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Copyright 1999 Federal Document Clearing House, Inc.  
Federal Document Clearing House Congressional Testimony

March 11, 1999, Thursday


LENGTH: 2475 words


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

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