SD7 - The Role of the Commonwealth in Providing Public Education and Citizen Protection in Health Insurance Issues

  • Published: 1993
  • Author: State Corporation Commission and Bureau of Insurance
  • Enabling Authority: Senate Joint Resolution 120 (Regular Session, 1992)

Executive Summary:
Legislative Request

The State Corporation Commission's Bureau of Insurance (Bureau) was requested by Senate Joint Resolution No. 120 (Appendix A), passed by the 1992 General Assembly, to study the role of the Commonwealth in providing public education and citizen protection in issues surrounding health care insurance. In its deliberations, the Bureau was asked to consider (i) the development of a single claims form for health insurance; (ii) regulatory oversight of the disclosure of criteria used in payors' case decision-making, and an appeals process for the denial of claims; (iii) development of a health insurance consumer guide for small businesses; (iv) the role of the Bureau in the collection, analysis, interpretation, and evaluation of provider and consumer problems related to health insurance; and (v) development of a "health insurance hotline."

Development of a Single Health Insurance Claims Form

The Bureau surveyed the top twenty-five (25) writers of accident and sickness insurance policies in Virginia to determine whether they would be in favor of the creation of a single health insurance -claims form. Out of nineteen (19) responses received, twelve (12) companies said they would be in favor of this proposal. Although the survey did not ask the respondents to comment on a particular form, several companies mentioned on the survey that they would not be opposed to the establishment of a universal claims form as long as it was the HCFA-1500 (Appendix B) for providers and the UB-82 for hospitals. These are national forms that were developed by the Uniform Claims Form Task Force and the National Uniform Billing Committee. The Health Care Financing Administration co-chaired both of these groups together with the American Medical Association and the American Hospital Association, respectively. One company stated that the development, implementation, and required use of uniform claims forms could best be achieved by using the forms already developed at the federal level. Several other companies stated that they would be opposed to any form that was unique to Virginia.

The Bureau also surveyed one hundred (100) randomly selected physicians licensed and living in Virginia to determine whether they would be in favor of the development of a single health insurance claims form. Out of thirty (30) responses received, twenty-eight (28) said they would be in favor of such a proposal. Although the survey did not ask the respondents to comment on a particular form, several physicians stated that the HCFA-1500 is currently being used as a national form.

Eighteen (18) advisory organizations representing provider groups other than physicians were also surveyed. Out of sixteen (16) responses received, fifteen (15) indicated that they would be in favor of the creation of a universal claims form for health insurance. Several organizations mentioned the HCFA-1500 and the UB-82 claims forms.

The Bureau also researched the activities of the other states to determine whether any other states had adopted a standard health insurance claims form. Twenty-six (26) states have either adopted a standard claims form or are considering it. Thirteen (13) of these states either require or plan to require insurers to accept the HCFA-1500 claims form from physicians, and eleven (11) states either require or plan to require insurers to accept the UB-82 claims form from hospitals. Nine (9) states have adopted the claims form developed by the American Dental Association (ADA) for dentists. Four (4) states have developed their own claims form for pharmacists. The National Association of Insurance Commissioners (NAIC) is also in the process of setting up a working group to study this issue. Some preliminary information obtained from the NAIC indicates that they will probably recommend adopting the HCFA-1500 for physicians, the UB-82 for hospitals, and the ADA form for dentists. They have not decided what they will recommend for pharmacists.

Based on these findings, the Bureau recommends that all accident and sickness insurers, health maintenance organizations, health services plans, and dental and optometric services plans licensed in the Commonwealth be required to accept as standard claims forms:

(i) the HCFA-1500 claims form (or its successor) for physician services and for services provided by chiropractors, audiologists, speech pathologists, clinical nurse specialists who render mental health services, physical therapists, psychologists, clinical social workers, professional counselors, podiatrists, optometrists, and opticians; (ii) the UB-82 claims form (or its successor) for hospital services: and (iii) the ADA claims form developed by the American Dental Association for dental services.

Payors should not be prohibited, however, from accepting any other claims form that has been determined to be acceptable by both the provider and the payor. Because there does not appear to be a national standard form already developed for use by pharmacists, the Bureau does not recommend establishing a pharmaceutical claims form that would be unique to Virginia. The Bureau recommends that the standardized format which is being developed by the American National Standards Institute to facilitate the electronic submission of claims be used by all insuring entities as soon as the ANSI X12 837 Health Care Claim Transaction form (Appendix C) has been adopted. This form will be available for use by hospitals, physicians, dentists, pharmacists, and other health care providers.

Disclosure of Criteria Used in Payors' Case Decision Making and Establishment of an Appeals Process for Denials of Insurance Claims

The Bureau surveyed other states to determine whether they require disclosure of criteria used in payors' case decision making and appeals processes for the denials of insurance claims. None of the responding states require disclosure of criteria used in payors' case decision making and only one state requires health maintenance organizations to have an appeals process for the denial of claims. However, several states require appeals processes for prospective and concurrent utilization review denials.

The Bureau also surveyed the top writers of accident and health insurance and private passenger auto liability insurance in Virginia, Blue Cross and Blue Shield of the National Capital Area (a health services plan), all Virginia-licensed health maintenance organizations, and all Virginia-certified private review agents. The survey responses revealed that (i) most respondents use criteria for screening and not for making utilization review determinations; (ii) all allow their physician or peer reviewers to override criteria if the criteria would result in a utilization review determination that is contrary to their judgment; (iii) many respondents are prohibited from disclosing criteria by contractual terms imposed by the marketers of the criteria; and (iv) many respondents use criteria that are computerized and which consequently may be difficult to disclose. The survey responses also revealed that many respondents have appeal/reconsideration processes which are accessible to insureds.

The Bureau also performed a review of the literature. The literature offered support for both disclosure and nondisclosure of criteria and offered support for establishment of appeals processes.

Based on these findings, the Bureau does not recommend that the Commonwealth of Virginia require disclosure of criteria used in payors' case decision-making to providers or consumers. The Bureau does recommend that insurers, health services plans, and health maintenance organizations that make prospective or concurrent utilization review denials should be required to have an appeals process for the appeal of these denials if the insurer, health services plan, or health maintenance organization makes the utilization review determination for its own insured, member, subscriber, or enrollee.

Development of a Consumer Guide for Small Businesses

The current publications produced for consumers by the Bureau of Insurance were developed for individual consumers. The Bureau recognizes the need for information by small businesses and considers it feasible to publish a consumer guide for that segment. A draft of the guide is found in Appendix E of this report.

Handling of Provider and Consumer Problems and Concerns

The Bureau's Life and Health Market Regulation Division has a Consumer Services Section which handles provider and consumer problems and concerns related to health insurance. This section investigates complaints, answers inquiries, and provides information to consumers who call or visit the Bureau. Complaint data is collected and analyzed on a monthly and yearly basis. The Bureau will, within the next few years, be phasing in a new computer system that will allow for more detailed tracking of complaints and analysis of complaints and other trends. This new system will also allow the Bureau to share complaint data with other states through the National Association of Insurance Commissioners.

The Bureau conducts seminars and makes presentations to groups who request information or who have special needs related to health insurance. Consumer guides are also made available to the public. Questions concerning Medicare, Medicaid, or nursing homes are referred to the Social Security Administration, the Department of Medical Assistance Services, and the Department for the Aging, respectively.

Because of its role in providing public education and citizen protection, because of the periodic reviews it conducts to analyze provider and consumer complaints, and because an upgrade of the computerized record-keeping and analysis of complaint data has already been planned, the Bureau recommends no changes at this time in the way it collects, analyzes, interprets, and evaluates provider and consumer problems and concerns related to health insurance.

Development of a Health Insurance Hotline

The State Corporation Commission makes an in-state, toll-free hotline number available to the public through which insureds can call the Bureau's Life and Health Consumer Services section to register a complaint or to discuss a problem related to health insurance. Consumers needing assistance from other state agencies are referred to the appropriate agency. The Commission's toll-free number and the Bureau's direct number are widely distributed. Several enhancements to the phone system have already been made and several more are in the planning stages for 1993. The Bureau recommends against the development of an additional health insurance hotline since both a commission toll-free hotline number and a Bureau direct number already exist.