Enrollee appeals of preservice coverage denials at 2 Health Maintenance Organizations

Congress and state legislatures are considering patient bills of rights that seek to strengthen opportunities for patients to have denials of coverage reconsidered by their health plans. Little is publicly known about such appeals systems.

To improve understanding of the sources, types, and outcomes of conflicts between patients and managed care organizations over coverage of services.

Descriptive study of information abstracted from 1774 preservice appeals out of a larger stratified random sample of 3519 appeals lodged between January 1998 and June 2000 at 2 large US health maintenance organizations.

Classification of preservice appeals according to whether they contested access to out-of-network care, the contractual limits of coverage, or the medical necessity of services; analysis of contractual coverage and medical necessity appeals by the services in dispute and out-of-network appeals by enrollees' reasons for seeking care; and comparison of the proportions of appeals won by enrollees across types of appeals and services.

Approximately one third (36.9%) of preservice appeals involved medical necessity determinations, another third (36.6%) centered on the scope of contractually covered benefits, and most of the remainder (19.7%) involved out-of-network care. Enrollee wins were significantly more frequent among medical necessity appeals than out-of-network or contractual coverage appeals (52.2% vs 35.4% and 33.2%, respectively; P<.001). Appeals were concentrated among relatively few services and among therapies that are generally regarded as nonessential.

A majority of preservice appeals disputed choice of provider or contractual coverage issues, rather than medical necessity. Medical necessity disputes proliferate not around life-saving treatments but in areas of societal uncertainty about the legitimate boundaries of insurance coverage. Greater transparency about the coverage status of specific services, through more precise contractual language and consumer education about benefits limitations, may help to avoid a large proportion of disputes in managed care.