A classic dilemma in the age of managed care: A physician believes a patient needs a knee replacement, but the HMO claims the operation is not "medically necessary" and that arthroscopic surgery is more appropriate.
In the past, the patient would have been hard pressed to force the HMO to approve the more expensive procedure -- regardless of how strongly the doctor felt it was essential.
But that's about to change in Maryland.
A state law taking effect Jan. 1 sets up a new process for doctors, hospitals or patients to appeal such "adverse decisions" to the Maryland Insurance Administration -- which can overrule the HMO.
"I'm very, very optimistic that this process will provide accountability to the health insurance plans and HMOs in the state," said Insurance Commissioner Steven B. Larsen.
T. Michael Preston, executive director of the state medical society, said the law "will finally give patients an avenue to appeal medical decisions that are being made by insurance clerks."
The law was prompted by growing complaints from frustrated consumers, doctors and hospitals about health maintenance organizations refusing to pay for services. The legislation passed with the support of the managed care industry, which was eager to avoid a more sweep- ing law that would have given consumers the right to sue HMOs.
Larsen's agency is hiring staff to carry out its new responsibilities as the court of last resort, but officials say it's impossible to predict whether there will be a flood of complaints or only a trickle.
The state medical society has been trying to get the word out, holding "town meetings" around Maryland urging physicians to use the system and to inform their patients about it.
"We are trying to make sure the physician community and public are aware of this process so they can utilize it," Preston said. "I can create all the systems in the world, but if they're not used, it doesn't mean anything."
The law affects about half the 3.5 million people in Maryland who have private health insurance. Excluded are those working for companies that have self-insured health plans, which are exempt from state regulations.
Under the new law, managed care plans and other insurers are required to have an internal grievance procedure to review complaints and advise members on how to appeal further to the state.
The state has set strict time lines for the process. The internal review must be completed within 30 days for nonemergency cases, and within 45-days if the dispute involves coverage for a service that already has been provided.
If a case reaches the insurance administration, the state must act within the same time lines. In emergency cases, a patient or health care provider can bypass an HMO's internal review and file a complaint directly with the insurance commissioner for a decision within 24 hours.
The insurance administration is hiring two nurse investigators and is contracting with a physician to review the complaints. In some cases, the review will be conducted by an independent panel of physicians and medical experts hired by the state.
The $1.3 million it will cost to set up and operate the appeals and grievance system is coming from state assessments of HMOs and other insurers.
Officials expect many disputes to be resolved before they readh the insurance department for review.
The reason is the role given to the Maryland attorney general's Health Advocacy Unit, which assists consumers and health care providers in preparing grievances to submit to an insurer for internal review.
Kevin M. Simpson, the unit's executive director, said his office has been helping consumers with billing and reimbursement disputes for 12 years, although it has not been a well-known or widely used resource.
The unit receives 800 to 1,000 consumer complaints a year about billing and other health care issues and has resolved about 80 percent of them through mediation, Simpson said.
He expects many more complaints to come through his agency -- an additional 6,000 next year -- because of concerted efforts under way to make the public aware of the new appeals and grievance process.
"We don't know if we're going to get a gradual increase or a hurricane," Simpson said. "We certainly hope to resolve a significant number of the complaints through mediation so the insurance commissioner can focus on real disputes."
A relatively small number of cases will wind up before the insurance administration, if the experience of other states is any guide.
Most of the 13 states offering such programs last year had far fewer cases than they expected, according to a recent study by the Kaiser Family Foundation, a California-based philanthropy that studies health care issues.
The "volume of cases in states is uniformly low -- less than 250 cases per year in the largest states and even fewer in smaller states," the study found. But Larsen said more Marylanders may use the system here, in part because of the medical society's information campaign.