Copyright 1999 Federal News Service, Inc.
Federal News Service
APRIL 20, 1999, TUESDAY
SECTION: IN THE NEWS
LENGTH:
2598 words
HEADLINE: PREPARED STATEMENT OF
TIMOTHY
T. FLAHERTY
, MD
SECRETARY-TREASURER, BROAD OF TRUSTEES
AMERICAN
MEDICAL ASSOCIATION
BEFORE THE HOUSE EDUCATION AND THE
WORKFORCE COMMITTEE
EMPLOYER-EMPLOYEE RELATIONS SUBCOMMITTEE
SUBJECT -
HEALTH PLAN ACCOUNTABILITY
AND INTERNAL/EXTERNAL APPEALS
BODY:
Introduction
Mr. Chairman and members
of the Committee, my name is Timothy T. Flaherty. I am the Secretary-Treasurer
of the Board of Trustees of the American Medical Association (AMA). I am also a
practicing, board- certified radiologist from Neenah, Wisconsin. On behalf of
the three hundred thousand physician and medical student members of the AMA, I
appreciate the opportunity to testify on the issue of "Employer Health Plan
Accountability and Internal/External Appeals."
The AMA has always been a
strong advocate for patient rights, and most recently has been championing
patient protections in the midst of a rapidly evolving managed care marketplace.
Among the many managed care reform issues currently being
discussed, health plan accountability, internal and external appeals and medical
necessity determinations rank at the top of the list. Virtually all other
patient protections that have been raised in some way turn on these critical
issues.
At the outset, let me emphasize that virtually all patient
protections are interrelated in some manner. Whether we are discussing external
appeals or health plan accountability, other patient rights will be affected in
some way, and many will be significantly affected.
Consider for instance how
intertwined medical necessity is with internal and external appeals programs.
The AMA is on record as avidly supporting grievance and appeals systems that
have rapid internal and external appeals mechanisms for patients who are
unjustly and inappropriately denied treatment by their health plans. Several
pieces of legislation provide for timely review procedures, and some also
require that only a duly licensed physician may review denials for medical
treatment. But regardless of how sound and effective the actual appeals
procedures may be, if the "medical necessity" standard that is being applied in
both the internal and external appeals is arbitrarily dictated by the plan
administrator or plan documents, the patient will never be guaranteed a fair,
objective evaluation of the appropriate level of covered treatment.
Consider
also what would happen if Congress required health plans to establish internal
and external appeals mechanisms. Patients would surely benefit from being able
to appeal coverage denials, refusals to provide access to specialists, and other
infringements on their rights to the health plan's benefit package. However,
patients would still remain vulnerable to unnecessary health plan interference
with medical decisions or health plans making negligent medical decisions that
harm or injure the patients. Health plans should therefore also be held
accountable for the decisions they make, and be made subject to state causes of
action,
The Need for Grievance and Appeals Procedures
Patients are
entitled to receive the benefits for which they have paid and therefore are
rightfully owed. Plans and insurers must not be able to arbitrarily deny
patients those health benefits. Consequently, patients must be guaranteed access
to a timely, meaningful, independent and binding external appeals process when
coverage has been denied.
In addition, patients and physicians have
consistently expressed frustration over their inability to voice their concerns
and make complaints about their health plans, and to obtain unbiased review of
treatment denials. Current federal law fails to require health plans to provide
comprehensive internal and external grievance and appeal procedures for review
of plan decisions relating to coverage and access disputes. Internal plan
decisions denying coverage or denying access to necessary care can therefore be
final decisions, and patients who have received an adverse coverage or review
decision have no recourse or opportunity for independent review.
The absence
of independent review enables plans to make unfair and arbitrary decisions with
virtually no consequences. Patients who are denied access to necessary care are
then forced to pay out-of-pocket for necessary medical services, which may in
fact be covered services. More important, patients who are forced to forego
necessary care awaiting the outcome of a coverage or medical necessity dispute
may suffer real, and sometimes irreversible, harm. In order to ensure that
patients have timely access to medically necessary care, health plans must be
required to maintain a procedure that will ensure the fair and prompt resolution
of disputes.
Key Elements of Grievance and Appeal Procedures
To protect
patients' right to meaningful grievance and appeals procedures, the following
three elements must be present. First, patients must have adequate access to the
grievance and appeals process. Second, the process itself must be timely and
fair. And third, the reviewers must be independent and properly qualified.
For access to the appeals process to be adequate, all patients - those in
health plans and those covered by health insurers - must have the right to
appeal any adverse decision. Patients should be able to exercise this right for
virtually any adverse benefits decision which they believe has been improperly
rendered. At a minimum, appealable decisions must include denials based on a
lack of medical necessity or that the proposed treatment is experimental or
investigational. They should also include denials of access to specialists,
scope of coverage disputes, as well as other benefit decisions.
Second, the
process itself must be fair and equitable. Patients and their authorized
representatives, including their physicians, must be permitted to initiate an
external review of any coverage denial.
The process must also prevent plans
or insurers from "slow-walking" the patients - or unnecessarily delaying the
appeals process. Rather, appeals must be conducted in a timely manner, not to
exceed specified and reasonable time limits. When the patient's health condition
requires, those limits must be shortened accordingly. Similarly, if plans or
insurers require that internal grievance procedures be exhausted before the
patient can access the external review, the plans or insurers must also allow
for expedited procedures when the patients' health requires.
And very
important, the review entities' decision must be binding on the plan or insurer
and enforceable. Patients would receive no benefit if their plan or insurer
could whimsically reject an independent reviewer's decision overturning the
plan's or insurer's initial coverage denial. As an aid to ensure that plans and
insurers remain accountable, the AMA also believes that aggregated results of
external reviews should be made available for public review and scrutiny. The
third essential element for a meaningful external review process is "properly
qualified reviewers." Independent external reviewers must be just that -
external to and independent from the health plan or insurer. They should have no
conflict of interest with or be beholden to the health plans or insurers. They
should also have the proper professional qualifications.
External
reviewers should therefore be licensed physicians, of the same specialty, or
subspecialty if appropriate, and actively practicing in the same state as the
practitioner whose decisions are being reviewed. A decision based on ignorance
will rarely be a good decision.
The AMA believes that patients are better
served by relying exclusively on properly qualified individuals for all external
reviews, because this ensures that determinations of medical necessity are made
only by qualified professionals equipped with the knowledge and experience to
make decisions in accordance with generally accepted standards of medicine.
Additionally, a grievance system must ensure that plans cannot retaliate against
patients for asserting their rights under the grievance and appeal system.
Proper Medical Necessity Determination - Critical for Internal and External
Reviews
Within the review process, the issue of who determines medical
necessity and how it is decided remains critically important. Currently, some
plans are focussing primarily on cost criteria to define medical necessity and
are then unfairly denying medical care to patients. The AMA believes that health
plans should not be allowed to continue this practice. This practice is
unacceptable and becomes even more repugnant when the plan's arbitrary
definition of medical necessity has to be used by the external reviewer.
The
AMA believes that medical necessity decisions are ultimately medical decisions
and should continue to be treated as such. Medical necessity decisions must
always be made in accordance with those generally accepted standards of medical
practice that a prudent physician would follow when treating a patient. Legally
and medically, this is an objective standard consistently relied upon by the
courts and not subject to the abuses alleged by plans and insurers.
Health
care quality legislation must include strong patient protections, and enable
patients to avail themselves of those protections through a legitimate appeal
and grievance system. Unbiased and accessible internal grievance procedures
would ensure that patients will have the opportunity to voice their concerns
about health care plans and provide a forum for prompt resolution of coverage
disputes; external grievance and appeal procedures would ensure that coverage
and medical necessity determinations are based, not on the cost of the medical
care, but on appropriate considerations of the individual patient's health care
needs.
ERISA Liability Reform
Access to grievance and external appeals
systems would be a significant advancement in a patient's ability to have his or
her benefit coverage denial reviewed in a systematic and expeditious manner.
While the AMA believes that stronger internal and external appeal rights will
help prevent health plans from ultimately denying medically necessary care,
sometimes an ERISA plan's initial negligent medical decision causes irreparable
harm. In this case, Americans covered by ERISA plans should have the same right
of redress as those who are covered by non-ERISA plans. This is a matter of
fundamental fairness.
The ERISA liability preemption issue is certainly not
new to this committee. At the February 24, 1999, hearing, this committee heard
from several witnesses on the issue of ERISA liability preemption. Taken
together, these witnesses provided a fairly comprehensive overview of the ERISA
statute and how the federal courts have varied their interpretation of the
"relate to," "savings," and "deemer" clauses. We do not believe it is necessary
to repeat a legal and case law analysis of ERISA for the purposes of this
heating. In short, we believe that this previous testimony revealed that,
despite claims to the contrary, Congress never intended that ERISA allow group
health plans to escape accountability under state negligence laws. As professor
Rosenblatt stated in his testimony, "... a momentous policy decision (ERISA
preemption), and perhaps the most sweeping federal preemption provision in
American history, were (sic)enacted without hearings, consultation with the
major stakeholders, public awareness, or even understanding by most (or perhaps
all) of Congress."
We would like to emphasize that there is strong evidence
(see testimony of Leslie Kramerich, Deputy Assistant Secretary for Policy,
Department of Labor, before this committee on February 24, 1999) that Congress'
true intent in passing ERISA was to protect employees from unfair and
unscrupulous pension administrators. However, as it turns out, the very law that
was meant to protect employees has produced the unintended consequence of
undercutting their ability to hold their health plan accountable for negligent
medical decisions.
The argument can also be made that when ERISA was
enacted, the shift from a fee-for-service environment to a managed care
environment among group health plans could not have been anticipated. This is
significant because under traditional fee-for-service, patients were provided
direct access to their physician or other health care provider and payment
issues were dealt with after treatment. Today, however, health plans generally
require that coverage decisions be made prior to the medical service being
provided. Thus, under today's health plan structure, a denial of a claim equates
to a denial of benefits, especially for those who cannot afford to pay out of
their own pockets. Health plans are increasingly encroaching on the medical
treatment decisions historically made by physicians and other health care
providers. When physicians are found negligent in making health care treatment
decisions, we are held accountable through the legal system. Health plans should
be held to the same standard--to exercise ordinary care when making health care
treatment decisions about covered services--and should be held responsible for
their failure to meet this standard.
We find it sadly ironic that trade
groups representing health plans claim that they do not make medical decisions
when they deny covered medical items or services. In these cases, health plans
are making decisions that directly affect the care that patients receive,
including: inappropriately limiting access to physicians and blocking patient
access to specialists; refusing or delaying needed covered medical services;
arbitrarily drawing treatment protocols; offering payment incentives or creating
deterrents (disciplining physicians who refer patients for necessary medical
care); and discouraging physicians from fully discussing health plan treatment
options (gag rules and gag practices).
Another argument advanced by the
group health plan industry is that health care costs will increase significantly
if this bill is enacted. In Texas, the first state to adopt managed care
accountability legislation, this issue was hotly debated. Milliman and Robertson
completed an actuarial determination of the cost of the Texas liability
legislation to a Texas-based HMO and set the cost at only 34 cents per member
per month. A study prepared by William M. Mercer, Inc. and the American Medical
Association demonstrates that managed care accountability legislation will only
increase premiums between .5%-1.8%. Care is being paid for, but not provided,
while health plans continue to work to protect their immunity from the
ill-effects on patients when medically necessary care is denied or delayed.
For a full analysis of nine recent studies of the impact of managed
care reform legislation, including ERISA liability
reform, we commend a reading of the AMA's recently published Economic Impacts of
Managed Care Reform. We have attached a copy of this analysis
to our testimony and respectfully request that it be included in the permanent
Record.
Conclusion
Throughout any discussion of managed care
reform, the patient has to be our number one concern. We have to
remember that those who are ill and need medical treatment are the most
vulnerable among us. They need and deserve these protections.
Thank you for
the opportunity to comment on the important issue of"Health Plan Accountability
and Internal/External Appeals." We look forward to continued participation in
the bipartisan effort to develop health care quality legislation that
incorporates strong patient protections, and we commend the Chairman and the
rest of this committee for their continued leadership on this issue. On behalf
of the AMA, I offer you our services in working further with the Congress to
effectively address this important matter.
END
LOAD-DATE: April 22, 1999
