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New Report Shows Most Consumers Are Winning Battles With NY HMOs

New York, December 15, 1998

Superintendent of Insurance Neil D. Levin today released the Department’s annual complaint ranking of health insurers. For the first time, the report includes comprehensive information about how New York’s HMOs and health insurers are responding to complaints about the quality of service they are providing and about their handling of key customer satisfaction issues.

Levin announced that these results show that on average, consumers win their grievances and appeals in more than half of the cases – proving that the Governor’s health care reforms are helping consumers get fair treatment from insurers. Consumers may appeal two types of HMO and insurer decisions. They may appeal utilization review decisions, which are determinations made by HMOs and insurers solely on the basis of medical necessity. Common utilization review decisions are admissions to hospitals, extensions of hospital stays, and coverage for certain medical procedures. They may also appeal grievance determinations, which are made by HMOs and insurers under a managed care contract. Grievances are complaints about any service that is unrelated to medical necessity, such as a referral to a specialist or a payment or a reimbursement issue.

"This ranking provides consumers in New York State with key information about HMOs and insurers to help them compare the plans that are available and make informed decisions about their overall health care," said Levin. "For the first time this year, we have added information about how the health insurance companies decided thousands of grievances and utilization review determinations, helping consumers gain a more complete picture of how their HMOs and insurers are performing."

The report includes a ranking of 1997 complaints that are upheld by the Department against insurers and HMOs. For the first time, the Department has also included the results of HMO grievance determinations and HMO and insurer utilization review appeals. Landmark managed care reform legislation signed by Governor Pataki in 1996 requires HMOs and insurers with managed care contracts to set up a formal grievance determination process for consumers who choose to contest adverse decisions and report those results to the Department. The legislation also requires all insurers, including HMOs, to have a separate appeals process for utilization review decisions.

As part of the ongoing effort to provide consumers in New York State with useful and accurate information about health care, the Department will be continuing to help HMOs and health insurers standardize their grievance determinations and utilization review appeals procedures. The Department will issue guidelines early next year to help HMOs and insurers meet their obligations under the new law.

In addition, the Department is gearing up to produce an even more comprehensive consumer guide to health insurance that will use a wide variety of quality of care indicators, including coverage rates for certain forms of treatment and the results of a consumer satisfaction survey. The new report will be completed in September 1999. To obtain a copy of the newest ranking, call 1-800-342-3736 or visit the website at

Attached is an executive summary of the new report.

Executive Summary

  • Overall, HMO enrollees who filed grievances or Utilization Review (UR) appeals saw their original adverse determinations by the managed care plans overturned more than 50% of the time, a rate consistent with results from a national survey.
  • In 1997, the Department upheld about 2,250 complaints against health insurers. Of these, 1,400 were attributable to HMOs, 300 to nonprofits and 550 to commercial indemnity insurers. An additional 5,600 complaints were either not upheld or determined to be questions of fact.
  • Complaints upheld by the Insurance Department against HMOs more than doubled over the year, rising to nearly 1,400 in 1997. Most of the increase in HMO complaints was attributable to complaints from health care providers for late payments of claims for health care services by HMOs.
  • The State’s five largest HMOs generated about 78% of the HMO complaints upheld by the Insurance Department. Of these, the vast majority was attributable to the State’s three largest HMOs—HIP, Oxford and U.S. Healthcare.
  • As of April 1997, HMOs were required to implement formal grievance procedures to aid consumers who wish to challenge adverse determinations unrelated to medical necessity. HMOs closed more than 10,000 grievances throughout the State in 1997, and slightly more than half, 50.6%, were resolved in the consumer’s favor.
  • The percentage of closed grievances resolved in the consumer’s favor (i.e., the reversal rate) was lower for upstate HMOs (44.1%) than for downstate HMOs (48.8%). In addition, smaller HMOs tended to reverse grievance determinations more often than large HMOs (57.2% vs. 49.2%). The for-profit status of an HMO had little impact on grievance reversal rates.
  • Utilization reviews are determinations made by HMOs and other insurers that judge the medical necessity of a health care service or procedure. In 1997, nearly 4,800 New Yorkers appealed their HMO’s adverse UR determinations. Of those, more than 4,400 were closed and nearly half (49.8%) of the HMOs’ original determinations were reversed.
  • The percentage of UR appeals resolved in the consumer’s favor was higher for upstate HMOs (51.8%) than for downstate HMOs (47.5%). In addition, smaller HMOs tended to reverse UR determinations more often than large HMOs (65.2% vs. 45.6%). The for-profit status of an HMO had little impact on UR reversal rates.
  • The complaint ranking order of the State’s six largest nonprofit indemnity insurers did not change between 1996 and 1997, however the total number of upheld complaints for these nonprofits fell from 418 in 1996 to 313 in 1997, a 27% decrease.
  • At 56.8%, the UR reversal rate for the six nonprofit indemnity insurers was higher than the corresponding rate (49.8%) for all HMOs.
  • Although the number of upheld commercial complaints rose by 169 over the year, only one commercial health insurer posted a significant year-to-year increase in complaints.

Department of Financial Services


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