Attempts to curb perceived managed-care abuses are causing the industry daily headaches.
Just last week, the Texas Legislature sent Gov. George W. Bush a first-in-the-nation bill that would strip managed-care plans of their immunity against lawsuits in state court alleging patient harm from treatment decisions, while the New York State Insurance Department launched an investigation into the claims-paying practices of HMOs and other health insurance companies.
In Connecticut, House and Senate leaders late last week announced an agreement on legislation offering patients the chance to overrule their health plans if they are denied coverage for medical treatments.
The measure also would require companies to supply the state with detailed information about their insurance plans for a "report card" intended to rank plans and help consumers understand what types of coverage and services different HMOs offer.
The Texas law would pre-empt the federal Employee Retirement Income Security Act, which was enacted to allow employers to negotiate and direct health benefits nationwide without being hampered by different state regulations. The broad language of ERISA prohibits suits that "relate" to employee benefit plans. But critics of ERISA say it was never intended to protect negligent healthcare organizations.
Opponents of the Texas bill say it's so broadly worded that it creates new and often duplicate layers of liability for everyone involved in managed care, especially doctors making healthcare decisions, who are already open to malpractice suits.
The bill says a managed-care organization is also liable for the bad treatment decisions of those "over whom it has the right to exercise influence or control," a clause that Jan Newsom, senior counsel at Locke Purnell Rain Harrell, called "a minefield."
Ironically, the Texas Medical Association supports the bill.
"There's quite honestly a lack of understanding as to the kinds of comprehensive services that physicians are offering managed-care patients today," said Newsom, who represents the Texas Association of IPAs, which is against the bill. "I don't think (the TMA) realizes that physicians are doing the things they want to hold HMOs accountable for."
"A lot of problems with the bill are really surfacing now," which could temper proponents' zeal, Newsom said. One problem is the bill requires an enrollee to submit a malpractice claim to an independent review committee, but the panel's decisions are not binding in all cases, she said.
Bush, who campaigned on a platform of tort reform, has not indicated whether he will sign the bill. But he has expressed concern that it will "open a Pandora's box" of lawsuits against managed-care organizations, said Bush spokeswoman Karen Hughes.
Larry Atkins, an ERISA expert and president of Health Policy Analysts, a Washington-based consulting firm, said, "What's really significant is (the bill) would allow suits on the basis of coverage decisions." That's because if a coverage or benefit decision adversely affects treatment, the bill considers it a medical treatment decision and an enrollee can sue for malpractice.
The New York probe, meanwhile, is the latest in a series of steps by state officials to crack down on perceived abuses by HMOs. Ordered by Gov. George Pataki, the investigation was prompted by numerous complaints from doctors, hospitals and other healthcare providers who say they've waited months before being reimbursed by HMOs. Ideally, such claims should be paid within 30 days.
Under the governor's order, the state insurance department said it also will be reviewing HMOs' claims handling and cash management practices as part of its routine financial examination of HMOs.
The HMO Conference of New York acknowledges that a few plans recently have run into trouble paying claims promptly but says those plans have taken corrective action. Norwalk, Conn.-based Oxford Health Plans, for one, has said it's trying to resolve delays created by its conversion to a new computer system.
With Karen Pallarito