Ombudsman Programs for Managed Care

By Mary R. Anderlik
Health Law & Policy Institute

Many consumers and policymakers believe ombudsman programs are a promising response to some of the problems associated with managed care. An "ombudsman" (or ombudsperson) has been described as a third party who intervenes to address the concerns of dependent individuals or groups in relation to powerful organizations or bureaucracies. An ombudsman is client-centered but not anti-administration—hence the role is slightly different from that of the advocate who answers only to the client and may adopt a purely adversarial stance vis-a-vis "the system."

Some state agencies have very active consumer assistance programs that perform many of the functions of an ombudsman program without bearing the label, and programs bearing the label have varying degrees of independence. Programs also vary in scope. Many states have an ombudsman program with a narrower focus than health insurance/health care. For example, the Older Americans Act requires that states establish ombudsman programs serving people in long-term care facilities. Also, a number of states have an ombudsman serving participants in Medicaid or Medicaid managed care. At the other end of the spectrum, several states have an ombudsman program with a broader focus, serving consumers with any kind of insurance-related problem.

Existing ombudsman programs with a managed care or health focus tend to fit one of four models:

Model 1: Independent agency funded by state. In Vermont, state law requires the agency that regulates insurance and health care to establish an "office of the health care ombudsman" by contract with a nonprofit organization. Duties of the office include assisting consumers in obtaining coverage, selecting a plan or understanding their rights and responsibilities; investigating and resolving complaints and assisting consumers in filing and pursuing complaints and appeals (includes administrative and judicial proceedings); and promoting the development of citizen and consumer organizations. The law requires insurers to give the office access to records of consumers who consent. It also mandates state agency compliance with reasonable requests for information and assistance. The contract, awarded to the state’s legal aid office, went into effect on January 1, 1999. As of the end of March 1999, the office had assisted 400 callers and closed 344 cases. Most of the calls were resolved by brief research and a return call or a call to the insurer.

A Florida law requires the Agency for Health Care Administration to facilitate the development of a network of local managed care ombudsman committees linked to the state’s health service planning districts, under the supervision of a statewide managed care ombudsman committee. However, because the program lacks funding and depends on volunteer effort, implementation has been slow.

Model 2: Independent agency funded by private foundations. Three foundations (California Wellness Foundation, Henry J. Kaiser Family Foundation, and Sierra Health Foundation) are funding a four-year pilot program in four California counties. The "Health Rights Hotline" provides assistance to all health care consumers in the region; services include counseling, referrals to resources, direct assistance, and development and distribution of print materials (available via the hotline web site at www.hrh.org). The hotline is sponsored by a nonprofit consumer advocacy organization and a legal aid office. The foundations have hired the Lewin Group to perform an independent evaluation of the program.

The California Endowment, another private foundation, is funding a two-year pilot in six California counties through a $5 million grant. Local legal services programs direct six Health Consumer Centers, supported by two health-focused resource centers. The program has a dual focus on consumer empowerment and direct advocacy. Services are limited to low-income residents experiencing problems with health coverage, access to health care, or health care quality. (More information is available at www.healthconsumer.org/QandA.html.)

Model 3: Office within state agency. A number of states have established an ombudsman program within the state agency charged with regulating managed care organizations (MCOs). The major concerns with the structure include integrating the ombudsman program with existing consumer assistance programs and achieving credibility in the absence of true independence.

In California, the person in the managed care ombudsman position has an oversight or "troubleshooter" role in relation to a large consumer assistance program and carries out public education and agency advisory functions. A Minnesota law required creation of an ombudsman program within the state health agency with broad duties. However, implementation was delayed due to funding issues, and the state has now decided to start over, studying efforts in other states. In Massachusetts, the governor has issued an order creating a managed care consumer advisory board "within, but not subject to the control of," the department of public health. Exec. Order No. 405, reproduced at www.state.ma.us/ombud/omcoexec.htm. The board is empowered to appoint a managed care ombudsman, subject to approval by the governor. Utah and Virginia recently passed laws creating ombudsman programs within state insurance agencies.

Model 4: MCO responsibility. Some states require MCOs to designate an internal ombudsman. For example, laws in Delaware and New Mexico provide that, upon enrollee request, an MCO must appoint a member of its staff with no direct involvement in the case to assist or represent the enrollee.

Those currently crafting programs might consider "lessons learned" from existing programs, including:

06/29/99