LeRoy Jones Jr. wants managed-care insurers to think twice before denying payment for procedures for their New Jersey enrollees. That's why Jones, a state legislator, is sponsoring a bill that would require insurance companies' medical directors to be licensed by the state medical board.
"The hammer is (the state has) issued a license, and they do enjoy the power to take that license away, in the event of some mishap," Jones says.
Jones' bill, which is pending in the New Jersey Legislature, is one of a small but growing number of medical director licensure bills working their way through statehouses. Those bills could make physician executives as responsible as attending physicians in cases in which action, or lack of it, causes harm.
Mississippi passed a licensure bill in April. Maryland this year added a special certification on top of its existing license requirement, although the Legislature rejected another bill that would have made medical directors subject to discipline by the state's medical board.
Indiana also passed a licensure bill, although it's unclear in the legislation whether the state would recognize out-of-state licenses. The Mississippi and Maryland laws do not.
Ohio is considering a licensure bill in this year's session, which ends in December. Bills in California and Minnesota failed but may be reintroduced in 1999.
All the bills have been sponsored by Democrats, but legislators say that is coincidental.
The philosophy behind these bills is that by making the medical director a state-licensed physician, thereby liable to discipline by a state medical board, that person will ensure patients get the treatment they need, rather than what the insurance company decides it can afford.
Jones, who says his HMO once turned down a procedure for a member of his family, calls it the making of the "conscience" of the managed-care insurer.
Advocates of such legislation also say patients would rather have someone in their home state, not someone across the country, review their case.
"Most people, when a medical decision is made about them, would like for somebody to know who they are rather than (someone) looking at a cookbook without putting an eyeball on the patient," says Paula Colodny Hollinger, a nurse legislator who introduced the failed Maryland bill. She plans to reintroduce it next year.
HMOs, not surprisingly, have fought licensure bills. In a letter sent to Mississippi Gov. Kirk Fordice, a Republican, before the state legislation crossed his desk, the American Association of Health Plans wrote that the bill would not improve the quality of healthcare. The bill sent to Fordice allows only doctors licensed in the state to make decisions patients or healthcare providers don't agree with.
Fordice signed the bill anyway, and it takes effect Jan. 1.
AAHP spokesman Don White, criticizes the law, saying it would create a "hostile" environment for consulting with doctors nationwide to determine the best, most appropriate treatment.
"The philosophy is our state-licensed physicians know best," White says.
The issue of whether a medical director should be held accountable gained prominence in 1997, when an Arizona appellate court allowed the state's Board of Medical Examiners to keep a "letter of concern" in the file of Blue Cross and Blue Shield of Arizona Medical Director John Murphy, M.D. The appellate court's ruling came after Murphy filed a suit to have the letter removed from his file.
Surgeon David Johnson had accused Murphy of incompetence and damaging the patient-physician relationship in a 1992 case in which Murphy denied authorization of gall bladder surgery for a Blues enrollee and instead called for a second opinion based on the patient's history. The insurer eventually approved payment for the surgery after Johnson performed it anyway.
The Arizona board's complaint against Murphy, filed in 1994, appeared to be the first action taken by a medical licensing authority against a physician executive. This year, a Tucson doctor filed a complaint with the board against medical directors at PacifiCare Health Systems. Details of the case, the only one filed since the complaint against Murphy, are not being disclosed while it is being investigated, board ombudsman Eric Nichol says.
However, Arizona has neither introduced nor passed legislation related to medical directors, according to a survey by the National Council of State Legislatures.
In Ohio, the medical board's position is that regulations require a medical director to be licensed in the state and subject to the board's authority.
However, the board wants that written into law. To avoid the perception the board is picking on managed care, it's willing to include medical directors of nursing homes, home-care companies and other non-HMO companies in a bill -- something other states haven't done.
"Our board discussed it this year and believed that making medical-necessity decisions is the practice of medicine, and it should be specifically defined as such," says Tom Dilling, the government affairs officer for the Ohio State Medical Board. "Complaints are coming to us that there are medical-necessity decisions that are being disagreed upon by physicians in Ohio who are treating the patients."
The medical director statute is included in a larger managed-care reform bill that Dilling says probably has little chance of passing. He says the Legislature this year passed another reform bill, backed by Kaiser Permanente and the Ohio State Medical Association, that spells out the procedure to appeal denials of care and covers other patient rights issues.
The bill being offered now also may fall prey to politics; it is backed by a Democratic legislator and secretary of state candidate in the Republican-controlled Legislature.
The measure also is opposed by the Ohio Association of Health Plans, which sees it as the first step toward making insurers liable for medical malpractice.
Texas in 1997 was the first state to pass that kind of legislation, but a similar bill failed in California this year.
Jones, the New Jersey legislator, says his bill is only a first step toward greater HMO liability.
"That (legislation) is a back-door approach," Ohio health plan association President Jady Johnson says. "When you can't pass legislation to hold a health plan liable, (you pass this) to hold the individual physician liable."
But Minnesota Rep. Joe Mullery, whose licensure bill died in committee, says his constituents are demanding accountability from HMOs, and the medical director is a good place to start.
Mullery says once the U.S. Congress started discussing HMO accountability, he got a lot more support for his already-dead bill. The Minneapolis attorney, who usually concentrates on job-training issues, says he may bring back his licensure bill in 1999.
"I know that the HMOs have a lot of lobbyists here," says Mullery, who lives in the hometown of managed-care giant United HealthCare Corp. "And I'm sure that makes it tougher, but then the citizens themselves are also beginning to lobby." He adds that nursing and medical associations in Minnesota are starting to muster support for licensure of medical directors.
"There has to be some accountability," Mullery says.