Plan Decisions

Medicare beneficiaries enrolled in managed care plans have a multilevel appeals process available if plans refuse to pay for requested services, refuse to provide requested services, or discontinue or reduce services.Beneficiaries generally appeal to their plan first. Appeals Process Starts at Managed Care Plan but Is Subject to External Review

The appeals process may begin when a Medicare member asks his or her plan to provide a service, such as skilled nursing care or a referral to a specialist, or pay for a service already obtained and is turned down. To make a reconsidered decision, the plan representative reviews the initial decision and all other evidence submitted by the beneficiary, beneficiary representative, provider, and health plan. HCFA has modified its contract with CHDR requiring CHDR to be held to the same time standards as the plans for processing appeals. Medicare beneficiaries can request expedited decisions when they believe that waiting the standard time for an initial decision or an appeal of the initial decision could seriously jeopardize their health or life. First, dissatisfied beneficiaries may disenroll and switch to another plan or fee-for-service instead of appealing. Second, beneficiaries may be unfamiliar with their appeal rights or the appeals process. The 242 Medicare HMOs that responded to our recent survey reported an average of about 9 appeals annually per 1,000 beneficiaries between January 1996 and May 1998 (see table 1). Some Beneficiaries May Disenroll Instead of Filing Appeals

The number of appeals may understate beneficiaries’ dissatisfaction with their HMO’s initial decision if some disenroll instead of appealing. Denial Notices Are Sometimes Incomplete or Never Issued

Beneficiaries are supposed to be informed of their appeal rights when they receive a written notice from their plan denying a service or payment.These notices are required to state that the beneficiary has the right to appeal if he or she believes the plan’s initial determination is incorrect. Also, vague notices may hinder beneficiaries from appealing because they may be uncertain as to whether they are entitled to the requested services. If the beneficiary appeals and loses, he or she is responsible for the cost associated with services received after the date specified in the denial notice. HCFA’s Monitoring Protocol Systematically Misses Beneficiaries Who May Not Have Been Informed of Their Appeal Rights

To determine whether plans informed beneficiaries of their appeal rights, HCFA’s monitoring protocol requires agency staff to review a sample of appeal cases. Yet HCFA does not check cases where services or payment for services were denied and not appealed. Comments From the Health Care Financing Administration

The first copy of each GAO report and testimony is free.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed Medicare's managed care beneficiary appeals process, focusing on: (1) the appeals process available to beneficiaries when managed care plans deny care or payment for services; (2) beneficiaries' use of the appeals process and the extent to which they are informed of their appeal rights; and (3) the Health Care Financing Administration's (HCFA) oversight of this process.

What GAO Found

GAO noted that: (1) Medicare beneficiaries enrolled in managed care plans have the right to appeal if their plans refuse to provide health services or pay for services already obtained; (2) upon receipt of the written denial notice, the beneficiary may appeal and the health plan must reconsider its initial decision; (3) if the plan's reconsidered decision is not fully favorable to the beneficiary, the case is automatically sent to the Center for Health Dispute Resolution (CHDR) to review the decision; (4) CHDR may overturn or uphold the plan's decision; (5) a beneficiary is entitled to an expedited decision from the plan, both on the initial request and on appeal, if the standard time for making the decision could endanger his or her health or life; (6) a beneficiary who is dissatisfied with CHDR's decision may appeal further to an administrative law judge and then to a U.S. District Court provided certain requirements are met; (7) health maintenance organizations (HMO) reported an average of approximately 9 appeals per 1,000 Medicare members annually between January 1996 and May 1998; (8) HMOs reversed their original denial in about 75 percent of appeal cases; (9) the number of appeals may understate beneficiaries' dissatisfaction with the initial decisions by HMOs for two reasons: (a) some beneficiaries may disenroll and switch to another plan or fee-for-service Medicare instead of appealing; and (b) some beneficiaries may not appeal because they are unfamiliar with their appeal rights or the appeals process; (10) GAO found that beneficiaries frequently received incomplete notices that failed to explain their appeal rights, and some beneficiaries did not receive any notices; (11) notices often do not state a specific reason for the denial; as a result, beneficiaries may be uncertain as to whether they are entitled to the requested services and thus discouraged from appealing; (12) GAO also found that beneficiaries may receive little advance notice when plans decide to discontinue paying for services, which places these beneficiaries at financial risk should they decide to continue treatment during their appeal; (13) beneficiaries who lose their appeals are responsible for the treatment costs incurred after the date specified in the denial notice; (14) the agency does not determine whether beneficiaries who were denied services but did not appeal were informed of their appeal rights, nor does it monitor provider groups that contract with health plans; and (15) HCFA has not used available information to develop more effective plan oversight strategies.