From Families USA
January 1998
A Guide to Complaints, Grievances and Hearings in Medicaid Managed Care
This factsheet is part of a more extensive Guide to Complaints, Grievances and Hearings Under Medicaid Managed Care. Contact Families USA, 202-628-3030 if you are interested in a print copy of the guide.
Medicaid beneficiaries have the rights to complain and to be heard by impartial decision-makers before their Medicaid services are reduced or terminated and when their Medicaid benefits are denied or delayed. The U.S. Constitution guarantees the right to due process. Federal Medicaid law and regulations specify the following complaint and fair hearing rights for Medicaid beneficiaries:
1. The state or its contractors must inform Medicaid beneficiaries in writing when a benefit is denied and generally at least 10 days before the date of a proposed termination or reduction of services.
2. Medicaid beneficiaries have a right to a hearing before an impartial decision-maker concerning denials, reductions, terminations, or delays in their Medicaid benefits, and they have a right to a written decision within 90 days of their hearing request. If not satisfied with the hearing decision, Medicaid beneficiaries can appeal to a state court.
3. In cases involving a reduction or termination of care, Medicaid beneficiaries can usually get services continued pending the final hearing decision if they make a timely request for continued services.
4. Besides complaining through a state fair hearing process, Medicaid managed care enrollees may complain to their managed care plans through "in-plan grievance procedures." Under federal regulations, the in-plan grievance procedures must be approved in writing by the state, provide for prompt resolution of grievances, and ensure the participation of employees in the managed care plan who have authority to correct problems. In-plan grievance procedures do not take away beneficiaries' right to request Medicaid fair hearings.
How Medicaid complaints have changed under managed care
Until the introduction of managed care, the Medicaid program operated on a fee-for-service basis. Beneficiaries received services from their physicians, and the physicians then submitted bills for payment. Disputes generally involved payment , not treatment, and beneficiaries had their medical records and the expertise of their physicians to support the appropriateness of treatment.
Under Medicaid managed care, states contract with health plans to provide comprehensive medical care to enrollees. States pay these managed care organizations flat fees in advance based on projections of health care costs. Managed care organizations seek to keep costs at or below the amount of the payment they received from the state. Disputes in managed care are more likely to involve services denied, delayed, reduced, or terminated than bills for services already rendered. What is more, when problems arise, Medicaid beneficiaries are often told to pursue their complaints first with the managed care organization rather than the state Medicaid agency.
Potential Problems
The following problems have been documented in a number of states:
Beneficiaries do not understand how to complain and be heard. Surveys of Medicaid managed care enrollees in several states have shown that fewer than half knew how to complain to their plans or how to request fair hearings. Information supplied by the state or enrollment contractors, plan member handbooks, and notices about service denials may fail to inform Medicaid beneficiaries that they can request state-level fair hearings. Member handbooks sometimes describe complex in-plan grievance procedures that take longer than 90 days to complete.
Notices may not explain that benefits can continue pending resolution of complaints about service reductions or terminations. Sometimes, managed care organizations send letters to enrollees stating that a course of treatment is going to end on a certain date. These letters may not inform enrollees of their rights to dispute this decision and to request and receive continued care until the matter is resolved. If the dispute resolution process is protracted, Medicaid beneficiaries' health can be severely harmed unless services continue.
States rely too heavily on managed care organizations to settle disputes. Some states argue that Medicaid beneficiaries do not have a right to a state-level Medicaid fair hearing about a managed care organization's decisions because these are medical decisions made by a contractor, not by the state. In cases such as J.K. v. Dillenberg, 836 F. Supp, 694 (D.Ariz. 1993), courts have found that managed care contractors are responsible for adhering to the Medicaid notice and fair hearing rules.
Managed care organizations' internal complaint processes may delay access to an impartial hearing. Managed care organizations may not have good systems for handling complaints. In some instances, members who complain are routed endlessly to member service departments, and their complaints are not treated as formal grievances. In other instances, members may become frustrated before they complete a multi-tiered grievance process that involves numerous personnel.
Furthermore, managed care organizations are not impartial; their judgment of complaints may be influenced by financial considerations. A plan's internal grievance procedures will violate Medicaid beneficiaries' rights if they delay access to a fair hearing and final state-level decision beyond 90 days. In a Tennessee case, the court found that the 90-day clock starts running as soon as a beneficiary contests a decision with either the managed care plan or the state.
Some states treat complaints as a request to disenroll. Proper complaint procedures hold managed care organizations accountable for providing services for which the state and federal governments have already paid. From the individual beneficiary's point of view, disenrolling might be the fastest way to obtain a disputed service. However, simply permitting disenrollment fails to hold managed care organizations accountable for care and enables them to keep payments although they have not delivered services.
Some states are not integrating complaint channels. States may route problems to hotlines or ombudsprograms for informal mediation without instructing beneficiaries that they may also file formal grievances and hearing requests.
Important data from complaints may be ignored. Complaint data can serve as an important tool for identifying problems that states and managed care plans can remedy. States have not uniformly required plans to report complaint data and some have not made full use of complaint data to monitor their contracts with managed care organizations.
Response to complaint problems
States have used the following strategies to develop good complaint procedures that protect Medicaid beneficiaries' rights:
Involve consumers and advocates in the development of complaint procedures. States can share proposed managed care complaint systems with their Medical Care Advisory Committees, draft rules concerning complaint procedures, and accept public comment before rules are finalized; and they can invite consumer organizations to comment on draft managed care contracts. Managed care plans can establish advisory committees with consumer representation that periodically review complaint summaries and make recommendations on how to correct systemic problems.
Provide ongoing education and timely, easy-to-read notices about complaint procedures. States can require enrollment brokers and managed care plans to provide both oral and written information about complaint procedures, explaining how to complain to the plan, how to request a fair hearing, how to request continued benefits during a dispute, and how and where to get legal assistance.
Log in all complaints, including in-plan grievances, with the state to start the clock running for a final fair-hearing decision. If the managed care organization has not resolved a dispute to the Medicaid beneficiary's satisfaction by a certain date, the state can proceed with a fair hearing and ensure a final decision within 90 days of the initial complaint.
Establish an ombudsprogram to assist beneficiaries through the complaint process. Ombudsprograms should assist beneficiaries in filing grievances and making fair hearing requests and should be able to represent beneficiaries in the grievance process or refer them to legal services.
Medicaid agencies and state fair hearing officers should order corrective action. To prevent problems from recurring, hearing officers should be able to order the Medicaid agency and its contractors to change policies or procedures. Corrective actions can include levying fines, suspending new enrollment in a plan, suspending payments to a plan, or requiring plans to report back to the Medicaid agency's staff about action taken to resolve a problem.
Require plans to report complaint data uniformly; use this information to correct recurring problems. States should use complaint information to monitor contractors' performance and should make summaries of complaint data available to the public.
Tools to improve complaint procedures
Community organizations can improve Medicaid managed care through a variety of mechanisms.
In waivers and state plan amendments, states should describe proposed complaint procedures. State Medicaid agencies, Medical Care Advisory Committees, state governors and the regional and central offices of the Health Care Financing Administration all have a role in reviewing these proposals. Community organizations can direct concerns about proposed complaint procedures to all of these parties.
State laws and regulations can specify procedures for plans to follow in reviewing grievances and set forth state fair hearing procedures. Under state Administrative Procedures Acts, states may be required to write formal rules about grievances and hearings and accept public comments on proposed rules. Community organizations can urge the state to put adequate laws and regulations in place.
Contracts with managed care organizations should specify procedures plans must follow when they receive complaints. States and community organizations should make sure that managed care plans' subcontracts with providers mirror the managed care organization's contracts regarding complaint procedures.
Lawsuits can clarify how due process protections apply in managed care settings. Community groups can file lawsuits when states fail to implement needed changes.
Review data regarding complaints and urge sanctions for poor performers. Community organizations can make public records act (or freedom of information act) requests to their states to review grievance summaries that are filed by the plans and copies of fair hearing decisions; they can call for consumer satisfaction surveys to include questions about complaint procedures; and consumer organizations can directly survey managed care organizations to make sure their employees understand complaint processes and communicate them correctly to beneficiaries.
Educate consumers about how to document service denials and how to get legal help. Community organizations can educate beneficiaries to put important requests for services in writing and to ask for responses in writing when care is not forthcoming.
This Fact Sheet was based on material written by the National Health Law Program and Families USA and was produced by
Families USA
1201 New York Avenue NW, Suite 1100Washington, DC 20005
Phone: (202) 628-3030
Fax: (202) 347-2417
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