Copyright 1999 Federal News Service, Inc.
Federal News Service
JANUARY 20, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
8417 words
HEADLINE: PREPARED STATEMENT BY
J.
RANDALL MACDONALD
EXECUTIVE VICE PRESIDENT, HUMAN RESOURCES AND
ADMINISTRATION
GTE CORPORATION
BEFORE THE SENATE
COMMITTEE ON LABOR AND HUMAN RESOURCES
SUBJECT - GROUP HEALTH PLAN
COMPARATIVE INFORMATION
AND COVERAGE DETERMINATION STANDARDS
BODY:
Chairman Jeffords and members of the
Committee, my name is J. Randall MacDonald. I am Executive Vice President-Human
Resources and Administration for GTE Corporation. We at GTE share your
commitment and interest in ensuring access to quality healthcare. Thank you for
the opportunity to speak about the importance GTE places on quality healthcare
and the benefits to our 91,000 U.S. employees, more than 60,000 retirees, and
their dependents.
With 1997 revenues of more than $23 billion, GTE is one of
the world's largest telecommunications companies and a leading provider of
integrated telecommunications services. In the United States, GTE provides local
service in 28 states and wireless service in 17 states; nationwide long-distance
and internetworking services ranging from dial-up Internet access for
residential and small-business consumers to Web-based applications for Fortune
500 companies; as well as video service in selected markets.
Outside the
United States, the company serves more than 9 million telecommunications
customers. GTE is also a leader in government and defense communications systems
and equipment, directories and telecommunications-based information services,
and aircraft-passenger telecommunications.
GTE has employees and retirees in
every state. We offer healthcare benefits to our employees and retirees
nationwide.
I appreciate the opportunity to present how GTE provides
health benefits to our employees and their families, the
information that we have found helpful to consumers, and the steps that we and
other employers take to ensure that coverage decisions are made accurately and
fairly.
I am appearing before you today on behalf of the Association of
Private Pension and Welfare Plans (APPWP-The Benefits Association), a national
trade association of companies concerned about the employee benefits system.
APPWP's members include Fortune 500 companies and other organizations that
provide benefit services to employees. Collectively, APPWP's members either
sponsor or administer health and retirement plans covering more
than 100 million Americans.
But I don't just represent employers. I'm also
here on behalf of the 350,000 healthcare consumers covered by GTE's
health plans in all fifty states. We believe we run these plans
on behalf of our employees and plan participants. We do not represent
health plans, providers, regulators, or attorneys. Our focus is
on healthcare consumers.
We also know that our effort on behalf GTE's
employees and their families have a much broader, positive impact on the quality
of health care in the communities where our employees and
customers live. We believe that when we do it right, health
care can be a win-win situation. Employers can assert their market clout on
behalf of their employees, and reshape the entire health care
system for the better in the process. At GTE, we have never shied away from
trying to do both.
GTE's Perspective on Healthcare Benefits GTE's approach
to consumer- responsive healthcare begins with selecting health
plan partners committed to operating in the best interests of our employees and
our expectation of fair and consistent coverage determinations.
GTE will
spend more than $600 million in 1999 direct health costs. We
estimate that we incur a similar additional cost in lost time from work because
of health problems of employees or their family members. It is
in our own enlightened self-interest to have healthy employees at work and not
away from their work site because the health care delivery
system failed them. We take seriously our efforts to provide employees with a
range of health plan choices to meet their personal needs and
we work hard at seeing that these plans are managed well. GTE believes that the
objectives of controlling cost and improving quality are linked - not mutually
exclusive. For us, good health care is good for business.
GTE is keenly aware that we must compete for one of our most valuable
assets: a skilled and committed workforce. GTE, and other employers like us,
provide health benefit plans to employees as part of overall
compensation designed to attract and retain talented employees. But it also goes
much further than that. We also share with our employees a strong and mutual
interest in maintaining a high quality, affordable set of benefits that are
administered consistently and fairly for all plan participants. We are committed
to selecting the best possible health benefit plans, with
proven records of performance, and we work closely with our
health plan partners to resolve problems when they occur and to
reduce administrative errors for the benefit of our plan participants.
Every
full-time and eligible part-time GTE employee may choose a healthcare plan that
meets their family's needs including either a traditional fee-for-service plan
or a point-of-service plan, except one specific labor agreement that provides
otherwise. This means that almost every one of our employees can select a plan
that will allow him or her to see the doctor of their choice. Additionally, we
offer more than 100 quality managed healthcare plans throughout the country -
including both staff and Individual Practice Association (IPA) model HMOs.
In this voluntary environment, more than seventy percent (70%) of GTE's
employees voluntarily chose managed healthcare plans for 1999, and an additional
sixteen percent (16%) selected a network based "Preferred Provider Plan". Less
than ten percent (10%) selected a traditional indemnity plan. We believe that
GTE employee elections reflect the quality of care, higher level of benefits,
satisfaction, service, and overall value that managed healthcare plans offer. We
are also actively involved in setting tough, meaningful standards for the
health plans that we offer to our employees and we continuously
monitor and evaluate these plans to ensure they maintain high performance
levels.
Finally, we strongly believe in the value of informed choices and we
work closely with our health plan partners to provide clear,
reliable information to guide employees in making decisions about how the
different health plans operate and their responsibilities as
plan participants.
In short, GTE's primary healthcare objective is to ensure
that our beneficiaries have access to the best healthcare resources available
and we are receiving superior value for the money we are spending.
At GTE,
we work to establish long-term partnerships with the plans we select and we
believe in continuous quality improvement. Long-term relationships with
health plans promote stable enrollee relationships with the
plans of their choice, with the provider networks, and ultimately pay off by
placing a greater focus on improved healthcare status of our employees and the
larger community where our employees and customers live. We view these
partnerships as a process where all parties learn from each other and drive
toward higher levels of performance with appropriate economic and market share
rewards for their innovation and success.
We also work to correct
problems if a plan fails to perform at or above our performance standards, first
by sharing our findings directly with the plan and soliciting their review and
commitment to take corrective action. Additional steps include notifying
employees of the particular problems and, if not corrected, "freezing" any
additional enrollment. The final step of discontinuing the offering of a plan is
only considered when problems persist.
Informed Consumers The critical link
in successful health plan management is giving consumers the
information they need to make appropriate decisions and then paying careful
attention to the results from satisfaction surveys. We are convinced that a
large part of the reason that so many of our employees voluntarily elect managed
healthcare plans, and report high satisfaction for whatever plan they select, is
because of the information provided during the annual enrollment period, and
more importantly, continuously available when the consumer needs it.
Each
year, we conduct extensive mailings to employees summarizing the
health plan options available to them and giving them
information on each option that is based on the type of information that they
have told us helps them to make informed decisions. In addition to basic
information about the size of the plan's membership, how long it has been in
business, and any differentiating attributes, we highlight those plans that meet
GTE's "Benchmark" status as one of the best in terms of combining access,
quality of care, service, satisfaction, and overall cost-effectiveness. We also
actively promote plans that meet GTE's highest rating, "Exceptional Quality
Designation", which is reserved for those plans that have been rated by us as
having the very best overall quality of all of the plans offered by GTE
throughout the country. These are the select group of plans that, in our
evaluation, offer the highest combination of healthcare quality and member
satisfaction.
These designations do not come easily in a competitive
marketplace and, I can assure you, our health plan partners
work very hard to earn them.
We added an additional designation for our 1999
enrollment. We prominently identified the more than 80% of the
health plans we offer that have agreed to work with us toward
voluntary implementation of the principles in the Patient's Bill of Rights
proposed by the President's Commission.
Informed consumers comparing plan
options based on quality, cost, and consumer support.
We want our employees
to have a choice of high quality health plans that are
committed to working closely with us over the long term to deliver high levels
of service at a fair price. We try to foster a sense of customer focus in how
health plans meet our needs, and those of our employees.
We
have been providing consumer-focused information annually since 1992. I
acknowledge it still might not be perfect, but we improve it each year based on
consumer feedback - what they want to know. Not based on a formula or a
regulation.
We recognize that one-size-fit-all standards will not allow for
differences among health maintenance organizations, preferred
provider organizations, and indemnity plans. Non-network and PPO plans are
designed to be fundamentally different from HMOs. HMOs strive to establish
clinical accountability for a defined population - for example, by assigning
members to primary care physicians or care "facilitators" who are responsible
for the patient's overall health status. PPOs or non-network
plans strive to give members the widest possible choice of providers with the
fewest possible limits on access. The challenge in establishing standards for
the very different types of health plans that exist in today's
marketplace is that they must be flexible enough to accommodate the real
differences between network and non-network plans while still consistent enough
to give consumers the baseline information that they need to make well- informed
decisions.
The key for us at GTE is to have appropriate standards for both
network and non-network based health plans. We have tailored
the specific standards we expect from our health plans to the
services they provide in the marketplace. While GTE provides a wide range of
health plan choices, we identify the "best practices" used in
managed care plans to drive quality throughout the healthcare delivery system,
and thereby increase the quality of health care for people in
all types of health plans. We urge that you not preempt this
voluntary process by mandating identical quality indicator and
health outcomes measures on every type of
health plan. As I mentioned at the outset of my statement, our
experience shows that employees are enrolling in large number in managed care
plans that based on the value offered: access, services covered, quality, and
price. We are convinced that consumers make informed decisions about
health plans if we give them the information they need, at the
time they need it, in the form that makes sense.
Finally, we need to keep in
mind that more information, by volume, is not necessarily 'better' from the
consumer's perspective unless it is (a) information that they want, (b) targeted
to those who need it, and (c) presented concisely. Unwanted information that
distracts or is poorly presented is simply not useful and makes consumers less
engaged - rather than better informed.
We have learned that no individual or
organization has "an exclusive" on information consumers want or need. Proposals
on consumer information should be encouraging rather than prescriptive.
Making the Right Decisions on Coverage Healthcare options have changed
dramatically in recent years. Like most companies, for many years GTE primarily
provided health benefits through traditional, comprehensive,
indemnity-type plans where benefits for all "medically necessary and appropriate
care" were explicitly and discretely defined in the plan documents.
One of
the most common misperceptions is that managed healthcare plans are more
restrictive than the typical indemnity plans of the past. The reality is that
managed healthcare improves access to more extensive healthcare services
including (a) coverage for preventive health services which
indemnity plans usually restrict or exclude altogether, and (b) elimination of
the economic barriers to healthcare access. Managed healthcare plans use modest
fixed-dollar co-payments in lieu of large annual deductibles and additional
co-insurance. This allows consumers to know their out-of-pocket costs before
seeking healthcare services.
In addition, most managed healthcare plans are
rapidly engaging in sophisticated, value-added pharmaceutical benefit strategies
designed to provide highly effective programs to combat and proactively manage
complex diseases. Finally, managed healthcare has significantly improved the
integration of information available to practicing healthcare providers to
evaluate the wide range of treatment options for a particular condition and
allows for much better decisions to be made about which of the options are most
likely to lead to improved, patient-specific healthcare.
The one thing that
distinguishes managed healthcare from the indemnity plans that preceded them is
that more decisions about what is considered "medically necessary and
appropriate" are made up-front, rather than after the service has already been
provided. In the past, when these types of decisions were made, they largely
affected the issue of whether a payment would be made by the plan for a service
that had already been provided. Now, under managed healthcare, the healthcare
provider and the patient often know the plan's decision before the service has
actually been provided. This means that everyone involved - the patient, the
provider, the plan, and the employer - has a stake in making sure that the right
decisions are made in the first place, and that decisions are made consistently
and fairly.
At GTE, we strongly subscribe to the concepts of evidence-based
medicine and standards for coverage of medical services. This means defining
benefits in terms of the treatment that is most suitable for the patient, based
on proven medical technologies and practice. GTE holds health
plans accountable for making sure that medical practitioners have the
flexibility to do what is required for their patients. But we also believe that
it is not enough to simply cover whatever a treating physician prescribes. Not
every treating physician is always right. We want plans to bring individual
physician decision making into a system of accountability, to ensure that the
treatment proposed is consistent with the latest and accepted medical knowledge.
Many in the healthcare field seem to consistently believe that "more is
better". We believe that only "better is better", and "better" may be more - or
fewer medical services. We believe our employees deserve protection against
non-evidenced based medical services and have encouraged others to support this
basic consumer protection.
For example, removal of cataracts once
required a minimum hospital stay of five to seven days. These are now routinely
done on an out- patient basis for most patients. The point here is
evidenced-based medical services should be based on the patient's needs and not
on out dated historical practices or the convenience of healthcare providers.
Given the high cost and quality risks of healthcare, non-evidenced based
services can no longer be the responsibility of plan sponsors.
Medicine is
not yet - and may never be - entirely science-based. There continue to be
significant areas where there is not yet medical consensus. Where disagreements
occur - as they inevitably will - we want these to be resolved fairly and
quickly, and when additional medical judgment is needed, we want final decisions
to be made that keep pace with constantly emerging medical technology and
advances.
I can assure you from my own experience that nothing we do in our
health benefits program is more important, or more difficult,
than ensuring that the best decision is made for an employee or a member of
their family in difficult coverage cases. And, we have an even higher obligation
required by law to act dispassionately, consistently, and in the interest of all
plan participants. In practice, that means it is just as important to ensure
that we are covering appropriate and needed care as it is to ensure that we are
not paying for inappropriate or unnecessary services. In either case, once the
decision is made for a single individual, it then must be our policy to act
consistently in all future cases, knowing that coverage interpretations must
change based on emerging medical science.
When our employees have questions
or concerns about the decisions made about their health
benefits, the first step is to make sure all parties have complete information
to make sure that the correct decision was made. Most are relatively straight
forward coverage decisions and are quickly resolved. Where questions continue,
we ask that both the guidelines involved in these cases and the specific
clinical cases in question be reviewed by independent medical practitioners
including the best medical providers available anywhere in the country to
provide the patient with specific clinical findings regarding the proposed
treatment, including whether the proposed treatment is within the medically
appropriate coverage provided by their plan. The point that I want to underscore
is that we do not attempt to substitute our judgment for the judgment of medical
professionals. Our job - and legal responsibility - is to make sure that our
healthcare plans are administered properly and consistently. We rely on medical
professionals to make medical judgments. In fact, we strongly believe that
medical decision making must remain in the medical arena. Where disagreements
over medical issues occur, we seek independent medical judgment so that the best
decision possible can be made about the services provided to our employees. And
where there is reasonable doubt, we want these decisions made in the employees
favor, consistent with our interest in having a health plan
that is both perceived, and truly is acting, in their interests.
By moving
toward "evidence-based medicine", we can subject both coverage decisions and
medical treatment decisions to an objective test of what has been shown to work
best and is in the patient's best interest. Evidence-based medicine is the best
hope we have for seeing that patients with chronic, rare, or difficult
conditions get the best treatment available, based on the best medical
knowledge, and actually improve their condition.
Making informed, consistent
decisions about what is covered under a health benefit plan is
a serious responsibility to be undertaken by those with a commitment to making
the best decisions possible. If we are honest with ourselves, we must also
recognize that in many cases, the job of making health benefit
coverage decisions involves difficult judgment calls based on the best available
information at the time. It is extremely important that public policy recognize
our common interests in seeing that these difficult but essential decisions are
made properly so that we do not end up with a system that encourages or requires
coverage for services that are excessive, unproven, inappropriately delivered,
simply unnecessary, and perhaps even dangerous to the patient's
health.
The best procedural protections are ones that are
structured to make the right decisions at the earliest possible stage
We
believe the current framework established by ERISA has balanced the needs of
consumers with the responsibilities of employers. While current regulations are
burdensome, the uniformity of federal, well defined regulations has enabled
thousands of employers to offer employee benefit programs offering coverage that
would otherwise not be available.
Toward the end of 1998, the Department of
Labor proposed first comprehensive revision of the claims procedure requirements
under ERISA since implementing regulations were first issued in this area in
1977. The Department of Labor's proposed revision would significantly increase
the compliance responsibilities of plan sponsors and their contractual partners
including: * significantly shorter time frames for making decisions on benefit
claims, * a broad-based redefinition of what actions constitute an "adverse
benefit determination," * expedited consideration of claims that are determined
to be "urgent" by a physician or other health professional, and
* extensive access to plan records for individuals who appeal claims
determinations.
GTE recognizes the need for modification of the claims
review procedures under ERISA, primarily to shorten the regulatory timeframes in
line with changes in claim processing practices and capabilities, as well as the
emergence of the "non-indemnity" healthcare system, most often referred to as
"managed care". However, in some instances, the changes proposed by the
Department of Labor in the Fall of 1998 would significantly expand and extend
the scope of claim determinations beyond the statutory authority granted under
section 503 of ERISA. We believe that the Congress must first resolve a number
of the issues addressed in these rules.
The proposed changes also create new
questions for interpretation and problems for implementation. For example, it is
of fundamental importance for plans sponsors and their contractual partners to
understand how the requirements of the proposed rules relate to state laws that,
in many cases, address similar or even identical issues. In addition, there are
also many questions about the consistency of the requirements and their
enforcement across the healthcare and benefits spectrum, including state and
local plans, federally-sponsored plans, and the individual market. One of the
key objectives of the President's Advisory Commission on Consumer Protection and
Quality in the Health Insurance Industry was to recommend a
uniform approach to the implementation of consumer protection standards, rather
than one based on plan type or sponsorship.
Finally, the proposed rules
would add a substantial administrative burden and cost to employer-sponsorship
of health benefits. We have recommended that the Department
evaluate the administrative complications if federal employees were extended
these same protections as one method to consider the administrative impact of
the proposed changes. Independent studies have consistently warned of the impact
of cost on (a) employee participation in plans, and (b) employer decisions to
offer or maintain plans. The admonition of "first due no harm" seems appropriate
for any potential changes that could reduce or eliminate coverage due to
unnecessarily onerous or burdensome regulations. We continue to believe that
coverage is the fundamental patient protection - and any proposal that might
substantially reduce coverage should be scrutinized and exchanged for effective
alternatives.
We have urged the Department of Labor to work closely with
employers and health plans to substantially revise their
proposed regulations in crafting a more workable framework. We have also asked
the Department of Labor to reissue a subsequent draft or drafts for public
comment. We are committed to working to get it right and will roll up our
shirtsleeves to do so. I have included a copy of the points we submitted to the
Department of Labor summarizing the proposals that would adversely impact
employer- sponsored plans and plan participants as Appendix 1 to this statement.
These comments were presented as examples, and do not represent the full
spectrum of our concerns. We have also worked with several employer groups that
have submitted more detailed comments. These groups have broader experience,
expertise, and resources than any individual employer has available.
Finally, it is important to point out that the Department of Labor's
proposed change in regulations goes well beyond healthcare benefits.
There are serious problems that need to be addressed and worked out for
how the same procedures would apply to pension plans. Employers and plan
administrators have noted this concern in their comments to the Department. We
are prepared to provide advice on the serious implications for pension plans if
rules similar to those proposed in the Department's September notice were
adopted.
We need to consider methods to protect consumers without adding
unnecessarily burdensome or complicated regulations. If the Department's
regulations are done collaboratively, with the full participation of the
professionals in the field who both sponsor and administer
health benefit plans, we have no doubt that many of the issues
that have been the subject of far too much rancorous legislative debate could be
mitigated or resolved entirely.
Cost Matters - and Coverage is Directly
Related to Cost
It is also extremely important that we recognize that when
it comes to healthcare, cost is not simply an important issue, it's the issue.
According to published reports, the average premium for the federal employee
health benefit plan will increase 10.2% this year - the plan
that covers you and your staff and all other federal employees. The federal
government may have dismissed that as a "cost of doing business". However, this
increase is well above:
* the increase in federal revenue (the government's
income); * the federal pay increase for 1999; * the reported increase in the
Consumer Price Index of 1.6%; and * wage increases reported by the Department of
Labor of just over 4%
In the competitive telecommunications business, GTE
can't accept a 10.2% increase in healthcare costs. And, like other private
employers without a printing press, if we continue to face numbers like these,
one of two things has to happen. We would either redesign our benefit package,
or ask our employees to shoulder more of the costs. Or, we may have to do both.
If a struggling company with 5, 25, or 250 employees gets a 10.2%
health insurance increase, their options are even simpler:
reduce wages, reduce the workforce through lay-offs, or drop all healthcare
coverage. I was struck by an in the Wall Street Journal last week by United
HealthCare's chief medical officer, Dr. Lee Newcomer: "Paperwork Is Bad For Your
Health". I have included a copy as Appendix 2 to this
statement. Let me illustrate just one of Dr. Newcomer's key points.
Despite
the prosperity of the U.S. economy, the number of Americans without
health insurance increased by 4% from 1996 to 1997. The primary
reason is that, once again, health insurance costs are rising
faster than incomes. And, perhaps most importantly, the rate of uninsurance is
increasing the fastest in the states with the most regulations and mandates.
It's clear that employers and employees are both impacted by increases in
healthcare costs.
Dr. Lee Newcomer's article includes additional
illustrations of how well intended ideas detract precious resources from
healthcare services.
Market-based Reform is Happening Every Day At GTE, we
work hard to give our employees the information they need to make informed
decisions about their health plans. And, we require that the
health plans that do business with GTE make evidence-based
decisions about the healthcare services for our employees.
I know from my
experience on the Commission that the details matter - a lot. I strongly favor
working out the details of patient information and claims adjudication directly
with the health plans we offer. But if you believe you must go
further, send a working group over to the Department of Labor. Ask experts to
develop the standards reflecting both the ideal and the practical.
We do not
have to "pass a law". If Congress starts down the path of micromanaging
health plan operations, it will take another act of Congress to
correct the inevitable mistakes. Market-based reform is happening every single
day. Not because of laws and regulations, but because a small group of advocates
are making it happen - and fixing it when we get it wrong.
Let me point out
the obvious about market-based reform. When health plans agree
to provide consumer protections for GTE employees, they do the same for all
their customers. Everyone benefits, quickly and efficiently. Innovation needs
encouragement, not penalties.
The Cost of Compliance
The real outrage is
that the cost of compliance with unnecessary and encumbering regulations diverts
money from medical care. Legislators and regulators don't fully understand the
cost of their rules. We need to use our limited resources for healthcare, not
for compliance with regulations.
We must be stewards of healthcare resources
and make fair decisions on how these resources are equitably used. More
regulations mean fewer resources for coverage of participants. Senators, there
is no pot of gold out there.
I don't question the intent of those who
advocate for "more" or "different". It is simply impossible to cover every
medical service available in unlimited quantity and keep the cost within the
reach of many Americans.
It's very simple. As costs go up, fewer people are
covered. Studies report that for every 1% increase in healthcare costs, about
300,000 Americans loose health coverage.
Coverage As Our
First Priority
The United States has a healthcare system that is the envy of
the world. As we all try to improve the delivery, let's make sure we don't ruin
the model. Our first priority must be to ensure that the greatest number of
Americans possible can enjoy the advantages of the system that most of us never
have to give a second thought.
I'm not smart enough to give you the "silver
bullet" answer as to how I would reform the healthcare system. But I will leave
you with what I hope you find to be some helpful advice.
First, employers
and health plans should be challenged to do better. Not by more
regulations or legislation, but by an empowered marketplace offering rewards and
sanctions. We have tried this and it works. If I have to choose between a
health plan that is fighting to earn my business and one that
is fighting with state regulators, I'll take the former any day of the week.
Second, this is one example where less is more. Fewer inappropriate laws and
regulations will result in more and better employer based coverage. Proposals
should not change the process (e.g., accelerate claims procedures beyond reason)
simply for the sake of change. There must be some ultimate benefit derived by
participants. Do not give us more regulations and paperwork that will benefit
only lawyers and consultants.
Third, we need to empower, encourage, and
enable those who are trying to do the right thing - not encumber them with the
fear that if they make a single mistake, they will face devastating legal and
financial consequences. No employer can risk that consequence if we go down that
road.
Fourth and finally, we need to get beyond the debate over how many
bells and whistles to add to the health coverage of those who
are fortunate enough to have it and start to address the needs of the 43 million
Americans who have no coverage at all. I ask you to carefully consider what you
do: coverage is consumer Protection #1.
Expanding the availability of
coverage is where the real work remains to be done, and what all of us need to
resolve. But, we also need to focus the resources available on the most
practical and cost-effective solutions in order to secure the greatest good for
the greatest number.
Thank you for the opportunity to meet with you and
share our views.
*****************************
Appendix #1
Summary Comments to the Department of Labor on Proposed Benefits Claims
Regulation and SPD Content Regulations
Scope of the Department's Regulatory
Authority Proposed Rules: Several of the proposed benefit claim rules appear to
be outside the scope of authority granted to the Secretary of Labor under ERISA
section 503. These would:
* bring new plan actions under section 503 review
that are not claims denials; * grant authority for claims decisions to persons
who are not fiduciaries; * introduce new parties to the claims process who are
not mentioned in section 503; * limit the plan's ability to provide what it
considers to be a "full and fair review;" and * dictate procedures for an
alternative to judicial review after the exhaustion of administrative remedies
under section 503.
Further, the proposed rules suggest the Department may be
reaching beyond claim reviews to establish rules for discovery in litigation.
Impact to Patients:
Many of the proposed changes benefit providers
rather than consumers and could have a negative impact on plan participants as
plan sponsors reconsider new approaches to "facilitation" rather than
"sponsorship" and the overall availability of coverage.
Summary:
These
proposals seem detrimental to public policy. To the extent these changes are
considered, they should be made by Congress and not by regulation.
Summary
Plan Description Content Regulations Proposed Rules: the Department proposes
requiring new information be included in the Summary Plan Description (SPD) on:
* premiums, * cost-sharing provisions, * network providers, and * specific
plan coverage features.
Impact to Patients:
* Much of this information
is currently provided to participants directly by health plans
or by employers, more often electronically, and especially during annual
enrollment periods. * Plan sponsors are continuously working to extend the
"shelf life" of SPDs as one method to manage administrative costs.
The SPD
is an awkward mechanism for providing timely information to participants on
frequently changing plan features including, but not limited to, premiums,
cost-sharing provisions, and providers that join or leave networks via
relocation, retirement, death, re-contracting, etc.
Summary:
* The
Department should focus on the intended purpose for information availability and
disclosure and not dictate the format or method that information is available.
The Department has not provided any support that broad based disclosure
requirements would benefit patients. * Specific requirements on premium
information (either on average or individually) exceed the Department's
statutory authority and do not meet the needs or concerns of plan participants.
* The most reasonable alternative is to provide this information upon request,
similar to plan participant requests for review of plan documents. * If a plan
sponsor conveys this information effectively and promptly, that communication
should be deemed to meet appropriate disclosure requirements.
Definition of
"Adverse Benefit Determination" Proposed Rules:
Would open the internal
review process to any "adverse benefit determination" - defined in the rules to
include plan actions other than the claims denials for which ERISA section 503
now provides internal review.
Impact to Patients:
* The proposed rules
would create a right of review and appeal for relatively routine decisions about
the manner and setting of care or adjustments in the treatment plan,
unnecessarily encumbering and delaying medical treatment in the emerging
"non-indemnity" healthcare system. Summary:
* Patients who wish to challenge
a decision about a treatment plan should have the opportunity to do so through
the plan's grievance mechanism. * No plan could afford to operate in an
environment where every action of every provider or plan could be contested
through two levels of review.
Definition of a Claim Involving Urgent Care
Proposed Rule:
Would add a new "claim involving urgent care" category with
the requirement that such claims be processed within 72 hours (rather than the
15 days for a claim involving non-urgent care). The rules would require plans
process these claims rapidly when, "in the opinion of a physician with knowledge
of the claimant's medical condition," failure to make a prompt determination
would harm the patient.
Impact to Patients:
* The test the Department
has proposed for claims involving urgent care - including that care is needed
quickly to enable maximum function - is so broad that most medical procedures
could be considered "urgent." Thus, rather than enhancing services to those with
time-sensitive needs, the proposal could disrupt the process for all, resulting
in a dramatic increase of "denials" just to meet the proposed time requirements.
* This proposal would inappropriately turn over the means to make coverage
decisions to the treating physician or any physician, and thereby force
immediate payment from the plan. * It would place physicians who are not plan
fiduciaries in the position of making coverage decisions and directing
expenditures from the plan. This would inappropriately subject providers to many
of the responsibilities of plan fiduciaries including liability for protection
of plan assets and actions by uninvolved plan participants. This may lead plan
administrators to "rubber stamp" treatment proposals by physicians without
regard to their fiduciary responsibilities.
Summary:
* Rapid
determination of a claim should be reserved to treatments requiring prior
approval where a delay in determination could seriously jeopardize the life or
health of the participant. Treating physicians should advise
the plan when a decision is urgently needed. The decision to process the claim
quickly should remain the plan's responsibility, with penalties for slow or
inappropriate action.
Timeframes for Initial Determination and Review
Proposed Rule:
New timeframes for initial determination and review that are
greatly shortened compared to the current regulatory requirements. In addition
to the 72 hour timeframes for urgent care determination and review, the proposal
would require that non-urgent claims be processed within 15 days of receipt
(unless additional information was required) and reviewed within 30 days. The
proposed timeframes would begin from the receipt of the benefit request by any
person employed in the employee benefit unit or "any officer of the employer."
Impact to Patients:
* Some of the proposed timeframes are unrealistic
and would not only unnecessarily raise plan costs, but compromise the quality of
benefit determinations.
* The proposed rules do not distinguish between
prior authorizations for medical treatment (where care may await the claim
determination) and retrospective claim determinations where care has already
been rendered.
Summary:
* Every officer or benefits employee of the
company cannot be prepared to promptly process benefit requests, particularly
given the short timeframes in the proposed rules. The Department should consider
the impact if a similar requirement covered federal employees or military
personnel to illustrates the complexity, impracticality, and lack of necessity
for such a requirement. * The proposed rules appear to include oral statements
(dissatisfaction, grievances, complaints, or appeals) as triggering a 15 or 30
day period for response. The Department should affirm that benefit appeals
covered by the proposed rules should be in writing unless (a) the claimant or
their representative is somehow unable to do so, and/or (b) the oral appeal is
accepted and acknowledged in writing by the Plan Administrator or a designated
representative. * Participants are clearly advised in the SPD and insurance
cards to direct benefit or appeals requests to the identified plan
administrator. Timeframes should begin when requests are received by the
individual identified for this purpose. * Urgent care timeframes should apply
only to a requests for prior approval of medical care or treatment and not for
plan reimbursement for services already provided. * The 15-day timeframe for
review should not be applied to all non- urgent care claims. The increased
volume of claims for rapid determinations that would result would (a) lower the
quality of determinations, (b) compromise the speed and quality of the most
time- sensitive determinations, and (c) contribute to an often inappropriate
claim denial just to satisfy the time requirements. Inappropriate denials create
duplicate handling that would further impair limited resources.
Review of
Appealed Claims Denial Proposed Rule:
Would require that the review of a
denied claim not afford deference to the initial determination, and take into
account information submitted by the claimant after the initial decision. The
rules also would require that a claimant be provided access to all records or
information relevant to the claim for benefits, regardless of whether the
information was relied upon in making the determination. Finally, the Department
is considering proposing a rule that after an adverse review decision, claimants
would have access to records of previous claims involving the same diagnosis and
treatment within the previous five years.
Impact to Patients:
* These
rules would, in effect, provide for a de novo consideration of the original
benefit claim rather than a review of the initial decision. * This will (a)
unnecessarily delay decisions, (b) create an incentive for an extensive and
expensive discovery process during the review and prior to appeal of the review
decision, (c) encourage withholding of information by participants, and (d)
minimize the need for care by the plan in making the original decision.
Summary:
* An alternative would require plans to provide claimants a
more extensive written description of the basis on which a decision was rendered
and/or a more extensive statement of the medical basis for the decision, and an
extended time period during which a claimant could submit additional or
clarifying information or file appeals. * Access to records regarding coverage
decisions for the previous five (5) years would require plans to adopt complex
categorizing systems and would encourage a wide-open search for evidence and the
possibility of endless debate and considerable litigation over case- by-case
variations in medical treatment. The Department has not presented evidence that
ERISA's current requirements that fiduciaries handle claims consistently and
within the terms of the plan require revision to correct abuses.
Prohibition
on More than One Level of Appeal or Mandatory ADR Proposed Rules:
The
proposed rules would prevent plans from:
* providing more than one level of
review of a claim, or * requiring arbitration for an appeal of an adverse
benefit determination.
Impact to Patients:
* As the plan fiduciary, plan
administrators reserve the authority to review an HMO's or other plan's internal
review of a benefit denial, and reverse it if appropriate to do so. * Plans may
also use arbitration as a faster, less expensive, and more flexible alternative
to litigation of claims denials.
Summary: Eliminating the option for
multiple reviews and enabling arbitration would:
* require more extensive
initial reviews for a larger number of cases - when an extensive review may only
be necessary for the very small number of cases that are unfavorably reviewed by
the plan, and * remove the ability of patients and plan sponsors to avoid the
expense and delay of judicial appeal. These proposed rules seem contrary to
public policy and reduce patient protections. These proposals should be
withdrawn.
Conclusion
The Department's proposed rules would exceed their
statutory authority and extend procedures that apply to claims denials to a host
of other decisions. The rules will require extensive and costly modifications to
claims procedures, plan documents, beneficiary materials, and contracts. And,
the proposed regulations have the potential to complicate and delay, rather than
facilitate and expedite the claim review process.
We recommend the
Department of Labor:
1. conduct meetings with prominent employers, industry
representatives, and other interested parties to supplement written comments and
facilitate a dialogue for implementation; 2. conduct agency hearings to allow
interested parties to fully present their comments, concerns, and suggestions;
3. provide a substantial revision on the proposed regulations based on the input
received from written comments and meetings with interested parties; and 4.
subject the amended proposed regulations to an additional comment period.
GTE Corporation December 9, 1998
****************************
Appendix #2
Manager's Journal: Paperwork Is Bad for Your
Health, by Lee Newcomer
The Wall Street Journal January 11,
1999
This holiday season the government required me to write a letter to my
four-year-old son, Michael. I awkwardly informed Michael that any woman in his
health plan who undergoes breast cancer surgery is also covered
for breast reconstruction surgery, plastic surgery for the unaffected breast to
make it symmetrical, and devices that prevent swelling in the arm. You see, in
addition to being Michael's father, I also am the medical director of his
health plan.
Our health plan had covered
all of these treatments since 1994. But under the Women's
Health and Cancer Rights Act of 1998, even
health plans already covering these newly mandated benefits
must send a notification to every man, woman and child on its mailing list.
United HealthCare, the sponsor of Michael's plan, covers more than six million
members. Sending bulk mail letters to those members, including Michael, could
cost the company enough to pay for about 40 breast reconstruction surgeries.
Mike and I face other new paperwork, thanks to government mandates. When
Mike wedged a calculator battery in his nose last fall, I paid a $50 co-payment
for emergency room care, the physician removed the battery, and our encounter
with the health system was over. The Department of Labor
intends to change that scenario.
Under their recently proposed
regulations, the department will require the health plan to
send Michael an explanation of benefits - a summary of what was paid and what is
owed for the visit - even if the bill is paid in full. One of the joys of
prepaid health plans is the elimination of confusing bills to
members. Now, as part of the Labor Department's interpretation of the patient
bill of rights, the paper blizzard will resume.
It gets worse. If visiting
the emergency room called for an authorization from the health
plan, the new regulations require the plan to send a notice of coverage to the
member and healthcare provider even if there is no dispute about the coverage.
At United HealthCare, roughly 95% of all requests are approved and paid without
disagreement. We pay some 85 million claims per year. If each mandated letter is
mailed for the bulk rate of 17 cents, our company will spend $13.7 million for
postage alone to comply with the regulations.
The real outrage is that these
regulations divert money from medical care payments. Each year I attempt to
balance providing the maximum amount of healthcare coverage with keeping
insurance costs affordable. It is simply impossible to cover every medical
service available in unlimited quantities and keep the cost within the reach of
average Americans.
The physician side of me wants to spend every available
dollar providing medical care. I am angry about the millions of dollars I must
waste on mandated paperwork that will not improve the health of
a single patient. With every new mandate I have two choices - raise premiums or
cut coverage for another service from the plan.
Legislators and regulators
don't fully understand the price of their rules. Despite the prosperity of the
U.S. economy, the Health Insurance Association of America
reported a 4% increase in our uninsured population from 1996 to
1997. The primary reason for this tragic increase is that insurance costs are
rising faster than incomes. The same report noted the highest
uninsured rates occurred in states with the most regulations
and mandates.
Medicare offers another vivid illustration. The Balanced
Budget Act requires all Medicare beneficiaries to receive a brochure describing
all of their coverage options, including Medigap insurance, HMO
health plans and the standard fee-for-service program. The
Health Care Financing Administration assessed the cost of the
entire program to Medicare HMOs, even though they cover only 15% of all Medicare
beneficiaries. My company paid approximately $9 million for this camouflaged
tax. The fee-for-service plan's fund paid nothing.
On January 1, I closed
Medicare health plans in 86 counties across the nation because
healthcare costs and administrative expenses exceeded the premium paid by the
government in those counties. Many of the seniors served by these plans lost
coverage for prescription drugs upon returning to the fee-for-service plan. The
$9 million spent on the informational brochure (a piece most seniors did not
want and may not understand) would have allowed my company to continue
operations in approximately 10 counties. The same $9 million could have provided
9,000 Medicare members with $1,000 each in prescription coverage.
Now a
federal commission is considering new reform proposals for Medicare. Here's an
idea: Give beneficiaries less paper - and more care.
Dr. Newcomer is chief
medical officer of UnitedHealth Group.
END
LOAD-DATE: January 27, 1999