VICTORY! New Law Guarantees External

VICTORY! New Law Guarantees External
Review of Disputes With HMO’s

Last year, the 1999 Indiana General Assembly passed legislation designed to protect the interests of Hoosiers enrolled in Health Maintenance Organizations (HMOs). This represented the third year in a row state legislators passed pro-consumer HMO legislation.

House Bill 1309 was sponsored in the House of Representative by Rep. Scott Pelath (D-Michigan City) and several other members from both political parties, an indication of the broad bipartisan support for HMO consumer protections. Sen. Beverly Gard (R-Greenfield) shepherded the bill through the process in the Senate.

With the passage of HB 1309, HMO enrollees in Indiana are guaranteed the right to have disputes with their HMO reviewed by an independent panel of medical experts. This legislation builds upon a law passed in 1997, which added consumer friendly features to the internal grievance procedures which all HMOs in Indiana must have. If an HMO enrollee is not satisfied with the outcome of the internal grievance procedure, they now have the option of contacting the Indiana Department of Insurance and requesting an external review.

The idea of providing HMO enrollees with a process of external review is catching on across the country. A majority of states have passed laws to create such a process.

External review has a "sentinel effect" on health plan behavior, creating incentives for HMOs to ensure the quality of the internal grievance and appeals process. External review strengthens consumer satisfaction with the outcome because they are assured the dispute is reviewed by medical experts with no financial or other conflict of interest. According to a study by the Kaiser Family Foundation, external review decisions favor enrollee about half of the time.

These factors reduce the potential for litigation, a cost savings for HMOs and consumers alike.

CAC worked hard to pass the external appeal legislation with our allies in the Indiana Task Force on Health Care Issues, which includes organizations representing a spectrum of consumer interests, including senior citizens and people with disabilities and chronic illnesses, as well as organizations representing health care providers.

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