What is an external appeal and what is the purpose of developing such a mechanism?

An external appeal is a process by which a health plan enrollee can have a grievance addressed by an entity or individual not affiliated with the health plan. An external appeal provides for an impartial review by reviewers with no financial or other interest in the outcome of the review.

What problem is a state attempting to address when it requires that enrollees be permitted to appeal certain health plan decisions to an independent reviewer?

Many managed care enrollees are being denied important medical care that health plans are deciding is not medically necessary. It is important to understand that before a covered service is requested, the enrollee has been examined by a treating provider who, in his or her professional judgment, determined that a particular covered treatment or service was necessary to the health of the patient. Some health plans do not require utilization review decisions to be made by licensed physicians; therefore, a patient may improperly be denied medically necessary care on the basis of non-medical or substandard judgment. In addition, a health plan may impose cost considerations in rendering a decision not to pay for medically necessary covered services.

Who initiates an external appeal and when does it occur?

In states that have created external appeals processes, appeals must be initiated by the enrollee, or by the enrollee’s treating provider or designated representative on behalf of the enrollee. Before initiating an appeal, an enrollee is generally required to utilize the health plan’s internal grievance procedures until no further redress is available. After an enrollee receives a final adverse decision by the health plan, the enrollee submits to the proper oversight agency a written request for an independent external review of the requested covered service.

What agency oversees the external appeals process?

Thus far, most states that have enacted external appeals mechanisms have charged the state insurance department with overseeing the appeals process. The most critical aspect in selecting an oversight authority is to select one that currently regulates other aspects of the state’s managed care organizations, particularly utilization review processes.

What role does the oversight authority play in the appeals process?

The responsible department handles the administrative aspects of the appeal. These functions would include receiving and acknowledging written requests for an independent review, compiling and maintaining a current list of eligible independent reviewers, and selecting an independent reviewer to make a recommendation. In addition, the overseeing agency should coordinate the appeal in such a way that the independent reviewer’s determination is communicated to the enrollee, the enrollee’s treating provider, the health plan and the department.

Who selects independent reviewers and what should their qualifications be?

Independent reviewers are selected by the commissioner of the oversight agency or by an appointed agent of the commissioner. Under most state laws, oversight agencies either contract with several independent reviewers to conduct reviews as necessary, or compile and maintain a list of approved independent reviewers. Independent reviewers should be licensed physicians and should specialize in an area of medicine that is the subject of the enrollee’s claim. When an oversight agency is selecting from a list of eligible independent reviewers, the commissioner should ensure that the selected reviewer has no financial or other interest in the outcome of the review.

What is the independent reviewer’s role in the appeal process?

The independent reviewer should determine whether the covered service requested by the enrollee or the enrollee’s provider is medically necessary based on a thorough review of pertinent information The reviewer’s decision should be communicated to the enrollee, the enrollee’s provider, the health plan and the oversight agency.

Does the health plan have to abide by the independent reviewer’s decision?

Yes. The independent reviewer’s decision should be final and binding, meaning that a health plan must administer a service upon notification that the covered service was determined to be medically necessary by the independent reviewer. However, both health plans and enrollees should retain the right to seek judicial relief if either party is unsatisfied with the independent reviewer’s decision. A health plan should be required to administer the service determined to be medically necessary even if it decides to seek judicial review of the matter.

Who pays for the independent reviewer?

Payment can be structured in several different ways. Most states require the health plan to pay for the independent reviewer, while others require the enrollee to contribute a nominal fee at the time the independent review is requested. Special arrangements should be made for enrollees who cannot afford to pay for the review, and some states refund the enrollee’s payment if he or she ultimately prevails in the review.