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Copyright 1999 Federal News Service, Inc.  
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Mr. Chairman and Members of the Committee:
Thank you for the opportunity to testify at this hearing on consumer protections. Families USA, the national organization for health care consumers, supports nationally enforceable consumer protections. These protections must be designed to ensure that health plan enrollees receive the care they were promised by their health plans. They must include basic protections covering a wide range of consumer concerns, and they must apply to all health plans. We support S. 6, the "Patients' Bill of Rights Act of 1999," because it achieves these goals.
The public needs federal legislation because the protections that do exist today constitute a veritable patchwork quilt that is indecipherable. Enormous differences exist today in the protections that are afforded to people based on the accidental happenstance of a consumer's state of residence and the payer and form of that consumer's health plan. Enormous differences exist in the protections provided by one state versus another. Enormous differences also exist among people within the same state, especially between those who get their coverage from an employer who is fully insured compared to those who get coverage from employers that self-insure and compared even further to those who buy their insurance coverage independently.
Consumers need greater clarity and predictability about the basic protections that are guaranteed to them. Such clarity and predictability can only be created, without stifling state-by-state innovation, by establishing national minimum standards applicable to everyone. As with other fundamental principles that Americans believe should apply to everyone in the nation - such as civil rights laws - consumer protections should apply to everyone. National standards should establish a basic foundation that nobody can fall through.
One of the reasons we support S.6 is that it creates such a basic foundation that everyone will be able to rely on. Everyone - irrespective of the state in which they live, and irrespective of what type of plan they are in - will be able to count on the fundamental protections that consumers need. They will not have to become experts about the complex ERISA statute and other to determine whether they are protected by the Patients' Bill of Rights. Unfortunately, S. 326, the "Patients' Bill of Rights Act," perpetuates the state-by state patchwork quilt that currently exists. Moreover, it adds another patch that enshrines in federal law that people in the very same state will have very different rights based on the type of health plan they are in. This is a very unfortunate recipe for confusion and bewilderment, and - in a health care system that is already too fragmented and complex - it will be a disservice to America's consumers.
Last summer, Families USA issued a report on consumer protections that had been enacted by the states. Each of you has received a copy of that report, which is entitled Hit and Miss - State Managed Care Laws. We named the report Hit and Miss because, as you can easily see from the attached chart (see Appendix A to this testimony), the protections vary widely from state to state. There are three types of variations. First, as the chart in Appendix A demonstrates, there is wide disparity in the areas covered by state consumer protections. Of the 13 areas of consumer protections analyzed in the report, only one state -Vermont- has adopted protections in at least 11 of those areas. Two-thirds of the states have adopted protections in only one to four of these substantive areas. Ohio adopted the "prudent layperson" standard for emergency care and provides access to drugs prescribed by physicians that are not on a health plan's formulary; Tennessee does neither of these things. Conversely, Tennessee has established an independent, external appeals system and enables patients with disabling or life-threatening illnesses to continue receiving transition care from physicians dropped from a health plan; Ohio does neither of these things.
Second, even in states that have adopted specific patient protections, those laws are not applicable to many of those states' residents. With respect to the substantive protections established by some of the states - such as the "prudent layperson" standard for emergency care and the right to receive prescribed drugs not on a health plan's formulary - these rules do not apply to people in self-insured plans. About one-third of all employees who get their health care coverage through their employer are not covered by any of these protections, irrespective of what the state has enacted. Approximately 51 million people are in this situation. To make matters worse, it appears that state laws relating to remedial processes - ranging from the right to sue to the right to independent, external appeals - may be inapplicable to the vast majority of people, approximately 124 million Americans, who get their coverage from a selfinsured or fully insured ERISA plan.
Third, even in the states that have established specific consumer protections, the details of these protections vary significantly from state to state. The laws that provide access to emergency rooms are an excellent case in point. As of last July, the publication date of our report, 32 states had enacted a provision addressing some aspect of access to emergency services, but the provisions are by no means uniform from state to state. In fact, the very definition of what constitutes an emergency differs depending on what state you are in. Some states, for example, do not specify whether severe pain may indicate the presence of an emergency situation. In some states, plans are prohibited from requiring prior authorizations for emergency services but have not adopted a"prudent layperson" standard as a basis for securing health plan payment for emergency room services. Other states have adopted the "prudent layperson" standard. :
States deal with emergency post-stabilization care differently. States often require plans to pay for emergency services necessary to stabilize a patient but require doctors to contact the plan directly to gain authorization for poststabilization care. States may even require health plans to provide 24-hour access to plan personnel who can authorize continued care following stabilization of the patient. But in some of those states, requests for post-stabilization treatment approval that receive no response within a specified time period are automatically approved. Other states, however, impose no time restraints on how long a plan can take to respond to a request for post-stabilization care and do not automatically approve care despite the plan's failure to respond.
Another area demonstrating the variability of state consumer protection laws is the one relating to external or independent reviews of health service denials. In our report, we recognized 15 states that have an external review process. Our number is lower than those in some other compilations of state laws because we did not give credit for weak external review laws - for example, if the provision only applies to experimental treatments.
A majority of states have either passed or are considering independent review legislation this year. But the breadth and scope of these provisions vary from state to state, providing consumers absolutely no consistent protection. Some states reserve independent external review for determinations of medical necessity.

Other states allow independent external reviews to settle any - consumer grievance not resolved internally by the plan.
The make-up of the independent review entity can again vary depending on the state. In some states reviews are performed by physicians or providers who are experts in the treatment of the enrollee's conditions. Other state laws preclude members of independent review boards from having been involved in the initial denial of care or from having a direct financial interest in the outcome of the review. Some states require the Director of Insurance to compile a list of independent review entities. Others require that a member of the health plan sit on the review board.
Another factor that varies from state to state is whether or not the reviewer's decision is binding for the plan or the consumer, binding for both, or not binding at all. Most states specify that decisions made by external reviewers are binding on the health plan. A few states make the decision binding for both the plan and the consumer. !n some states the decisions are not binding at all.
Some states require that requests for independent external reviews be made within a certain time period after the initial adverse decision. These timeperiods range from a low of 15 days after a consumer exhausts the plan's internal grievance system, to an average of between 30 and 60 days, to a high of one year in Florida and two years in Michigan. Several states impose no time limits on consumers to file a request for an independent external review.
In addition, there is significant variability on the length of time reviewers can take to rule on appeals. Some, but not all, states require external review entities to establish a mechanism so consumers can obtain an expedited review in emergency or urgent cases - and, even in those instances, there is variability concerning time limits related to such expedited reviews.
The net result is that - even in the states that address specific areas of consumer protection (let alone the states that totally fail to address such specific areas) - there is enormous variability from state to state concerning how the states treat such areas. Hence, one cannot assume uniformity - and, hence clarity and predictability - if a state happens to address a specific area of consumer protection. This enormous variability cries out for a federal floor so that all consumers throughout the country have clear, basic rights that do not change due to the happenstance of where they live.
As described earlier, we believe that state laws are often inadequate. They too frequently leave unaddressed key areas of consumer protection. Protections that do exist contain so much variability that they are confusing to all stakeholders in the health care system. And they often contain weak provisions that fail to sufficiently protect consumers. Unfortunately, S. 326 suffers from the same critical flaws
I have already mentioned the significant flaw in S. 326 that perpetuates the patchwork quilt that varies the presence or absence of fundamental consumer protections based on state-by-state differences and differences in type of health plan. Simply stated, a federal patients' bill of rights should be applicable to everyone, irrespective of place of residence or type of health plan.
There are a number of important consumer protections that are missing altogether from S. 326 - protections that are provided under S.6. One example is access to specialists, which is of significant concern to consumers. A number of states have passed provisions to assure enrollees that they can have access to providers outside their network if the network is insufficient to accommodate their particular need. Obviously, this is a crucial right if the plan does not have the type of specialists needed for an enrollee's particular health needs, or if such specialists in the network have filled their caseloads or are inaccessible.
Another obvious gap relates to access to prescription drugs that might not be on a health plan's formulary. In making this criticism, I want to make clear that we are not objecting to the use of drug formularies per se. However, different drugs used to treat similar illnesses or health conditions often have different chemical properties. An attending physician may conclude that a specific drug that is not on the formulary may be more efficacious than the formulary drug in treating that particular patient's condition or may cause fewer adverse reactions. In such instances, there should be a clear procedure by which the attending physician can prescribe, and the patient can receive, the appropriate nonformulary drug. Some states have passed laws requiring plans to establish a method for physicians and patients to fill prescriptions to obtain needed drugs that are not on the formulary. S. 326 provides no such protection; S. 6 does.
S. 326 does include a prohibition on restricting provider communications with patients. A recent GAO report concluded that plans do not use the so-called "gag rules" in their contracts any longer. Rather, they use other methods to restrain their physicians. S. 326 does not prohibit plans from penalizing providers who advocate on behalf of their patients in the utilization review or appeals process, and it does not include a prohibition against the plan's use of financial incentives to deny or delay care. S. 6 provides these protections. In an important area of consumer protection addressed both by S. 6 and S. 326 - namely, consumer rights to independent, external appeals - there are significant differences in how those bills treat this right. I have attached to this testimony, in Appendix B, a side-by-side comparison of the external appeals provisions of these two bills. I will highlight a few of the distinctions.
In S. 326, the plan decides whether a request for an appeal can go forward. In S. 6, the outside external review entity makes that decision. This distinction can make a huge and very practical difference. For example, both bills exclude appeals when the service is not covered by the plan. However, the case of a woman who has cancer in her jaw and whose plan does not cover dental services could be treated very differently under the provisions of these bills. Under S. 326, the plan could deny the woman access to an external appeal for treatment of her cancer by claiming the service is a dental service that is not covered. Under S. 6, the outside review entity would decide whether or not the treatment at issue is dental. In this instance, the woman's physician would have a chance to demonstrate that oncology, rather than dental, services are needed.
Both bills allow an appeal when the plan decides that a specific service is not medically necessary. Under S. 326, however, only the plan can define what is "medically necessary," and the external review entity would have to make its decision based only on the plan's potentially very limited definition. In so doing, S. 326 could render the external review process meaningless. For example, if a plan determines that medically necessary services only include services that will improve a person's condition, the external entity would be forced to turn down any request for services designed to prevent an adverse condition from deteriorating. In contrast, under S. 6, all appeal decisions would follow a standard definition of "medically necessary" which would not so drastically limit what constitutes necessary care. The definition would be consistent with generally accepted principles of professional medical practice - and, hence, a consumer's chances of prevailing would be considerably better than a decision predicated on the plan's narrow definition of"medical necessity."
Another important difference in the two bills relates to expedited review processes for people experiencing emergency or urgent health care needs. S. 6 delegates the decision as to whether expedited procedures are needed to the independent review entity and, if the entity determines that an emergency or urgent health situation is applicable, it must render a decision within 72 hours. Under S. 326, the health plan determines whether a situation constitutes an emergency or urgent care situation, and the health plan then decides what the appropriate timelines should be.
I want to emphasize one other provision in S. 6 - the creation of consumer assistance, or ombudsman, programs - that is crucial to making the external appeals process work. The creation of consumer assistance programs is described with greater detail in S. 496, "The Health Care Consumer Assistance Act," introduced by Senators Reed and Wyden. These programs are designed to assist consumers in understanding their health care choices and rights, and provide assistance to consumers in non-litigative appeals processes.
Two very diverse states - Vermont and Virginia - recently established such consumer assistance programs. These consumer assistance programs are crucial to making internal as well as independent, external review processes work. Simply stated, consumers need help to make meaningful use of internal and external appeals processes.

At the time consumers wish to appeal a plan's denial of important health services, those consumers are likely to be sick or frail and they have limited capacities to pursue their appeals alone. It is for this reason that, in places that do not have such consumer assistance programs, the right to an external appeal has made little practical difference for consumers.
A recent Henry J. Kaiser Family Foundation report, entitled External Review of Health Plan Decisions: An Overview of Key Program Features in the States and Medicare, indicates how important consumer assistance programs are in making external appeals systems work. In states where external appeals processes have been in existence, the number of people who availed themselves of these processes is very low - less than 250 cases per year in the largest states and fewer in the smaller states. The report cites studies indicating that these numbers are low because consumers often are unaware of their rights to an external review and, when they are sick, they are unable to pursue their appeals rights. Consumer assistance programs are needed to make the system work properly.No matter whether one supports or opposes the right of consumers to sue HMOs in court and receive a meaningful remedy, there should be universal agreement that we want to solve consumer-health plan problems early - thereby reducing the impulse to litigate. That's why the creation of consumer assistance programs, so that help can be provided on a timely basis for internal and external appeals, is crucial. It is a way to provide non-litigative, non-lawyer remedies on a timely basis before significant damage is done.
Consumer assistance programs help to resolve problems at earlier, less formal stages and obviate the need for more contentious proceedings, such as litigation. Consumers need to have someone to go to for help when they think they are not getting the care they need. A knowledgeable person who can explain the obligations of the patient and the plan may be able to run interference and solve a consumer's problem before a formal grievance is necessary. Additionally, providing assistance throughout the appeals process could make the system work more efficiently and thereby lessen the need for further proceedings, such as litigation.
As a result, any legislative proposal that seeks to deal with problems early and uses external review mechanisms to achieve that objective should include a provision for the creation of consumer assistance programs. We have ample, high-quality precedents in the states for these programs, and we should implement them as part of a patients' rights system.
Congress often looks to the states as the laboratories of change. States experiment with various laws. They inform Congress about what works, and frequently Congress adopts these ideas for the entire nation. We urge you not to adopt only the lowest common denominator of the consumer protections enacted in the states. Rather, we encourage you to take the best from the states and make it federal law so that all consumers, no matter where they work or live, will be assured that their health plans will serve their needs.

LOAD-DATE: March 13, 1999

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