Managed Care Reform

AMA refutes HMO industry's misinformation regarding HR 2723 (the Norwood-Dingell bill)

Bipartisan Consensus Managed Care Improvement Act of 1999, H.R. 2723


The Washington, D.C. HMO lobby has spent $100 million to block federal patient protection legislation. They say that assuring quality patient care costs too much, increases the uninsured, and exposes employers to law suits. These claims are simply untrue.


bulletHMO MYTH: Patient protection legislation, such as the Norwood-Dingell bill, would cause health care premiums to skyrocket.

FACT: According to a September 28, 1999, Washington Post article, the American Association of Health Plans (AAHP) and the Health Insurance Association of America (HIAA) surveyed their HMO members in Texas and "could not find one example" where the Texas patient protection law forced Texas HMOs to raise their premiums or provide unneeded and expensive medical services.

FACT: The two-year-old Texas law that allows HMOs to be sued for their negligent medical decisions has prompted little litigation—only five lawsuits out of the 4 million Texans in HMOs. Texas State Senator David Sibley, a Republican, stated in a September 28, 1999, Washington Post article, that "those horror stories" raised by the HMO industry "just did not transpire." A spokesman for Texas Governor George Bush stated that Governor Bush thinks the new law has "worked well."

FACT: Representatives of the insurance industry have publicly admitted that holding plans accountable will not significantly drive up health care premiums. Jeff Emerson, the former CEO of NYLCare, stated in a July 11, 1999, Washington Post article that he is ". . . not going to make the argument that it's going to be a lot of money." Aetna/USHealthcare spokesman, Walter Cherniak, stated in the same Washington Post article that "we would charge the same premium to a customer with the ability to sue as we do those who do not have the ability to sue." Why? "Those judgments to date have been a very small component of overall health care costs," according to Cherniak.


bulletHMO MYTH: Patient protection legislation would increase the number of uninsured.

FACT: No evidence has been found to conclusively link patient protection laws to the number of uninsured. (see, GAO Report T-HEHS-99-147).

FACT: The independent nonpartisan Congressional Budget Office wrote a letter suggesting that the insurance lobby misinterpreted their analysis of the patient protection cost impact on the uninsured.


bulletHMO MYTH: HMOs support small business' effort to create affordable health insurance.

FACT: In a September 29, 1999, press release, HIAA President Chip Kahn stated that the "HIAA opposes [Rep. Jim Talent's] call for Association Health Plans and HealthMarts because they would hurt many small employers who provide coverage to their employees. This, in turn, will cause many of these employers to drop their coverage because it will become too costly." Perhaps the HIAA forgot that it was the small employers who asked Congress to create Association Health Plans and HealthMarts to help make health plans more affordable so more employees could be insured.


bulletHMO MYTH: Employers would be subject to lawsuits simply because they offer health benefits to their employees under ERISA.

FACT: Senior attorneys in the Employee Benefits Department and the Health Law Department at the law firm of Gardner, Carton and Douglas concluded in their September 27, 1999, legal review of the Norwood-Dingell bill that this claim is simply incorrect.

FACT: Section 302(a) of the Norwood-Dingell bill specifically precludes "any cause of action" against an employer or other plan sponsor unless the employer or plan sponsor "exercises discretionary authority" to make a "decision" on a claim for covered benefits that results in personal injury or wrongful death. (see, p. 99, line 4-p. 100, line 10).

bulletHMO MYTH: An employer's decision to provide health insurance for employees would be considered an exercise of discretionary authority.

FACT: An employer's decision to provide health insurance benefits to employees is not the same as making a decision to deny or delay a patient's claim for the benefits covered by a group health plan. Decisions on claims for covered benefits are almost always made by the administrator of a group health plan, not the employer.

Examples of the types of decisions health plan administrators make that directly affect the care that patients receive, and which could be considered "medical decisions," include: inappropriately limiting access to physicians through restricted networks (blocking patient access to specialists); refusing to cover or delaying needed medical services (transplants, transfusions, therapies); drawing treatment protocols too narrowly (patients discharged from a hospital prematurely); offering payment incentives or creating deterrents to discourage the provision of necessary care (disciplining physicians who refer patients for necessary medical care); and discouraging physicians from fully discussing health plan treatment options (gag rules and gag practices). These are not decision employers make.

FACT: The Norwood-Dingell bill explicitly excludes from being construed as the exercise of discretionary authority decisions to 1) include or exclude from the health plan any specific benefit, 2) any decision to provide extra-contractual benefits, and 3) any decision not to consider the provision of a benefit while internal or external review is being conducted. (see, p. 100, lines 11-20).


bulletHMO MYTH: Voters do not consider patient protection legislation a priority.

FACT: Public opinion polls show overwhelmingly that voters want protections against HMO abuses—and they are willing to put their vote behind it. According to a recent ABC News/Washington Post poll, 91% said that protecting patients' rights will be important to them in deciding how to vote in the next election.

FACT: Most states have already heard the plight of their voters and took action to pass laws that include the same patient protections voters are now asking Congress to pass. These protections include disclosure of plan information, access to specialists, grievance procedures, access to emergency services, preserving the patient-physician relationship, and plan accountability.

The American Medical Association (AMA) strongly supports the Bipartisan Consensus Managed Care Improvement Act of 1999 (Norwood-Dingell), H.R. 2723, and urges Congress to pass this legislation without amendments that weaken the patient protection and HMO accountability provisions.


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