By Spencer Rich
LEGI-SLATE News Service
Thursday, July 2, 1998

Congress is poised to get a taste of its own medicine when lawmakers decide which prescription to fill for curing problems with managed care health plans – without making the nation's health care system sick.

When Congress returns from its Independence Day recess, lawmakers face a high stakes legislative battle over consumer protections for patients in HMOs and other health plans. The fight blurs traditional partisan lines between Democrats and Republicans and highlights some unusual alliances among groups that are normally on opposite sides.

But one thing is clear: a majority in Congress is intent on producing some form of patients' rights legislation in this election year, as polls and constituent letters show that concerns over health care plans top most voters' agenda.

About 60 percent of Americans were enrolled in some form of managed health care plan in 1996, according to the American Association of Health Plans, up from 36 percent in 1992.

At the heart of the fight are consumer fears and complaints that managed care health plans, particularly HMOs, are denying or limiting needed benefits and services in order to save money. In hearings on Capitol Hill and accounts in the press, patients have told heart-rending stories of being trapped in life-threatening situations with no recourse or help from their health plans.

The way out of this dilemma, many consumer and health groups say, is to give people the right to appeal an unfavorable decision by their HMO to an impartial outside body, to let patients use doctors outside their health plan's limited list of care providers if they urgently feel they must, and to permit lawsuits against the health plan itself, not just a doctor, as a backup threat if skimping on care by the plan causes serious damage to the patient.

These are seen as key safety hatches when patients feel that their health plan is denying them services they need to save their lives. In practice, most people may never exercise such rights, but they want to know that they are available if needed.

Steve Zuckerman, a policy analyst and health economist at the Urban Institute said, "What people really want is the ability to go outside of a plan, especially for specialists, and not be locked into a plan and its doctors in a serious situation. What people want is flexibility."

That is why the right to appeal denial of services, the guarantee of access to specialists and the right to go outside the plan are so central to the dispute. And the right to sue warns the health plan that unless is provides proper care it could face severe financial consequences.

"We consider external appeals to an unbiased entity, whose decisions would be binding on the health plan, and the liability lawsuit provision, as the linchpin of all other consumer protections," said Adrienne Mitchem, legislative counsel for Consumers Union, the nonprofit organization that publishes Consumer Reports magazine and maintains a Washington office.

"The rationale for this view is that these consumer protections provide the only means of really holding plans accountable for providing quality care to all managed care enrollees. The liability provision particularly serves as a counterbalance to the financial incentive to skimp on care," she said. "Without these two provisions, consumers are left to the mercy of plans to provide a quality product."

Democrats – led by Rep. John Dingell, D-Mich., Senate Minority Leader Tom Daschle, D-S.D., and Sen. Edward M. Kennedy, D-Mass. – and some Republicans, like Reps. Greg Ganske, R-Iowa, and Charles Norwood, R-Ga., are pushing for tough, "red-meat" federal regulation on many issues.

Daschle and Kennedy are sponsoring legislation [S. 1890], with Dingell and Ganske in the House [H.R. 3605], incorporating many of these tough provisions, including the right to sue health plans and binding outside review of patient appeals on medical coverage decisions. Norwood sponsored another bill [H.R. 1415] that was the original proposal to allow patients to sue health plans.

Major insurer groups such as the American Association of Health Plans (AAHP) want no new legislation, fearing that government requirements for specific services would paralyze the HMOs' ability to tailor efficient low-cost health plans, and would be a foot in the door to further government micro-management of health care.

However, two major HMOs – HIP Health Plans and the huge Kaiser Permanente group – together with the American Association of Retired Persons, the giant seniors' organization, and an advocacy group called Families USA, have said in a joint statement that they will back "legally enforceable national standards" for a number of provisions, although the group did not endorse inclusion of the lawsuit provisions.

AAHP and other health plan spokesmen fear that the proposed bills would also greatly increase costs because of the additional services that would have to be provided.

"Our basic concern has been about cost," said Bill Gradison, president of the Health Insurance Association of America and a former Republican member of Congress. "It's a duel of numbers. Supporters [of various provisions] say the cost is trivial and others – us – say the cost is large and would reduce coverage."

The AAHP issued a study April 27 saying the liability proposal alone could increase premiums by up to 8.6 percent, and that various other proposals could double or triple this figure.

Backers of the Dingell-Kennedy bill say cost increases from their measure will not be even remotely close to those estimates. They are awaiting a Congressional Budget Office estimate on their bill, which some expect to project only a "medium single-digit" percentage increase in costs.

The Association of Private Pension and Welfare Plans-The Benefits Association, which represents employers who sponsor health plans, opposes federal legislation. The group's Paul Dennett, sounding the same theme against government management of the health market as the AAHP and Gradison, said that the market is already moving to provide some of the protections sought by consumers and that "we oppose all of this being done by legislation."

Once you get started writing mandates, "pretty soon you end up with everything mandated," said Dennett, raising costs and paralyzing the ability of plans to innovate and keep premiums low.

The employers who pay the bills also fear that if the lawsuit provision were passed, it might eventually open their businesses to direct lawsuits. However, as presently worded, the Dingell-Kennedy bill would not normally apply directly to the business sponsoring the health plan, only to the health plan itself. And some business and insurance groups contend that the only tangible impact of the lawsuit provision would be to fill the pockets of trial lawyers.

In the House, Democrats are lining up squarely on the side of the Dingell bill while the bulk of the Republicans are in between, seeking to mollify public resentment and anger but sympathetic to many of the arguments of the insurers and businesses against government mandates and potential cost increases.

Ganske, a reconstructive plastic surgeon before his election to Congress, and Norwood, a dentist, defied the Republican leadership to press forward with patient rights legislation. Ganske has decided to support the Dingell Democratic-backed bill while Norwood – with more than enough votes to get his bill passed if GOP leaders allowed it on the House floor – prodded the Republican leadership to develop a compromise plan.

A GOP House task force headed by Rep. Dennis Hastert, R-Ill., appointed by Speaker Newt Gingrich, R-Ga., came up with a less stringent plan than the Dingell-Kennedy bill. It also did not include the Norwood lawsuit provisions, and left unanswered questions about details of how its provisions would work.

The GOP task force plan was denounced by the Democrats as far too weak and a sellout to the insurers and they claimed it was designed to undermine the Democratic bill.

But the HMOs and health insurers didn't like the GOP plan, either. The AAHP said that while it was "less onerous than the Kennedy-Dingell and Norwood bills, we oppose its reliance on government mandates that could have the unintended consequences of micromananging the market." Gradison said it was largely a "mish-mash of cobbled together ideas."

Although six key provisions in the competing bills been identified by a wide number of sources as the focus of discussion, not all are highly controversial. Those provisions are the right to appeal benefit denials; guaranteed access to specialists; the right to sue health plans; allowing access to doctors outside the health plan network; full disclosure of benefits and covered services; and coverage of emergency services if a "prudent layperson" thought care was necessary.

"The information and prudent layperson provisions, that's a given," said a lobbyist for a group that is a major player in the health debate, who declined to be named. Both provisions will almost certainly be in any final bill since everyone seems to favor these concepts, the lobbyist said, and there may also be provisions assuring confidentiality of medical records, although there could be some disputes over the details.

An anti-gag rule provision – to bar health plans from forbidding doctors to give patients full information about their best medical options regardless of whether the plan will pay for them – is also a good bet, he said. Such a provision has been pushed indefatigably by Ganske.

Also having a good chance to make it are provisions that allow women in HMOs and other managed care plans to choose an ob/gyn physician as their primary caregiver and to let parents choose a pediatrician as the primary doctor for a child.

The liability provision allowing health plans to be sued for pain-and- suffering and other damages is clearly one of the most contentious, difficult issues in the Dingell-Kennedy bill, and it is the most fiercely hated by many health plans and employer groups. Aside from fears that health plans and possibly even employers could face huge settlement costs, some argue that the presence of this threat could cause health plans and doctors to practice costly "defensive medicine," ordering tests and procedures that are really unnecessary just to protect against legal action.

Moreover, Dennett, of the private pension and welfare plan group, argued that the ERISA barrier to damage suits against health plans was enacted because Congress feared states would establish such high levels of punitive damages that employers would be discouraged from offering health benefits to their workers. Congress also wanted to pre-empt conflicting state laws that could cripple the growth of coverage, he said.

The Hastert GOP task force's proposal has a variation on the pre-emption theme that could cause a battle, too. It would allow small businesses to pool together in what are called "association health plans" to reduce the cost of coverage and to receive the protection of ERISA exemptions from various state laws.

But some health insurers, such as BlueCross/BlueShield, say such plans could draw healthy people out of state-regulated small business health insurance pools, leaving behind only the sickest people in those programs and forcing their premiums up sharply.

Meanwhile, the questions surrounding how appeals of care denials will be handled are legion: what will be appealable; will a genuinely independent body hear the appeal and decide it; will that decision be expedited in cases where a delay in care may cause death or severe damage to the patient; will the decision be binding on the health plan; and who will enforce it.

Although a wide range of sources stress the importance of the right to appeal to an impartial outside board, in practice there may be few patients who actually exercise such a right. In the federal Medicare program for the elderly and disabled, where such appeal rights already exist, fewer than 2 of each 1,000 enrollees in Medicare managed care plans seek external review each year.

But supporters of a strong appeals system say that it is not how often it is used, but the knowledge that it is there in a crisis, that gives people a sense of security.

The requirement to include a "point-of-service" option to allow use of doctors outside the health plan is another safety hatch provision, but Gradison said 74 percent of health plans already have it. However, such an option can be quite costly. For example, according to a study by the William M. Mercer consulting firm, a small employer's annual premium per active employee in 1997 averaged $2,884, but with a point of service plan that figure was $3,240.

Gradison argued that the whole push for patients' rights legislation is not necessary because the market is adjusting rapidly to include many of the things that the lawmakers advocate. Gradison said point-of-service is already widespread, many HMOs already allow women to use ob/gyns as primary care doctors, and HMOs have kept premium growth low in recent years. "Every plan now on the table will increase costs," he said, "the only question is how much."

And while Congress tries to step into the quality of care debate, some health experts say managed care is taking good care of patients. A study by Robert Miller and Harold Luft, two respected health policy analysts who have been tracking quality issues for some time, published in the journal Health Affairs in its fall 1997 issue, concluded that "the evidence shows no pattern of worse HMO quality of care" than other types of health plans, despite the public sense that there are too many restrictions.