Health Affairs, 23, no. 6 (2004): 163-169 doi: 10.1377/hlthaff.23.6.163 © 2004 by Project HOPE	New Online   Obama's Success & Next Steps   3 Health Policy Options for President Obama   A Hybrid Proposal   Bipartisan Compromise

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Independent Medical Review Of Health Plan Coverage Denials: Early Trends

Abstract

 
Concerns among patients and physicians that health plans would deny coverage for medically necessary services has brought about legislation mandating independent medical review (IMR) of denied services. Among 1,400 cases submitted in California, the most common areas for dispute were cancer care, endocrine/metabolic care (especially for obesity), orthopedic care, and neurological disorders. Surgery and pharmacy services constituted 52 percent of cases. In 58 percent of cases, IMR upheld the health plan’s decision, while in 33 percent of cases the health plan’s decision was overturned, which suggests that external IMR provides additional patient protection in California’s health care system.

In response to complaints about health plans’ behavior, the Friedman-Knowles Act of 1996 amended the Knox-Keene Act, requiring California HMOs to provide external independent medical review (IMR) for coverage denials. In external review, health plans must step beyond their internal processes, and providers and patients must be willing to take their problems to a regulatory body. As of late 2002, forty-one states and the District of Columbia had passed legislation creating a process of IMR.⁴ Thirty-four of these states, including California, mandate that the decision resulting from the IMR is binding on the HMO.

Since IMR in its current form is a relatively new approach to dispute resolution as run by a state agency—the IMR legislation in thirty-six states and D.C. is new since 1997, and five of the six states that adopted IMR before 1997 have amended or expanded their laws since 1997—there have been no prior peer-reviewed reports about its functioning.⁵ In this paper we extend the literature on coverage disputes with this first detailed description of the medical conditions and services in which disputes commonly arise and the outcomes of IMR among HMOs in California.

Study Data And Methods

Top Study Data And Methods Results Discussion Editor's Notes NOTES

 
IMR process. Although the details of IMR vary from state to state, the general approach is similar. When a patient or physician disputes a plan’s coverage decision, the case can be referred for review to independent specialists experienced in the condition or service at issue. This process occurs after any internal reviews within the HMO have been exhausted. California’s Department of Managed Health Care (DMHC) contracts with three IMR organizations to facilitate and obtain the determinations. All but one IMR since the system began in January 2001 have been provided through the primary contractor, the Center for Health Dispute Resolution (CHDR). The CHDR credentials medical specialists, selects reviewers, distributes medical records to assigned reviewers, and submits the completed determination to the DMHC after internal quality-assurance review for consistency. Three reviewers are assigned for experimental and investigational cases; one reviewer is assigned in 95 percent of medical-necessity cases.⁶ Reviewers submit rationale and evidence in support of their decision and must make a binary "uphold/overturn" decision about the service, rather than entering into a clinical consultative relationship with the plan and physician (for example, they do not propose additional testing but must render an uphold/overturn judgment based on the information available in the medical records). In California, the HMOs pay for the cost of the review.⁷

Sample. We collected data on all eligible IMR cases referred to the DMHC from the time the DMHC implemented IMR, 1 January 2001, through 31 December 2002. Cases eligible for review include services covered under the enrollee’s contract that the plan has denied as medically unnecessary and those denied experimental or investigational exclusions.

Data collection. Eligible cases were first classified by the DMHC into two categories: medical necessity (disputes over appropriateness of the use of a requested test or therapy in the patient’s particular case) and investigational/experimental cases (disputes about the appropriateness of a test or therapy in general), according to the HMO’s internal review classification. Data collected for IMRs in 2001 included health plan, severity/urgency of case, diagnosis, and disputed treatment. In 2002 the DMHC revised its classification and replaced diagnosis and disputed treatment with the following categories: treatment category, treatment service, treatment type, primary diagnosis, and secondary diagnosis. The DMHC also recorded the decision by the reviewer or whether the claim was withdrawn (by the HMO or the patient). To make the two data sets comparable, we converted 2001 data into the 2002 format, adding the additional categorizations if possible.

Cases were assigned to clinical areas and service types based on the details of the dispute. For example, refusal to perform a follow-up computed tomography (CT) scan on a patient with breast cancer was grouped in "cancer care" in the list of clinical areas in which disputes arose and "imaging" in the categorization of disputed services.

There were three possible outcomes of IMR. It could uphold the HMO’s original denial of the service, it could overturn the denial (resolving the case in favor of the patient), or a case could be withdrawn (by the HMO if it agreed to cover the service or by the patient if the service was no longer desired).

Data analysis. We present the data first by primary diagnosis and again by disputed treatment category. We limited the categories to conditions that accounted for at least 3 percent of the cases for both years. We further subdivided primary diagnosis by secondary diagnosis if conditions accounted for at least 1 percent of cases. We subdivided primary treatment categories in a similar manner.

We performed two analyses to see if the outcome of IMRs and the tendency for HMO coverage decisions to be overturned or upheld had an impact on subsequent frequency of disputes. First, we sorted all clinical areas into three groups: number of IMRs increased from 2001 to 2002, number stayed the same, and number declined. Among these groups, we determined the percentage of HMO decisions overturned in 2001. We did the same for therapeutic categories. We further focused on categories for which the increase or decrease in IMRs was statistically significant and assessed the relationship between percentage of HMO decisions overturned and change in number of IMRs for 2002 versus 2001. Statistical significance was tested using chi-square statistics with Yates correction for multiple comparisons and with Cochrane Armitage chi-square (SAS version 8) to evaluate for trends.⁸

Results

Top Study Data And Methods Results Discussion Editor's Notes NOTES

 
In the first two years in which an IMR system was in place in California, 1,400 cases were reviewed by the DMHC, 619 in 2001 and 781 in 2002. More disputes arose over medical necessity than experimental interventions, and the percentage of medical-necessity cases increased from 75 percent in 2001 to 81 percent in 2002 (p < .01). The most common clinical areas for dispute were in cancer care, endocrine/metabolic care, orthopedic care, and neurological disorders (Exhibit 1). Important subcategories include breast cancer, obesity care, hepatitis, autism, migraine headaches, arthritis, back or neck pain, hip/knee/shoulder pain, mental developmental delays, and sleep apnea. From 2001 to 2002 there was a decline in disputes over cancer care and obstetrics/gynecology and an increase in disputes for obesity care, which explained almost all of the increase in endocrine cases.

Top Study Data And Methods Results Discussion Editor's Notes NOTES

Added patient protection. Among all areas of dispute, IMR upheld the original HMO decision at least half the time in most clinical areas and for most services, but nonetheless, fully one-third of HMO denials were overturned. This suggests that the external IMR process adds some patient protection to California’s health care system. Discussion with the CHDR revealed that in overturned IMRs, reviewers felt that HMOs had applied stricter or slightly different standards than the medical literature or practice guidelines supported. IMR’s additional patient protection appears to justify the investments most states have made in it. States that do not yet have IMR should consider these data when deciding whether their citizens might benefit as well.

Evidence of patient protection is mitigated, however, by the fact that relatively few IMRs are being requested. Of 17 million HMO patients covered by California’s IMR system in 2002, only 781 requested IMRs that year. This is a rate of 0.46 IMR per 10,000 enrollees. Reports for the Henry J. Kaiser Family Foundation of early IMR show rates of 0.09–1.07 per 10,000 enrollees (the Medicare IMR rate is about 16 per 10,000 enrollees).¹⁰ This relatively low number may reflect lack of awareness among patients and physicians about the IMR process or a large population in self-insured ERISA plans that are not eligible for IMR. In addition, those who have requested internal HMO review and been denied may be skeptical that a second IMR would change the outcome. However, our data suggest that such subsequent reviews do often lead to overturns. An alternative explanation for the paucity of IMRs is that patients and physicians are satisfied with the results of HMOs’ internal reviews. However, David Studdert and colleagues found that about half of internal medical-necessity appeals from a sample of 13,000 appeals from a two-month period in one HMO and 2,223 from a six-month period in another HMO were denied. It seems unlikely that all those whose appeals were denied were convinced after the first review that the care was unwarranted.

We found sizable concentrations of disputes around cancer, obesity, neurological disorders, and back pain care and around pharmacy and surgical services. These areas are fairly similar to Studdert and colleagues’ review of internal disputes from 1998 to 2000, but they also reflect the wide variety of disputes that can arise. This implies that the option of review (internal or external) of HMO denials has been sought for many types of care and should be considered by almost all clinicians who believe that a patient has been inappropriately denied care.

Study limitations. In addition to having only two years of data, the most important limitation to our findings is that we only had data about the IMRs that were formally submitted by the DMHC for expert review. Therefore, we do not know how often patients or physicians disagreed with plans’ coverage decisions but did not request IMRs, and we cannot evaluate yearly trends on volume within specialties or the percentage of cases that go to review. The DMHC has initiated an outreach program to make consumers and providers more aware of the IMR option.¹¹

Differences of opinion will always arise between patients, physicians, and health plans about what therapies are medical necessary and when new services cross the line from experimental to accepted medical practice. IMR is one possible response, but it is still in its infancy. This first study of IMR in California shows that some clinical areas are more likely to generate disputes than others, that reversal of HMOs’ decisions is not rare, and that patients and providers nonetheless rarely seek IMR. Further research will be needed to determine how patients, providers, and plans use IMR, to understand the potential of IMR as a dispute-resolution tool; and to assess the interrater reliability of IMR. However, physicians, as patient advocates, should be aware of IMR and be able to explain to patients that such a process exists and can reverse denials of recommended care. In addition, states that do not have IMR may wish to consider offering this option to their citizens.

Editor's Notes

Top Study Data And Methods Results Discussion Editor's Notes NOTES

 
Kenneth Chuang (Kenneth.chuang{at}med.va.gov) is a Veterans Affairs (VA) National Quality Scholar at the San Francisco (California) VA Medical Center. Wade Aubry is an associate clinical professor at the Institute for Health Policy Studies, University of California, San Francisco (UCSF). Adams Dudley is an assistant professor of medicine and health policy, Division of Pulmonary and Critical Care Medicine and the Institute for Health Policy Studies, at UCSF.

Wade Aubry and Adams Dudley received support from the California Department of Managed Health Care for their work on this paper. Kenneth Chuang’s work was funded by the Veterans Affairs (VA) National Quality Scholars program.

NOTES

Top Study Data And Methods Results Discussion Editor's Notes NOTES

 

1. D.M. Studdert and C.R. Gresenz, "Enrollee Appeals of Preservice Coverage Denials at Two Health Maintenance Organizations," Journal of the American Medical Association 289, no. 7 (2003): 864–870.[Abstract/Free Full Text]
2. Institute for Medical Quality, Independent Medical Reviews, Experiences in California Phase I: Cases of Investigational/Experimental Treatments (Oakland: California HealthCare Foundation, 2002).
3. P.G. Golschmidt and G.P. Monaco, "Investigational Treatments: Process, Payment, and Priorities," Journal of the American Medical Association 278, no. 17 (1997): 1402–1403; and [CrossRef][ISI][Medline]R.A. Rettig, Health Care in Transition: Technology Assessment in the Private Sector (Santa Monica, Calif.: RAND, 1997).
4. W.K. Mariner, "Independent External Review of Health Maintenance Organizations’ Medical Necessity Decisions," New England Journal of Medicine 347, no. 26 (2002): 2178–2182.[Free Full Text]
5. America’s Health Insurance Plans, Independent Medical Review of Health Plan Coverage Decisions (Washington: AHIP, 2001); and Studdert and Gresenz, "Enrollee Appeals."
6. California Department of Managed Health Care (March 2001).
7. K. Pollitz et al., Assessing State External Review Programs and the Effects of Pending Federal Patients’ Rights Legislation (Washington: Georgetown University, Institute for Health Care Research and Policy, May 2002); Friedman-Knowles Experimental Treatment Act (A.B. 1663 of 1996); and Knox-Keene Act (1975).
8. S.A. Glantz, Primer of Bio-Statistics (New York: McGraw-Hill, 1997).
9. Supreme Court of the United States, Rush Prudential HMO, Inc. v. Moran et al., No. 00-1021, argued 16 January 2002, decided 20 June 2002.
10. Pollitz et al., Assessing State External Review Programs; and K. Pollitz, G. Dallick, and N. Tapay, External Review of Health Plan Decisions: An Overview of Key Program Features in the States and Medicare (Washington: Georgetown University, Institute for Health Care Research and Policy, 1998).
11. See DMHC, "Independent Medical Review," www.dmhc.ca.gov/imr (11 August 2004).

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