Most people now get their health care through some form of managed care plan – a health maintenance organization (HMO),⁽¹⁾ preferred provider organization (PPO),⁽²⁾ or point-of-service plan (POS).⁽³⁾  These plans “manage” care by monitoring the medical care used by their enrollees to make sure it’s medically necessary and cost-efficient, and by providing restrictions or incentives to use certain health care providers.  Even traditional indemnity plans⁽⁴⁾ have incorporated elements of utilization review to keep costs under control. 

Most of the time, people covered by health plans (the common term now for all types of health insurance and health plans) receive the care they need.  But when a health plan decides that the care you or your doctor want is not medically necessary, limits your care in some way, or denies payment for your care, the potential for a dispute arises.  The health plan may be justified in refusing to provide or pay for treatment if it is not considered medically necessary, not necessary in your situation, or not covered by your policy.  The cases most likely to end up in dispute are often not clear-cut, such as treatments that may be new and experimental, whose value may be unproven.

You have certain rights under federal and state laws if you disagree with a decision your health plan makes about your medical coverage.  The rights that you have depend on the type of health plan you have and the state in which you live.  Note that in some states, the state laws apply to all of the various types of insurance coverage (HMOs, PPOs, POS plans, and indemnity insurance, whether available from insurance companies, Blue Cross/Blue Shield plans, or employers), while in other states the laws may be limited to specific types of managed care plans such as HMOs. 

Both federal and state laws apply to a health plan’s “internal review” process, the review of denials that are conducted by the health plan.  If you have an employer-sponsored health plan (a plan that you enroll in through your work), the federal government has requirements that employer-sponsored health plans must follow for processing claims and for internal review of appeals.  If you have a health plan that you purchased on your own, your state has laws and rules that your health plan must follow for internal review of claims denials.  In general, a state’s rules apply to internal review by insured health plans (whether employer-sponsored or not), as long as the state’s rules don’t conflict with the federal rules. 

In recent years, most states have expanded your ability to appeal a health plan’s denial of benefits by setting up their own process for “external review,” or the reconsideration by an outside, independent organization of a health plan denial.  These “external reviews,” or “independent reviews” as they are often called, provide an unbiased way to resolve disputes between patients and their health plans.  The review is typically made by a person or panel of individuals who are not connected to the health plan.  As of December 2004, 43 states plus the District of Columbia had external review programs.⁽⁵⁾

This Guide will help you navigate your plan’s internal appeals procedure and your state’s external review process for disputes with your employer or private health plan.  You cannot use this Guide, however, for resolving disputes with your Medicare or Medicaid health plan because these programs have their own procedures for resolving disputes.

Section 1 of this Guide, “Know Your Coverage,” is important to read before you have a dispute.  Many disputes arise because people don’t know what type of health plan they have or what services are not covered by their plan.  You can avoid a lot of hassle by knowing this information.  There may be referral or payment rules that you need to follow.  At the end of Section 1, we present some questions to help you diagnose your coverage and dig into the important details.

Section 2, “Appealing To Your Health Plan,” discusses how to use your health plan’s internal appeals process.  All states require health plans to have internal review procedures, and the federal government requires employer-sponsored plans to follow certain rules for internal review.  The internal appeal is an important step for consumers to understand because many disputes are resolved during this process, and because most state laws require you to complete the internal appeal process before using the state’s external review process. 

Section 3, “Getting an Independent Opinion  –  External Review in Your State,” explains what to expect if you use your state’s external review process. 

Section 4, “How Consumers Fared Under External Review Programs,” describes some of the experiences states have had with their external review programs.

⁽¹⁾ An HMO typically requires all your care to be arranged and approved through your primary-care physician.  Except for emergency care, you must receive care from providers (hospitals, doctors, and therapists) who are part of the HMO network.

⁽²⁾ A PPO plan allows you to use any providers (hospitals, doctors, and therapists) that you choose, but you will pay less if you use health care providers that are part of the PPO network.

⁽³⁾ A POS plan is an HMO that allows you to obtain services from providers such as hospitals, doctors, and therapists who are not part of the HMO network, but you will pay less if you use providers within the network.

⁽⁴⁾ Indemnity plans (also known as fee-for-service plans) were the predominant type of health insurance available before managed care plans such as HMOs and PPOs became available; typically you can use the provider of your choice, and the plan will pay a certain percentage of the reasonable and customary fee charged by the provider.

⁽⁵⁾ This Guide’s total for the number of states with external review programs may differ from the total in other studies because of the different ways of defining what constitutes an external review program.  This Guide includes state external review programs that review health plan denials based on whether the health services were medically necessary or experimental, and also contractual disputes.  See Section 5 of this Guide under “What you can appeal” to determine what types of denials your state’s program covers.