Complaint and appeal procedures are regulated by a patchwork of federal and state laws. No federal standards, however, prescribe how complaint and appeal systems are to be structured and administered. Nine Elements Were Considered Important for Indemnity Plans

The groups we contacted identified 9 of the 11 elements recommended for HMO complaint and appeal systems as applicable to indemnity plans. The elements considered important to a sound complaint and appeal process for indemnity plans fell into three general categories—timeliness, integrity of the decision-making process, and effective communication—and included the following: explicit time periods, set out in plan policies, within which plans resolve complaints or appeals. Key Elements Were Present in at Least Half the Plans

Nearly all the recommended elements were present in the policies of at least half the plans in our study. As shown in table 1, five elements—explicit time periods for resolving member appeals, appeal decisions made by medical professionals with appropriate expertise, provision of information on how to register a complaint or appeal, plan acceptance of oral complaints, and inclusion of appeal rights in notice of denial of coverage or payment—were included in the policies of a large majority of the indemnity plans in our study. However, the remaining four elements—expedited review of appeals in urgent situations, appeal decisions made by individuals not involved in the initial decision, plan acceptance of oral appeals, and written notice of appeal denials including further appeal rights—were present in the policies of only two-thirds or fewer of the plans reporting. Indemnity Plans Were Less Closely Aligned With Certain Key Elements Than Were HMOs

Compared with the 38 HMOs in our previous report, a smaller proportion of the 10 indemnity plans’ policies and procedures included the recommended elements. Figure 1 compares the prevalence of recommended elements in indemnity plans with those in place in the HMO offered by the same carrier.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the key features that are important to indemnity plans' complaint and appeal systems, focusing on: (1) the elements that are considered important to a system for processing indemnity plan member complaints and appeals; (2) the extent to which indemnity plan complaint and appeal systems contain these elements; and (3) how indemnity plans compare with health maintenance organizations (HMO) in the extent to which their complaint and appeal systems incorporate recommended elements.

What GAO Found

GAO noted that: (1) guidelines issued by the regulatory and consumer advocacy groups in GAO's study identified nine elements as important to indemnity plan complaint and appeal systems, falling into three general categories: (a) timeliness; (b) integrity of the decisionmaking process; and (c) communication with members; (2) nearly all the recommended elements were present in the policies of at least half of the plans in GAO's study; (3) five elements--explicit time periods for resolving member appeals, appeal decisions made by medical professionals with appropriate expertise, provision of information on how to register a complaint or appeal, plan acceptance of oral complaints, and inclusion of appeal rights in notice of denial of coverage or payment--were included in the policies of a large majority of indemnity plans in GAO's study; (4) however, the remaining four elements--expedited review of appeals in urgent situations, appeal decisions made by individuals not involved in the initial decision, plan acceptance of oral appeals, and written notice of appeal denials including further appeal rights, were present in the policies of only two-thirds or fewer of the plans reporting; (5) taken together, a smaller proportion of indemnity plans in GAO's study incorporated recommended elements in their complaint and appeal systems than did HMOs in GAO's previous study; and (6) when compared with HMOs operated by the same carrier, indemnity plans generally incorporated about the same proportion of recommended elements as did HMOs.