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Hassle-Free Health Coverage: HMO Reform Proposals

Clinton and his allies seemed determined to restrict managed care cost controls under the banner the Patient's Bill of Rights. Specifically, this wish list included the following assurances:

- access to easily understood information about a health plan and its benefits;

- access to information about financial arrangements between a plan and its member doctors;

- a prudent-man standard for coverage of emergency services;

- access to appropriate specialty care;

- quality-assurance programs;

- a ban on doctor gag clauses;

- a appeal procedure for treatment decisions;

- confidentiality of medical records; and

- health-plan liability in instances of malpractice.

An early draft of the Patient's Bill of Rights passed the House in 1998 -- but died in the Senate. Almost immediately afterward, a small group of Republican senators proposed a compromise package aimed at drawing bipartisan support.

Compromise legislation would almost surely guarantee coverage of emergency treatment without authorization from a managed care plan. It would also provide that patients could appeal denial of treatment to an independent review board. But some issues -- like giving people the right to sue when a plan's decision to withhold a treatment resulted in harm -- remained irreconcilable.

Clinton and most congressional Democrats believed that these provisions were necessary to give patients leverage over their managed care plans. Most Republicans favored the existing standard, under which managed care plans were liable only for the cost of the denied care.

A late 1998 editorial in the Omaha World-Herald argued that the managed care reform "debate this year consisted of too much political maneuvering and too few attempts to consider the concerns of HMO members.... The voters should reject attempts by either party to get mileage out of the issue. Both parties have failed to address it forthrightly. So long as the two parties maintain their unproductive stalemate, the concerns of patients are being ignored."

While Congress spent two years debating new managed care regulation, several states moved ahead with reforms of their own.

Texas gave patients much of what Congress was considering, including rights to appeal denials of coverage to an independent board of physicians and to recover substantial damages in malpractice lawsuits. In two years after the law went into effect, the independent review board ruled on 293 appeals -- and sided with the patients in half of the cases.

California's legislature, which shot down a patient protection bill in 1998, was expected to try again in 1999. The odds of passage improved with the election of Gray Davis -- who supported tighter HMO regulation -- as governor. The managed care industry was bracing for a fight over letting patients recover damages from managed health care plans.

"I think a reasonable amount of patient protections have been enacted and more is appropriate, especially on the issue of independent review," said Walter Zelman, president of the California Association of Health Plans, representing 40 insurers and managed care plans with more than 20 million patients.

Zelman said his organization, in a sharp departure from managed care plans in most states, was likely to support creating an independent panel of physicians to review treatment decisions. But his group wasn't so likely to support enabling patients to recover substantial damages in court. "The greatest concern of managed care plans in California is that if the door were to be open an inch, the lawyers would want to take a mile," Zelman said.

None of the state patient rights laws affected the 48 million patients nationwide in self-funded health plans. Federal law exempts self-insured plans from state regulation. As a result, the outcome of the debate in Washington over managed care will be particularly important to this group.

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