Senate Joint Resolution (SJR) 99 of the 1998 Session of the General Assembly directed the Joint Commission on Health Care to examine both an independent external appeals mechanism and an ombudsman for health insurance issues. Specifically, the Joint Commission on Health Care was requested to examine: (i) the costs and benefits of an ombudsman program for health insurance issues; and (ii) the costs and benefits of requiring an external appeals mechanism for managed care health insurance plans.

Based on our research and analysis during this review, we concluded the following:

• The number of enrollees directly benefiting from an independent external appeals system is likely to be a small percentage of the number of persons enrolled in managed care plans; in Florida and New Jersey, the number of independent external appeals filed has averaged less than 100 per year;

• While the number of enrollees directly benefiting from an external appeals system is small, there are potential intangible benefits. These include the security of knowing that an appeal to an independent entity is possible;

• Virginia has instituted an external appeals procedure in its utilization review statute. A key question is to what extent additional external appeals provisions (such as requiring appeals to be conducted by entities selected by a state agency or to be conducted by a centralized review organization) would confer additional benefits. This is difficult to quantify as the most significant benefit that can be identified would be increased confidence in the independent nature of the appeal, as the review entity would no longer be selected by the health plan;

• A health insurance ombudsman provides a non-regulatory option for helping consumers navigate the sometimes cumbersome requirements associated with managed care plans;

• Several potential models for an ombudsman exist. These include requiring health plans to establish an internal ombudsman, contracting with a private organization to serve as a health insurance ombudsman, and having this function conducted by a state agency (the most likely candidates are the Bureau of Insurance and the Virginia Department of Health); and

• The Arlington Area Agency on Aging has instituted a pilot ombudsman program for Medicare beneficiaries that could be used as a model for a more broadly applicable health insurance ombudsman program.

A number of policy options were offered for consideration by the Joint Commission on Health Care regarding the issues discussed in this report. The policy options are shown on page 23 and pages 30-31.

Our review process on this topic included an initial staff briefing, which comprises the body of this report. This was followed by a public comment period during which time interested parties forwarded written comments to us regarding the report. The public comments received, which are provided in Appendix B, provide additional insight into the various issues covered in this report.