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November 15, 1999

Dear Senator/Representative:

We urge you and your fellow conferees to concede to the House of Representatives' patient protections contained in the Bipartisan Consensus Managed Care Improvement Act of 1999 (Bipartisan bill). Specifically, we urge you to oppose efforts to substitute patient protections in the Senate-passed managed care reform legislation for the Bipartisan bill. Equally important, we urge you to oppose efforts to combine managed care reform legislation with the so-called "access" bill H.R. 2990 entitled the Quality Care for the Uninsured Act of 1999. H.R. 2990 contains anti-consumer measures such as Medical Savings Accounts (MSAs), Association Health Plans (AHPs), and HealthMarts that drive up the cost of traditional health insurance coverage.

The Bipartisan bill is the only managed care bill that would ensure genuine accountability of health plans that place profits ahead of patient care. This bill provides legal accountablity (i.e. liability) for negligent behavior that results in injury or death. In contrast, the Senate-passed bill leaves in place the current ERISA exemption that shields employer-based plans from the consequences of their irresponsible, or even reckless, decisions about patient care. This allows these plans to continue to enjoy special immunity, rather than being accountable in the same way that doctors, providers and individual insurers are.

While adequate external review is important, meaningful accountability can only be achieved when consumers have further recourse in the courts. After suffering an injury due to plan's negligence, only the justice system has the power to make a consumer whole. An external review can reverse an inappropriate denial of care in certain circumstances, but it provides no compensation for patients who have already suffered injuries at the hands of a negligent plan. Penalty based on a plan's unwillingness to abide by an external appeals entity's recommendation is equally inadequate. The proposed penalties in the Senate-passed bill fail to fully address the extent of the plan's wrong- doing and the nature of the injury in compensating the consumer.

However, the Bipartisan bill does not rely upon liability alone to ensure plan compliance. It also includes a comprehensive external review of grievances and appeals - far more comprehensive, in fact, than that in the Senate passed bill. The Senate-passed bill mandates that the plan whose decision is under review select the external appeals entity that appoints the reviewer - calling into question whether the word independent is truly appropriate. In order for external review to be truly independent and unbiased, state and federal agencies should be allowed to select reviewers that do not have unfair incentives to rule in favor of health plans. By mandating that health plans select and contract directly with the review entity, the Senate-passed bill creates an inherent incentive for the reviewer to side with the plan (the promise of future contracts). Instead, the Bipartisan bill allows states if they so choose to select the reviewer or create an unbiased process for selection. Otherwise, the plan selects the external appeals entity.

The Senate-passed bill also creates a complicated process for determining whether a medical dispute is appealable. The bill limits external appeals to covered benefits which are medically necessary and appropriate and that have not been determined to be experimental in nature. Further, the disputed care must meet a financial threshold or the health of enrollee must be in jeopardy. Plans can define whether a covered benefit is medically necessary or not. An enrollee is also granted an external appeal if the plan fails to meet an adverse coverage determination deadline. The Bipartisan bill, however, is clear that covered benefits that are both medically necessary and require a medical judgment are appealable. The Bipartisan bill, like the Senate-passed bill, grants an external appeal if the plan fails to meet an adverse coverage deadline. The bill also provides that the external appeals entity decides whether the covered benefit is medically necessary or not. By permitting the external appeals entity to make this determination about medical necessity, the Bipartisan bill ensures that best medical practices serve as criteria for granting an appeal as opposed to an individual plan's guidelines.

In addition, the Senate-passed bill establishes an ambiguous timeframe for conducting an external review, which could be indefinite. The bill establishes that the plan has five working days after a request for an appeal to appoint an external appeals entity. The external appeals entity then has 30 working days to select an external reviewer(s). Furthermore, the external reviewer then has 30 working days to conduct a review - a timeframe that might not begin until the entity receives all necessary information. Plans are required to release all necessary information 10 days from the initial request for a review. The above timeframe could allow a delay of several months until the reviewer has reached a decision, and even after reaching a decision, the plan is permitted to wait an additional 30 days before informing the patient about the reviewer's determination. In comparison, the Bipartisan bill requires that an external review be completed within 21 days from the initial request at which time the patient must be informed.

The external appeals process in the Senate-passed bill is deficient because it fails to include safeguards that ensure a fair process. First, the bill does not provide for a de novo, evidence-based review by a neutral review entity of the internal appeals decision. Second, the bill does not explicitly prohibit any type relationship between the external reviewer and the managed care system but it does explicitly prohibit any type of relationship for all other vested parties in the dispute. Third, the GOP bill is binding on the plan, only if the reviewer adheres strictly to the guidelines for conducting an external review. In contrast, the Bipartisan bill includes a de novo review, provides conflict-of-interest protections between the managed care system and the reviewer, and is binding on the plan without any exceptions.

Moreover, we strenuously object to combining managed care reform legislation with H.R. 2990 which could move us further from the goal of reducing the ranks of the uninsured. For example, MSAs are a threat to our health care system because they divide the healthy from the sick. MSAs over time are expected to drastically increase the premiums for traditional coverage, and may even drive policies with deductibles of $250 out of the market, decreasing the choices that are available to consumers. Moreover, the Boehner bill includes anti-consumer measures such as AHPs and HealthMarts. AHPs prevent state benefit protection laws from applying to all consumers. These state consumer benefit protection laws ensure health insurers offer well-child care, cancer screening, mental health benefits and many other valued benefits. HealthMarts create a situation where insurers can cherry pick which can harm risk-sharing thus driving up the cost of health care.

For all these reasons, Consumers Union urges you to adopt the patient protection in the House Bipartisan bill rather than in the Senate-passed bill. Additionally, we urge you to oppose efforts to combine managed care reform legislation with H.R. 2990 that includes anti-consumer measures such as MSAs, AHPs, and HealthMarts.

Thank you for your consideration on this very important matter.


Adrienne Hahn
Legislative Counsel

Gail Shearer
Director, Health Policy Analysis
Washington Office

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