HD2 - The Possible Establishment and Implementation of an Appeals Process for Insureds Denied Coverage for Experimental Technologies
Executive Summary: Purpose The State Corporation Commission's Bureau of Insurance was requested by the 1991 Session of the General Assembly to study the possible establishment and implementation of an appeals process for insureds denied coverage for "experimental" medical technologies. As stated in House Joint Resolution No. 432, this study was requested because (i) the Commission on Health Care for All Virginians had previously examined this issue; (ii) recent studies have revealed inconsistencies in third-party reimbursement policies for medical procedures considered experimental; (iii) some experimental therapies provide potentially lifesaving treatment and may actually be more cost-effective than more traditional treatments for which coverage is provided; and (iv) an appeals process is necessary to provide Virginia citizens a "fair and objective" means of obtaining adequate insurance. Methodology The Bureau of Insurance began studying this issue by analyzing the data collected by the Commission on Health Care for All Virginians. The Bureau surveyed the other state insurance departments to determine whether any states had established an appeals process for insureds denied coverage for experimental medical treatments and whether any states required coverage to be provided for experimental medical treatments. The Bureau also surveyed the top twenty-five accident and sickness insurers, health services plans, and health maintenance organizations operating in Virginia to determine (i) whether coverage for experimental treatments was being provided; (ii) how insurers determined which treatments were experimental; (iii) who within the company made this determination; (iv) whether a list of these treatments was maintained by the company; and (v) whether any statistics were available to indicate the number of claims that had been paid and/or denied for treatments considered experimental. In addition, a public meeting was held to give the citizens of Virginia an opportunity to provide testimony on problems they may have had in being reimbursed for treatments deemed experimental by their insurer. Findings The Bureau's findings can be summarized as follows: 1. The Commission on Health Care for All Virginians concluded in its report that, with so many assessment mechanisms already in place, a state panel appointed to assess new technologies would simply replicate the current assessment processes used by various organizations. It also concluded that mandating and/or paying for experimental procedures would encourage the expenditure of resources and money for tertiary care services and high technology research which, in turn, would greatly increase health care costs. 2. There are certain advantages of setting up an appeals panel such as impartiality, consistency in claims handling, reduction in litigation expenses, quick resolution, and equity for the citizens of Virginia. An appeals panel could also help address some of the concerns that have been noted in recently published medical literature such as the concern that (i) cost containment has become the overriding factor in determining the type of medical treatment a patient will receive, (ii) that decisions regarding new technologies do not take into consideration the speed with which biomedical research is advancing, and (iii) that reimbursement procedures may actually negatively impact the development of new technologies. 3. Comments provided on the company surveys indicated certain disadvantages associated with setting up an appeals panel. These included duplication of remedies already available to insureds, existence of adequate assessment methodologies currently in place, cost and the lack of predictability in determining adequate rates, possible conflict with ERISA laws for self-insured single employer plans, lack of impartiality by specialists making decisions in their field of expertise, and lack of authority to override specific contract exclusions. 4. Thirty-five (35) state insurance departments responded to the Bureau's survey. According to the responses received, none of the states require coverage to be provided for experimental or investigative treatments. None of the states have an appeals process for insureds who are denied coverage for experimental or investigative treatments. However, three states provided additional information for the study. The Georgia Insurance Department said they had taken the position that experimental or investigative treatments could not be defined more restrictively than any treatment, procedure, facility, equipment, drug usage, device or supply not recognized as accepted medical practice by the American medical community. The New York Insurance Department indicated that they could request an opinion from their health department as to whether a treatment was experimental but that such an opinion had only been requested once. The Connecticut Insurance Department said that under questionable circumstances, the department could require the company to justify or support its conclusion that a treatment was experimental. This type of documentation can be and has been requested in Virginia as well. 5. Twenty-two (22) usable company survey responses were received. Seventeen (17) companies indicated that coverage for experimental treatment was neither provided in their policy nor offered in a rider. Seventeen (17) companies reported that they did not maintain a list of treatments considered experimental. When asked if the company had ever paid a claim for a treatment considered experimental, eighteen (18) companies answered "yes", but most of the companies (17) said they did not track claims data for these types of claims so they were unable to report the number of claims that had either been paid or denied. Finally, five (5) companies indicated they would not be opposed to establishing an appeals process in Virginia. It should also be noted that a number of different responses were provided when the companies were asked how they determined what was experimental, who within the company made this determination, and what types of medical authorities were consulted in making this determination. 6. Twenty-one (21) people testified at the public meeting held in Richmond on July 10th and thirty-four (34) individuals and organizations submitted written comments. Excerpts from the testimony given at the meeting and from the written comments received are contained in the report. Also, selected representative samples of written comments are included in the Appendix. The following summarizes some of the comments given: (i) insurers are given unlimited discretion in determining what is experimental and, as a result, are restricting the delivery of health care in Virginia; (ii) insurers do not use the same criteria to determine what is experimental or investigative and vary considerably in their reimbursement policies for these types of treatments; (iii) the court system is already overburdened and another system that allows quick resolution is needed; (iv) when an insured proves his or her case in court it does not set a precedent for future decisions made by insurers; (v) an arbitration forum should be available to the average person where no lawyer needs to be present and no great legal expenses are incurred; (vi) most insureds do not know or do not have a choice in deciding what will be covered under their group insurance policies; and (vii) insurers have been cited for making their own independent evaluation of published scientific literature and disregarding the consensus of opinion of members of the medical community. Conclusion While the Bureau of Insurance is of the opinion that an appeals process could be established, such a process may not be the best solution to the problem that currently exists. This type of proposal would have certain drawbacks such as (i) increased administrative responsibilities for the agency in charge of overseeing the activities of an appeals panel; (ii) additional costs associated with the added administrative responsibilities; (iii) increased staffing needs; and (iv) difficulty in locating panel members who would be impartial and who would be willing to serve on the panel. In addition, no other state has established an appeals process for insureds who have been denied coverage for experimental medical technologies. Therefore, the Bureau of Insurance is unable to recommend that an appeals process be established in Virginia. The Bureau of Insurance concludes that if the public demands this type of coverage, insurers should be encouraged to offer coverage for experimental treatments. This coverage should be made available to those who are willing to purchase it. |
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