Bitter pill

Opponents say patients’ bill of rights could backfire on health-care system
Is is a cure for an ailing health-care system? Or will it make the patient sicker and prompt businesses to drop health-care coverage for employees?
The debate rages on over whether a federal patients’ bill of rights will help or hinder the nation’s health-care system.
The U.S. Senate passed the Bipartisan Patients Protection Act, also known as the patients’ bill of rights, or the Kennedy-McCain Bill, on June 29.
Proponents say the act would allow those harmed by the decisions of health maintenance organizations (HMOs) to seek redress. But opponents say that employers who provide medical coverage to their employees might also be sued under the act.
Lisa Mauer, president of 50-year-old industrial distributor Tool Service Corp., has been vocal about her opposition to the Patients’ Bill of Rights. Mauer, an active member of the Independent Business Association of Wisconsin, met with President George W. Bush in early July as part of a group of female business owners visiting the capitol to discuss her concerns.
“My concern is the exposure that small businesses have,” Mauer said. “Anyone in the health-care food chain has that exposure.”
But Mauer’s concerns extend beyond the issue of employer liability.
“The concern I have is that anytime you add mandates and onerous regulation to the health-care system, the cost goes up,” Mauer said. “The affordability of providing health care to our employees is at a critical level. It’s the utilization review program, procedures and timelines that, while the intent may be very good, the end result is that layers of cost are added to the process. What we are seeing in this area is horrendous increases in health insurance cost. Ours increased 17% this year in a down economy — that is in the middle of the pack or on the low side from what I am hearing. Cost would be driven by the exposure on the legal end of it — if you select a health plan and the employee does not like the decisions — what exposure does the employer have?”
In fact, an amendment designed to address some of those concerns was passed in the Senate June 28, but detractors of the bill say that larger self-insured companies — and perhaps employers in general — could still wind up in the legal crossfire.
The amendment provides protection to employers that identify a “designated decision-maker” for medical decisions. Such a decision-making party would take on all liability and risk.
However, roughly 5% of employers in the nation are completely self-insured and do not contract with any outside entity to administer their plans. Those employers would be liable for health-care decisions as, according to information released by Sen. Herb Kohl’s office, they are in fact acting as insurance providers. And some say a conflict of verbage in the bill — not addressed by the amendment — would create ambiguity as to whether employers could be sued or not.
Rhetoric gets heated
The insurance industry’s response has been swift.
The Patients’ Bill of Rights “would cause more than a million Americans to lose their health coverage and do nothing to improve the quality of health care,” Dr. Donald Young, interim president of Health Insurance of America (HIAA), said in a statement following passage of the bill. “The patient’s rights bill would expose employers to costly and unlimited lawsuits, fueling already rising health-care costs. Surveys consistently find that increased costs directly lead to an increase in the number of uninsured Americans. Rather than protecting patients, the McCain-Kennedy patient’s rights bill sacrifices the most basic patient protection — affordable health coverage. This patient protection bill would hurt the very people its sponsors are trying to help.”
Regardless of the amendment which would leave self-insured companies as the only employers with legal exposure, Mauer doesn’t think the McCain-Kennedy bill can be adjusted to her satisfaction, and supports a Republican-backed alternative now pending in the House of Representatives.
“There are some alternative bills out there that seek to achieve the same avenues of appeal for patients,” Mauer said. “But they seek to limit the exposure of the people in the health-care chain from the legal liabilities.”
At the top of Mauer’s list is the Fletcher-Peterson plan, which was introduced June 26 by Rep. Ernie Fletcher (R-Ky.) and Rep. Collin Peterson (D-Minn.). President Bush endorsed the bill June 27.
Liability aspect
“The biggest difference is that the Senate plans will open up employers to liability,” Fletcher, an M.D. by training, told SBT. “We do have some liability provisions — so if an insurance company does not follow the direction of the expert panel it will be liable just like doctors.”
Fletcher-Peterson would also increase the amount individuals could contribute to medical savings accounts and provide for insurance pooling among small employers.
The bill has been picking up support — with some help from members of Wisconsin’s legislative delegation and others with Wisconsin connections.
“We worked with Health and Human Services Secretary Tommy Thompson — who I think most of you in Wisconsin know,” Fletcher said. “He is a very strong supporter of the bill. We worked with him in conjunction with the Department of Health and Human Services to make this bill as strong as it is.”
Fletcher said reconciling the House and Senate versions will not be easy — although he suspects both sides agree in principal that employers should not be in the line of fire.
“There is no question it is going to be a challenge,” Fletcher said. “We have different approaches. I would say the majority of people don’t want employers sued. We have had an evolution of language that has gotten much better on protection of employers. I would hope we are able to hang onto that language that has the employer protections.”
The amendment designed to shield employers from lawsuits under the Kennedy-McCain proposal is insufficient, according to Fletcher.
“The amendment — you have to get into the fine details,” Fletcher said. “They try to use designated decision-makers to shield employers from liability — but they have a two-layered system that still says that anyone involved in decision-making can be liable. The way we make it is that the judge can look at it very simply. Our language is very clear that you cannot sue an employer.”
But the real sea change that is coming — regardless of which bill passes — is that health maintenance organizations will be held liable for their decisions.
“All the business groups would rather have no change in liability,” Fletcher said. “Insurance companies would rather have no change in liability. But everyone is realizing that there is going to be a liability component to the legislation.”
Wisconsin years ahead
But health insurance industry advocates in Wisconsin say the state is light years ahead of either the Senate or House bill.
“Our line is that this stuff is old news here in Wisconsin,” Joe Kachelski, deputy director of the Wisconsin Association of Health Plans said. “We have a very comprehensive patients’ bill of rights right now.”
But there are differences between the proposals on the federal level and the measure that was signed into law in June of 1998 by then-Gov. Tommy Thompson.
“The main difference between Wisconsin and Washington is the whole litigation aspect,” Kachelski said. “We think we have a much better approach here in Wisconsin, which is independent external review. If there is a dispute about the medical necessity or experimental nature of a treatment, it can go to an independent reviewer who will make a determination. There are any number of organizations that can be the independent reviewer. The Office of Commissioner of Insurance (OCI) is in charge of selecting the party.”
Under the Wisconsin Patients’ Bill of Rights, a panel of physicians unrelated to the insurance company hears grievances and makes determinations as to whether coverage of specific treatments and measures need to be covered.
“I think both what is passed in Wisconsin and what we have are very similar patient protections,” Fletcher said. “But we make sure we are not going to override the Wisconsin laws — and I think that is a concern with Kennedy-McCain and Norwood-Dingell. States would rather follow their own basic protections than what we impose. You have a couple of representatives — Mark Green — and Paul Ryan — two representatives that I am very close to, and they have expressed their support for the bill. And they wanted to make sure we didn’t do anything to hurt what you have in place in Wisconsin.”
Wisconsin House Republican Tom Petri of Fond du Lac is also a supporter of the bill, he added.
Fletcher added that the Wisconsin legislation does not have the teeth that Fletcher-Peterson would — his bill would allow insurance companies to be sued if they do not follow the decisions of an independent body of physicians after an appeal. In that and other regards, the bill is influenced by similar legislation in states other than Wisconsin.
“As far as looking at the details — 33 states have passed patients’ protection, and we looked more at the Texas law — which is one of the more comprehensive laws that have been passed,” Fletcher said. “I do not believe Wisconsin law has the liability provision that the Texas law does.”
In fact, Wisconsin statute does not allow for suing an HMO — which is just fine by Larry Rambo, regional vice president of Humana, Inc.
“In Wisconsin — according to our independent external review law — the decision is binding,” Rambo said. “Everything in the federal Patients’ Bill of Rights bills is already in place except for the right to sue. Our position would be – if that decision of the independent review board is binding on the insurance company, it doesn’t make sense to allow a lawsuit.”
Rambo said that, for that reason, HMOs in Wisconsin supported independent review provision in the state statutes.
“We wanted to do the patient some good,” Rambo said. “Lawuits and big damage awards do nothing for the patient. If the person didn’t get the treatment and died, it doesn’t do him or her any good. Under Wisconsin law, if it is an emergent case, the dispute can be resolved in 72 hours.”
The Fletcher-Peterson bill does allow for independent external review — and allows for lawsuits only if the insurance company does not abide by the reviewer’s decision.
“I would never defend an insurance company that chose to go down that path,” Rambo said. “But if an insurance company goes through independent external review and it follows the demands of the reviewers, it does not make sense that it would then still be liable to lawsuits.”
While Rambo feels that, on the whole, insurers try to make the right decisions, he feels that there is enough ambiguity in legal and medical terminology affecting the industry to make independent opinions are necessary.
“Independent external review is all about what is medically necessary and what is experimental in nature,” Rambo said. “These are big gray areas. And the independent medical professional needs to determine whether treatments are experimental or necessary. There are protocols to be followed by independent review organizations to deem whether something is experimental — and most health insurance policies have provisions for determining whether something is experimental. But these are things that have room for interpretation.”
On the whole, the cost of an independent review to an insurance company is a fraction of that of litigation — which is one reason the Wisconsin Association of Health Plans supported Wisconsin’s Patients’ Bill of Rights.
“Putting it in simplistic terms — I would like to think as an insurer that we make the right decision 100% of the time,” Rambo said. “Realistically, that probably wouldn’t be the case. If an independent reviewer determines we have made the wrong decision, I would rather pay the reviewer than pay thousands of dollars defending a lawsuit. I would rather pay for the coverage — which benefits the individual the coverage was intended for — than pay a trial attorney their percentage of an award.”
Rambo said that the average cost for an independent review is around $500, and would primarily include consulting fees for the medical professionals involved. A simple case could include only one physician, but a more complex case could involve a panel of reviewers, he said.
But while Rambo supports independent review, he draws a clear distinction between a doctor’s responsibility to care for a patient and an insurer’s responsibility to pay for that care.
“There may be examples otherwise, but typically what you see is that the insurance company has made a decision as to whether there is coverage allowed — not should the treatment take place or not take place,” Rambo said. “If the decision on ordering treatment lies with the physician — the issue comes down to payment. But in some cases, if the payment is not there, the treatment does not occur. These are payment decisions rather than treatment decisions.”
See www.biztimes.com for a review of the different liability provisions in the various federal bill proposals, and for a review of Wisconsin’s patient-protection bill.
Aug. 17, 2001 Small Business Times, Milwaukee