Obama Administration Reverses Itself on Patient Disputes With Insurers

The Obama administration has fine-tuned rules that give patients greater clout in disputes with health insurers, changing the standards in ways that disappointed leading advocates for healthcare consumers.  The rules are designed to guarantee patients the same rights to appeal if their insurers do not cover care that is considered necessary.  The federal standards, part of the Patient Protection and Affordable Care Act (ACA), replace a patchwork of varying state policies.  The rules allow patients to protest to their health plans; if they do not succeed, they can take their complaints to an outside arbiter.  Department of Health and Human Services (HHS) officials issued the rules 11 months ago, but they have revised them.  Insurers and employers have long wanted limited appeal rights; conversely, consumer groups have argued for stronger patient protections.  In the new version, the grounds to protest an insurer’s decision are narrower than consumer groups prefer.

Writing on the Becker’s Hospital Review website, Rachel Field says that “The earlier rules governed consumers’ right to appeal denials by health plans.  The overhaul gave members in group and individual health plans the right to appeal the denial of coverage to an independent review panel.  The administration’s new rules give beneficiaries less time to prepare an appeal, less information about the reason for the denial and limitations on which denials can be appealed.  According to the report, patients can still appeal if their coverage is cancelled by an insurer, and decisions by external review panels are still binding.  Employer-sponsored plans that are self-insured will have to use at least two independent review organizations to make sure decisions remain unbiased.”

Because states lack the authority to regulate self-insured health plans, there has been no requirement allowing beneficiaries to appeal denials to an independent panel.  The health law extends that right to more than 44 million Americans covered by self-insured plans that will lose their exempt status this year.  “The right to an external appeal is considered one of the most important consumer protections that you can have,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the HHS.  “Consumers do not want insurance companies making medical decisions for them or for their families.”  According to Larsen, states will have extra time to revise local external appeals rules so that they can conform to the federal standards.  Insurers won’t have to comply with new state rules that incorporate federal requirements until January 1, 2012.

The revised rules come at an appropriate time.  Although few people want to a fight with their health insurer, it may be worthwhile.  A recent Government Accountability Office report found that more claims problems resulted from annoying but often clear-cut billing and eligibility issues than from disagreements over whether care was medically necessary.  Plus, the odds are about 50/50 that if a patient appeals an insurer’s decision, the patient will win.

Not everyone agrees with the action. “The Obama administration gave in to the insurance industry and large employer lobby on rules that would, for the first time, give rights to patients with certain employer-paid health plans to challenge a healthcare denial.  These consumers need the protection of independent reviews the most because they usually have no legal remedy for a wrongful decision to deny care under an errant 1987 Supreme Court ruling.  Health reform was intended to strengthen the public’s ability to make insurers provide the coverage patients are promised.  The administration should reverse the changes in this regulation that undermine that promise,” said Carmen Balber, Washington director for Consumer Watchdog.

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