Landmark Agreements Give Consumers New Protections In Hmo Disputes

Attorney General Spitzer today announced a landmark set of agreements that will empower New York consumers to challenge denials of coverage made by Health Maintenance Organizations (HMOs).

The agreements come after a two-year investigation by Spitzer's Health Care Bureau.

"At the start of our investigation, consumers were often left wondering why their requests for health care coverage were denied," Spitzer said. "Now, consumers will know what facts an HMO cites in denying coverage. And if consumers or their doctors disagree with the rationale used to deny coverage, they will be able to appeal the HMO's decision more effectively."

The unprecedented agreements with six of the state's largest health insurance plans require HMOs to spell out the specific reasons for denying a treatment deemed "not medically necessary." Under current law, plans are required to disclose the reasons and clinical rationale they use to deny coverage, but have done so in only the most general terms.

As a result of the settlements, consumers will now be told the specific medical findings on which the plans relied before issuing a denial.

Richard Kirsch, Executive Director of Citizen Action of New York, said: "We are very pleased about the Attorney General's action. Many consumers, confused and frustrated by HMO denial notices in the past, will now be empowered to appeal. These agreements provide consumers and their health care provider with a powerful tool - a better understanding of the reason for a denial so that they have a fair chance to get care they need and deserve."

Spitzer's Health Care Bureau examined in detail how HMOs authorized or denied care during a six-month period from January 1, 1999 through June 30, 1999. This examination, which included a careful review of internal documents, revealed that these plans were refusing to pay for extended hospital stays and recommended treatments for anxiety, depression and substance abuse, while offering nothing more than a generic phrase to justify the denial of such claims. Frequently, the only reason for denying an extra day in a hospital to patients recovering from critical surgery was "care could have been provided in an alternate setting."

In other situations, doctors treating addicted and suicidal patients were told that plans would no longer pay for the care they recommended at a psychiatric hospital because "the proposed service or treatment was not medically necessary."

Spitzer noted that while these denial notices contained serious deficiencies, they were apparently made by authorized individuals. Some health care consumer advocates and others had expressed concerns in the past that such decisions might have been made by non-medical personnel. The investigation revealed that key coverage issues were being made by properly qualified medical personnel, not accountants or other business office personnel.

Spitzer said his office would continue to monitor HMOs for a two-year period to ensure that the plans comply with the terms of the agreements. The monitoring will continue until January 2004, at which time the Attorney General's Health Care Bureau can extend it for an additional year in the case of plans found to be noncompliant.

In addition to agreeing to disclose specific information on medical assessments in their denial notices, the health plans have also agreed to:

  • Ensure that any company hired to conduct "utilization review" for a health plan complies with the terms of the agreement with the Attorney General's office and with state law;
  • Disclose to patients and their doctors that under the state's Utilization Review law, a plan's failure to meet the statutory deadlines for processing an appeal will result in an automatic reversal of the denial. In addition, when a plan does not meet the deadline, it must notify the consumer that the denial was reversed as a result;
  • Send denial notices to doctors and hospitals when they have submitted claims for medical services or treatments that they have provided so that they can meaningfully exercise their independent right to appeal;
  • Comply with all the detailed provisions for monitoring by the Attorney General 's Health Care Bureau, including maintaining complete and accurate records related to each denial; and,
  • Contribute $1 million dollars to cover the costs of the Attorney General's investigation.

The insurance plans that have signed these agreements serve about 7.5 million consumers throughout New York. The health plans are:

Aetna/U.S. HealthCare, Inc./Prudential Health Plan of Hartford, Conn.;
Excellus Health Plans, Inc of Rochester;
Group Health Incorporated of Manhattan;
HIP Health Plan of Greater NY, Inc.;
Oxford Health Plans of Trumbull, Conn.; and
Vytra Health Plans of Long Island, Inc.

The investigation was handled by Howard Gootkin, Deputy Bureau Chief and Assistant Attorneys General Dorothea Caldwell-Brown and David Sharpe, all from the Health Care Bureau.

Consumers and providers with questions or concerns about health care matters may call the Attorney General's Health Care Bureau at 1-800-771-7755.


  • For Adobe PDF files you can download Adobe Reader from Adobe Systems.