Major changes likely from feds next year

Look for erosion of ERISA protections for MCOs

Regulatory pressures continue to mount in the nation’s capital and will result in significant, far-reaching changes in the next year, warns Mark Kadzielski, JD, a partner-in-charge with Epstein Becker & Green in Los Angeles. He told attendees of the recent meeting of the American Society of Healthcare Risk Management in San Diego that state and federal legislators have done a lot of posturing so far about important issues and probably will take action soon.

David Manoogian, JD, a senior partner with the Washington, DC, office of Epstein Becker & Green, reiterated that message. He stresses that one of the biggest threats to health care provid ers comes from the potential changes to the Employee Retirement Income Security Act of 1974 (ERISA). Managed care plans currently enjoy a number of legal protections under ERISA, but threatened changes in ERISA may erode many of the firewalls that protect managed care plans from action in state courts. ERISA survived the most recent legislative session unscathed, but he says that probably will not be the case next year.

The most likely change will be to abolish em ployers’ tax advantages for providing employee health care benefits, he says. "The word on the street is that the Republicans will try to abolish all employer-sponsored health care. The rumor is they are going to do it through the tax code. In exchange, they’re going to try to get the employer to give the income directly to the employees, who will use it to buy their own health insurance."

But he says that would be a disaster for health care providers because it is unlikely that most employees would use that money to buy health insurance. Those people are still going to get sick and come to your hospital, though, and that means health care providers could face a staggering increase in unpaid medical bills.

"This would be an absolute catastrophe," he says. "On a scale of one to 10, for us in this room it would be a 10 catastrophe."

If Congress follows the same pattern it established in the past session, there will be several different threats to ERISA in the next year, he says. The biggest threat could be HR 4250, the Patient Protection Act of 1998, which was introduced by the House Republican leadership. The bill passed the House of Representatives in the 1998 session in only seven weeks, an enthusiastic response he calls "stunning."

More bills that erode ERISA

That bill was not as detrimental to ERISA as some other proposed changes, but Manoogian says its quick acceptance signals an attitude in Congress that should be troubling for health care providers. Another troubling bill was the Patient Access to Responsible Care Act of 1997 (PARCA), introduced in the House as HR 1415 and in the Senate as S 644. He says he expects PARCA to be introduced again next year. It also would erode the ERISA protections.

Kadzielski also warned risk managers that more trouble from the Health Care Financing Administration is coming in the next year. Congressional leaders are putting a lot of pressure on HCFA to crack down on providers, so he says there will be a stiffening of the requirements providers must meet to participate in Medicare and Medicaid. The "conditions of participation" will modified in the next four to six months, he predicts. The likely changes include efforts to ensure patient rights and improve patient admissions, assessment, plans of care, actual care, and quality assessment.

"Be on the alert for some of these changes because they are going to create some real liability issues," he says. He adds that those in the know expect the government to put more effort in enforcing the Emergency Medical Treatment and Active Labor Act.