Federal, state legislators take aim at HMOs

Prohibition of gag clauses is key component of bills

In May 1996, the U.S. House subcommittee on health and the environment of the House Energy and Commerce Committee heard the following testimony from a representative of the American Medical Association:

A Tulsa, OK, physician was threatened with possible loss of his HMO contract (often called "deselection") when he wrote to his patient that the HMO refused to authorize a magnetic resonance arteriogram (MRA) because the plan considered the procedure "investigational." He also explained that an alternative test requiring injecting dye into the patient’s arteries was riskier than the MRA. The HMO was not correct in its assessment that an MRA is investigational, according to the physician.

Upon receiving a copy of the doctor’s letter, the HMO sent him a letter stating that his actions were considered "significantly inflammatory," and continued: "You should be aware that a consistent pattern of pitting the HMO against its members may place your relationship with [the plan] in jeopardy. In the future, I trust you will choose to direct your concerns to my office rather than in this manner."1

‘Past tragedies might have been avoided’

Stories like this one have led many members of Congress, as well as legislators in at least 15 states, to enact or introduce legislation to ban such "gag clauses" in HMO contracts, and have many managed care providers worried.

On the federal level, the Managed Care Consu mer Protection Act of 1997 was introduced Jan. 7 by U.S. Rep. Pete Stark (D-CA), ranking minority leader of the powerful House Ways and Means subcommittee on health. "Past tragedies might have been avoided if the patients had known about the financial incentives not to treat, or if the physicians had not been gagged from discussing treatment options, or if there had been legislation forcing health plans to provide timely grievance procedures and timely access to care," Stark wrote in a letter to colleagues asking them to cosponsor the comprehensive bill, which would regulate both Medicare managed care and private plans.

A summary of the bill’s 10 specific provisions is as follows:

1. Utilization review. Negative determinations about the medical necessity or appropriateness of services or the site of services would be required to be made by clinically qualified personnel of the same branch of medicine or specialty as the treating physician.

2. Assurance of access. Plans would have a sufficient number, distribution, and variety of qualified health care providers to ensure that all enrollees (including those in rural areas) may receive all covered services, including specialty services, on a timely basis. Plans would be prohibited from requiring enrollees to obtain a physician referral for obstetric and gynecological services. (Editor’s note: Some health plans already allow direct access to OB/GYNs. This is now legally required in Georgia and other states.)

3. Access to emergency services. Plans cannot require prior authorization for emergency medical care, and cannot deny any claim for an enrollee using the "911" system.

4. Due-process protection for providers. Notification to a participating provider of a decision to terminate or not to renew a contract must include reasons for termination or nonrenewal.

5. Grievance procedures and deadlines for responding to requests for coverage of services. Plans would have to establish written procedures for responding to complaints and grievances in a timely manner.

6. Non-discrimination and service area requirement. Plans would be required to cover an entire Metropolitan Statistical Area and could not discriminate against any individual on the basis of race, national origin, gender, language, socioeconomic status, age, disability, health status, or anticipated need for health services.

7. Disclosure of plan information. Plans would provide prospective and current enrollees with information on loss ratios explaining the percentage of premiums spent on health services; financial arrangements and contractual provisions with hospitals, utilization review organizations, physicians, or any other health service provider; salaries and compensation of key executives; and other information.

8. Protection of physician-patient communications. Plans could not use any contractual agreements, written statements, or oral communication to prohibit, restrict, or interfere with any medical communication between physicians, patients, plans, or state and federal authorities.

9. Patient access to clinical studies. Plans could not deny or limit coverage of services furnished to an enrollee because the enrollee is participating in an approved clinical study if the services would otherwise have been covered outside of the study.

10. Minimum childbirth benefits. Plans must provide a minimum inpatient stay of 48 hours following vaginal delivery and 96 hours following a cesarean section.

Patient safeguards guide states

In mid-January, a bipartisan group of state legislators announced their intent to introduce legislation to regulate managed care organizations that would be similar to the proposed federal law.

"These nine legislators saw beyond the current patchwork of legislation to regulate the rapidly growing managed care industry and fashioned a comprehensive bill that protects consumer rights without hobbling managed care plans with mandates and micromanagement," says Joy Newton, executive director of Washington, DC-based Women in Government, a bipartisan educational association for elected and appointed women in state government.

As Physician’s Managed Care Report went to press, versions of a draft bill have or were soon to be introduced in New Jersey, Texas, Colorado, Georgia, Delaware, Kansas, Ohio, Oregon, and Tennessee.

Specific provisions of the bill include the following:

Choice of provider. Patients would be allowed to see a physician outside of the plan’s network by paying an additional fee. It also would allow patients with special needs to select the appropriate specialist as their primary care provider.

Gag rules. The bill specifically prohibits "gag rules" that forbid providers from discussing all treatment options with patients.

Access to drugs and devices. Patients would be allowed access to all FDA-approved drugs and devices, offering the attending physician the freedom to prescribe the most appropriate drug or device for an individual patient.

Reference

1. Families USA Foundation. HMO Consumers at risk: States to the rescue. Washington, DC; 1996.