"Medical Necessity" Provision Would Hurt Consumers, Increase Health Care Fraud


March 2, 1999

CONTACT: Richard Coorsh

(202) 824-1787

email: rcoorsh@hiaa.org

WASHINGTON, D.C., March 2 – A "medical necessity" provision contained in leading so-called patient protection legislation would hurt consumers by allowing health care providers to prescribe unnecessary care virtually unchallenged, according to a new report released today by the Health Insurance Association of America (HIAA).

According to the HIAA report, these bills would allow providers to determine what services are covered, including treatments that may no longer be considered effective, and where and how those services are delivered. The report also states that the "medical necessity" provisions would make it next to impossible for health insurers to stop provider fraud and abuse.

"These so-called patients’ bill of rights proposals would give virtual carte blanche to treatments that are unnecessary, and sometimes even dangerous," observes HIAA President Chip Kahn. "The result: consumers pay higher premiums and receive lower quality health care."

Taxpayers pay for fraud and abuse through higher taxes, and consumers pay for it through higher health insurance premiums, notes Mr. Kahn.

"On the one hand, the Clinton Administration has just announced a major initiative to fight health care fraud and abuse, and would never want to retreat on fighting fraud in the Medicare program. On the other hand, so-called patient protection legislation supported by the Administration would tie health insurers’ hands when fighting fraud and abuse. This is worse than hypocrisy – this is public policy malpractice."

HIAA’s report – based upon a legal opinion by Washington, DC-based attorney William G. Schiffbauer – notes that under the major so-called patient protection bills, providers can defend decisions to prescribe marginal or unnecessary care as being consistent with vague "generally acceptable principles of professional medical practice."

"This is a standard that you can drive a Mack truck through," opines Mr. Kahn.

As a consequence, health insurers would be unable to fight medical fraud and abuse, which account for approximately one-tenth of the nation’s trillion-dollar annual health bill, according to government estimates. Each year, up to 120,000 Americans die and an additional one million are injured due to medical mishaps, some of which are attributable to unorthodox or unnecessary treatment, according to the HIAA report.

The Health Insurance Association of America is the nation’s most prominent trade association representing the nation’s private health care system. Its 269 members provide health, long-term care, disability, and supplemental coverage to more than 115 million Americans.


PLEASE NOTE: A copy of this study is available at http://www.hiaa.org/newsroom/mednecwhitepaper.html


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