Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
March 11, 1999, Thursday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2475 words
HEADLINE:
TESTIMONY March 11, 1999 WILLIAM J. SCANLON DIRECTOR HEALTH FINANCING AND PUBLIC
HEALTH ISSUES SENATE HEALTH, EDUCATION, LABOR & PENSIONS
REGULATION OF HEALTH INSURANCE
BODY:
Testimony
Before the Committee on Health, Education, Labor, and Pensions, U.S. Senate
Thursday, March 11, 1999 MANAGED CARE State Approaches on Selected Patient
Protections Statement of William J. Scanlon, Director Health Financing and
Public Health Issues Health, Education, and Human Services Division Mr. Chairman
and Members of the Committee: We are pleased to be here today as you discuss
various approaches the states have taken to enhance consumer protections for the
millions of privately-insured Americans who receive health coverage under
managed care arrangements. 1 To control rising health care costs and to promote
enrollee health, managed care organizations attempt to control or coordinate the
use of health services by their enrollees, particularly for high-cost sources of
care such as hospital emergency department services or specialty care referrals.
At the same time, consumers have increasingly voiced concerns about the effect
of such constraints on their ability to obtain appropriate care. As the primary
regulator of private employer-based health insurance for about 76 million
people, states have responded to these concerns by implementing various measures
designed to protect managed care consumers. However, an estimated 48 million
people are enrolled in health plans exempt from state regulation and thus not
covered by state patient protections. Pending before the Congress today are a
number of bills that would extend certain protections to these individuals. At
your request we reviewed selected state patient protection provisions already in
place and congressional proposals under consideration. You specifically asked us
to examine state statutes that relate to seven types of patient protections:
coverage of emergency services, access to obstetricians and gynecologists,
access to pediatricians, access to other specialists, continuity of care for
enrollees whose providers leave the plan, drug formularies, and patient-provider
communication (including prohibitions on "gag clauses"). 2 We reviewed the
health insurance statutes and regulations in 15 states that collectively account
for about two-thirds of those enrolled in HMOs nationwide. In addition, we
examined three Senate bills introduced in the 106th Congress-S. 6, the
"Patients' Bill of Rights Act of 1999"; S. 300, the
"Patients' Bill of Rights Plus Act"; and S. 326, the
"Patients' Bill of Rights Act of 1999." My remarks today will
focus on the 15 states' experience with crafting selected patient protection
measures. In brief, we found that many states have responded to managed care
consumers' concerns about access to health care and information disclosure.
However, they often differ in their specific approaches, in scope and in form.
For example: 1 Health maintenance organizations (HMO) are the most recognized
form of managed care. Other prevalent arrangements include preferred provider
organizations and provider sponsored organizations, many of which offer more
open-ended access to providers than do traditional HMOs. 2 Our 1997 review of
HMO contracts with physicians found that none of the 529 HMOs surveyed used
contract clauses that explicitly restricted physicians from discussing all
appropriate medical options with patients. However, plans' ability to terminate
physician contracts can bring significant pressure to bear on physician-patient
communication. See Managed Care: Explicit Gag Clauses Not Found in HMO
Contracts, but Physician Concerns Remain (GAO/HEHS-97-75, Aug. 29, 1997). - Two
states-California and Minnesota-have laws and/or regulations that address all
seven types of protections we analyzed. Two other states Colorado and
Massachusetts-have laws that address three or fewer protections. - The patient
protection most common among the 15 states addresses open patient-provider
communication. Provisions addressing coverage of emergency care and access to
certain specialists were also prevalent among states. In contrast, only four
states had specific provisions to guarantee direct access to pediatricians. -
Although several states have continuity-of-care provisions, they can differ
markedly in the criteria for coverage and time period allowed for transition. -
About half of the states specify pregnancy as a condition subject to
continuity-of-care coverage. Most of these states allow women in their second
trimester of pregnancy to qualify for continuity-of- care protection if their
physician leaves the plan. One state requires that women be in their third
trimester to receive such coverage. BACKGROUND Because the majority of privately
insured Americans is now enrolled in some form of managed care and concerns have
often been voiced about the associated controlled access to health services,
legislators are increasingly addressing managed care issues. States and the
federal government each have a role in regulating managed care plans. For
individuals who buy insurance directly, state laws apply. For the 124 million
people with employer-provided (group) coverage, the application of federal or
state law depends on whether employers "self-insure" (that is, accept most or
all of the financial risk for the coverage) or purchase insurance. The federal
Employee Retirement Income Security Act of 1974 (ERISA) preempts the application
of state laws for the approximately 48 million people who are enrolled in
self-insured group health plans. Approximately 76 million people with private
employer-sponsored group health insurance are in "fully insured" ERISA plans in
which the employer purchases coverage from a health insurance issuer who assumes
the risk of paying for covered items and services. State insurance laws cover
individuals in such plans. The three federal bills that we reviewed differ in
the extent to which they would extend certain protections to managed care
enrollees. All three bills would cover self-insured plans. S. 6 would also cover
those participating in fully insured group and individual health plans. Certain
provisions in S. 300 and S. 326 would apply to self-insured group health plans
and other provisions would apply to all ERISA plans. OVERVIEW OF PATIENT
PROTECTIONS IN SELECTED STATES Although all 15 states in our review have enacted
legislation and/or implemented regulations addressing patient concerns about
managed care, they do not all cover the same set of issues. As shown in table 1,
two states-California and Minnesota-have provisions encompassing all seven
protections. Two other states- Colorado and Massachusetts-have laws or
regulations that incorporate three or fewer of the seven issues. (Table is
available on hard copy only). We found no direct relationship between a state's
rate of HMO penetration and the presence of the seven protections in its laws
for the 15 states in our review. Massachusetts, with an HMO penetration rate of
54 percent, the highest among the states in this study, addresses only one of
the seven protections. Yet Vermont, with less than half the HMO penetration rate
of Massachusetts, addresses six of the patient protection areas. Of the seven
types of protections, open patient-provider communication, including
prohibitions on gag clauses, is the only one addressed by all 15 states we
reviewed. Also common is coverage of emergency care. Continuity of care is
addressed by 9 of the 15 states and access to pediatricians is addressed by only
4 states. (See table 2.) (Table is available on hard copy only). Because the
legislative action in some of the 15 states has been relatively recent,
implementation issues, cost implications, and actual benefits for consumers are
not yet well understood. Furthermore, some state officials we interviewed
indicated that the absence of certain patient protections in statutes or
regulations may be an indication that they did not see a need for such
regulation, given health plan practices in the state. It may be general practice
among managed care plans to have policies that are concordant with consumer
protections. For example, many officials told us that they have no requirements
that HMOs classify pediatricians as primary care physicians because HMOs already
generally do so. STATES OFTEN VARIED IN THEIR SPECIFIC APPROACHES While we found
some common ground among states in the types of patient protections they have
addressed, the scope and standards of the provisions vary from state to state. 3
In general, when states address disclosure of information to plan members, their
provisions were similar, while in the case of access issues, the provisions
varied significantly in detail. These variations have implications for who
receives protection and under what circumstances, as illustrated for the
following provisions. (App. II provides more detail on each of these seven types
of patient protections and their comparison to three pending federal bills,
which show many parallels.) Coverage of emergency services- Concerned about
cost- effectiveness, most health plans attempt to manage enrollees' use of
emergency services. One common approach is to require members to call the plan
before seeking emergency care, unless the member has a truly serious,
life-threatening emergency (such as a bleeding wound or heart attack). When
there is no prior authorization and the emergency care provided is not found to
have been medically necessary, then coverage can be denied. 3 To help
standardize laws on patients' rights, the National Association of Insurance
Commissioners has developed several model statutes addressing aspects of
consumer protection that may be adopted by state legislatures. Many states have
attempted to define "emergency medical condition" in their statutes and
regulations. They have used somewhat different terms, such as "prudent
layperson" and "reasonable expectation," to specify what a nonmedically trained
individual would reasonably assume to be an emergency. 4 However, three of the
states that have adopted such definitional standards do not prohibit plans from
requiring prior authorization for coverage of emergency care. Access to
obstetricians and gynecologists: Plan enrollees generally must obtain a referral
from their primary care physician before obtaining services from a specialist.
However, women may prefer to see a gynecologist for the provision of routine and
preventive women's health care services. States attempt to facilitate access to
obstetricians/gynecologists (OB/GYN) through various means. One approach is to
allow female enrollees to designate an OB/GYN as their primary care provider.
Another approach is to prohibit plans from requiring authorization or referral
for coverage of certain gynecological care and pregnancy-related services by an
OB/GYN. Some states-such as Pennsylvania and Vermont-further stipulate that
OB/GYNs must communicate with the patient's primary care physician concerning
the services provided, while others-such as California and New York-allow plans
to establish communication protocols between OB/GYNs and primary care
physicians. Continuity of care, Enrollees may be undergoing a course of
treatment or be receiving pregnancy-related care when their health care provider
leaves a health plan. In some circumstances, the departure of the provider can
have an adverse effect on the enrollee. Some states have adopted measures to
enable enrollees to continue seeing their original health care provider for a
period of time. States' provisions differed in the duration of the transition
period and the circumstances under which individuals would be permitted to
continue to be treated by their original provider. Only seven states specify
pregnancy as a condition subject to this coverage. Most of these states allow
pregnant women in their second trimester to qualify for continuity-of-care
protection if their physician leaves the plan. However, one state requires that
women be in their third trimester to receive such coverage. Drug formularies:
Managed care plans often provide coverage for prescription drugs through a
formulary. However, some enrollees may require drugs that are not on the plan's
formulary. States have responded in various ways to consumers' concerns about
the inclusion of drugs and their desire for a process to consider exceptions to
a plan's formulary. 4 The prudent layperson standard refers to a person having
an average knowledge of medicine and health and whether that person would
believe that the absence of immediate medical attention would jeopardize health.
The reasonable expectation standard specifies that the absence of immediate
attention could reasonably be expected to jeopardize health. Many states require
that plans disclose the use of a drug formulary to plan members. Several states
require plans to provide an exception process that allows coverage of
nonformulary alternatives when medically indicated. Many of the states simply
require plans that have a procedure to obtain nonformulary drugs to disclose the
process. There is also a distinction in how states address cost-sharing
requirements for prescription drugs. Oregon requires full disclosure of
cost-sharing for plans with procedures to obtain nonformulary drugs. Ohio
specifies that a plan may not charge more for a nonformulary drug than for a
formulary drug, if a provider certifies that the formulary drug is ineffective
or harmful for the patient. CONCLUSION States are responding in myriad ways to
managed care consumers' concerns about the ability to get the medical care they
need. In many cases, these state actions closely parallel each other, such as
coverage of emergency care and open patient-provider communications. But it is
also apparent that the states' approaches often vary in their scope and in the
details, as they are tailored to the needs and priorities within the individual
states. Realizing the promise of managed care specially its ability to constrain
health care cost growth-is dependent upon many factors, including consumers'
satisfaction with their ability to obtain timely, needed health services.
Perceived or real undue obstacles to accessing needed care will undermine
consumer acceptance and confidence in managed care. They could also lead to a
backlash resulting in overly restrictive regulation that could thwart the
advantages and efficiencies to be gained in a managed care environment.
Balancing regulatory approaches, such as the assurance of minimum standards,
with quality-based competition among providers can be an effective approach that
ensures quality and efficient health care for managed care enrollees. We will be
happy to continue to work with you to monitor the further development and
implementation of these and other issues. Mr. Chairman, this concludes my
statement I will be happy to answer any questions that you or other Members of
the Committee may have.
LOAD-DATE: March 12, 1999