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  •   Md. Senate Kills Tough HMO Bill

    By Avram Goldstein and Charles Babington
    Washington Post Staff Writers
    Friday, March 27, 1998; Page A01

    In an abrupt about-face, the Maryland Senate yesterday narrowly rejected a plan to hold HMO medical directors personally accountable if they improperly deny treatments as medically unnecessary.

    The reversal came after an intensive lobbying battle between two of the most powerful special interest groups in Annapolis -- organized medicine and the health maintenance organization industry -- and a last-minute letter from the state insurance commissioner raising concerns about the measure.

    The proposal represented the legislature's most serious effort this year to rein in HMOs and other managed-care plans, which have generated heated complaints from doctors and patients over their refusal to pay for certain kinds of health care services.

    While HMOs have argued that they are cutting costs by rejecting unneeded procedures, legislative anger over their behavior had fueled interest in a plan to permit the Maryland medical board to begin disciplining health plan medical directors for improperly denying care.

    Such medical directors cannot currently be disciplined by the doctors board, on the theory that they are administrators who are not practicing hands-on medicine. But the state medical society pushed hard for a measure that would have said that the medical directors are essentially practicing medicine and should be held accountable by the board that disciplines doctors. Maryland would have been only the third state to subject HMO medical directors to such accountability, according to the Federation of State Medical Boards.

    "The doctors are sick and tired of telling patients they just don't have any recourse when a medical director turns down care," said Gene Ransom, a lawyer with the Medical and Chirurgical Faculty of Maryland. "HMOs are afraid they aren't going to make as much money because they won't be able to deny care that is necessary anymore."

    On Tuesday, the Maryland Senate initially embraced the doctors' argument, voting 27 to 19 to approve a bill that would make medical directors subject to discipline that could include fines and loss of medical licenses. But yesterday, the Senate reversed course and killed the bill by a 24 to 22 vote when the measure came up for a final vote.

    Sen. Paula C. Hollinger (D-Baltimore County), the sponsor of the measure, attributed the turnabout to intense lobbying by HMO groups, which framed the issue largely in economic terms. The HMO representatives said doctors were mostly upset that managed care has eroded their incomes.

    "They want more procedures, not less, more money, not less," said Gerard Evans, a lobbyist for HMOs run by Nylcare and Blue Cross-Blue Shield of Maryland. "Don't assume that every denied procedure is warranted. Until managed care came along, no one was watching what physicians were doing."

    Several senators said they also were swayed by last-minute concerns raised by Maryland Insurance Commissioner Steven B. Larsen, who told senators that the measure could conflict with a separate bill also aimed at holding HMOs more accountable.

    The less-stringent measure, which has widespread support in the General Assembly, would give Marylanders more ability to appeal coverage decisions by HMOs. That bill would strengthen the commissioner's power to scrutinize treatment decisions and sanction HMOs for withholding appropriate care, Larsen said. Those sanctions could include imposing fines, challenging an HMO's license or ordering changes in coverage.

    Larsen told legislators that if the Board of Physician Quality Assurance also sanctioned HMO medical directors, it could cause confusion and conflict.

    Yesterday's vote means Maryland medical directors will remain beyond the reach of state physician discipline even if they make unethical medical decisions. The same exemption exists in most states, but many medical licensing boards across the nation are reconsidering the question, said Dale L. Austin, a top official with the Federation of State Medical Boards.

    After a four-year court battle, the Arizona Supreme Court let stand a lower-court decision that the board can investigate denials of care. No other high court has ruled in such a dispute. The Texas medical board is the only other board to define medical directors as answerable to them, Austin said.

    Hollinger's bill would have redefined the practice of medicine to include insurance administrators' review of the necessity of treatment.

    "It is a total scam that the consumer has no place to go, because when you have no recourse against the HMO or the medical directors, the only person you can sue is your treating provider," Hollinger said.

    The HMO industry said the appeals bill is enough to protect the public and described Hollinger's bill as a medical society-sponsored attempt to undermine the entire philosophy of managed care. HMOs and other managed-care health plans now dominate the nation's health care delivery system, and their reviewers have wrested control over patient care from physicians by deciding which treatments will be paid for. In the past, physicians were rarely second-guessed by insurers.

    "This is clearly our biggest bill this year," said Evans, the HMO lobbyist. "We want someone to call the balls and strikes fairly. . . . Turning regulation of the managed-care industry over to [the physician disciplinary board] is like the wolves guarding the sheep."

    The medical society's lobbyist, Joseph A. Schwartz III, called the vote a "bad decision."

    "To have HMO medical directors regulated by insurance regulators, and not by the board that regulates physicians, is incomprehensible," he said. "The insurance commissioner's office may be fine for insurance problems, but they don't have . . . anybody with medical training. To think that they are even going to have the inclination to oversee medical decision-making is fairly fanciful."

    © Copyright 1998 The Washington Post Company

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