[Congressional Record Volume 142, Number 100 (Tuesday, July 9, 1996)]
[House]
[Pages H7149-H7151]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CLINTON ADMINISTRATION SHELVES RULES ON HEALTH MAINTENANCE
ORGANIZATIONS
The SPEAKER pro tempore (Mr. Gutknecht). Under a previous order of
the House, the gentleman from California [Mr. Horn] is recognized for 5
minutes.
Mr. HORN. Mr. Speaker, I was shocked when I read in yesterday's Long
Beach Press Telegram an article that originated in the New York Times
concerning the administration's shelving of rules as they concern
HMO's, health maintenance organizations. For
[[Page H7150]]
years I have felt very strongly that most doctors I know and most
Americans I know do not want a doctor to be paid a bonus because that
doctor does not refer the patient to the specialist whom is needed to
solve a particular problem. Probably each of our district offices has
had one or more cases where our constituents have complained of that
type of treatment under both Medicaid and Medicare depending on the
type of health organization they have gone to.
Let me read the first two paragraphs of this article:
Facing a torrent of criticism from health maintenance
organizations, the Clinton administration has temporarily
shelved new rules that would have restricted the common HMO
practice of rewarding doctors who cut costs and control the
use of services by Medicare and Medicaid patients.
On March 27, the administration issued rules to protect
consumers by limiting the use of such financial incentives to
reward doctors. But after the protests by HMO's health
maintenance organizations the Department of Health and Human
Services quietly suspended enforcement of the rules, which
are mandated by a 1990 law.
{time} 1730
That is a law passed by the Congress of the United States. We are now
in 1996, and that has been kicking around in the Department of Health
and Human Services over the last two administrations, the Bush
administration and the Clinton administration. I must say, I think that
set of rules ought to be reexamined by the Clinton administration.
People are sick and tired of seeing poor care because somebody is
making a profit out of it.
This article goes on to cite a few classic examples which could
happen anywhere in the United States. One lawyer--Mark Hiepler of
OxNard--who has been successful in suing a number of HMO's said the
incentives created conflicts of interest and put a wedge between doctor
and patient. ``The more a doctor treats a patient, the less money he
gets,'' said Hiepler, who added: ``The less he treats a patient, the
more money he gets. The incentives take several forms. In many cases,''
says reporter Robert Pear of the New York Times. ``In many cases, a
group of internists or family doctors receives a flat payment--say $70
a month--to manage all the care required by a Medicare patient. If the
patient needs tests or specialty care, the physician group must provide
it or pay for it. This might encourage the group to minimize the
referral of patients to specialists.''
Mr. Speaker, I think we have to be very careful when we have
conflicts of interest that lead to wrong medical judgments which are to
the ultimate ill of the patients involved. It is one thing to find
economies in a hospital or a nursing home, or any human organization,
but we do not find economies when we make a decision that ends up in a
tragic situation because the general practitioner or health care
gatekeeper could not discover something that perhaps only a specialist
could discover and that individual patient has not been referred by the
gatekeeper to the specialist.
I think that is shocking, and I think the administration ought to
reexamine its decision. If there are problems with those regulations
that defy common sense, that is one thing. But if the Federal
Government sides with one party in this relationship, it should be the
patient.
Mr. Speaker, I think the deferral is an outrage and the
administration ought to get to work, clean up the regulations and issue
them if they prevent conflicts of interest and if they prevent
responsible, solid, and effective medical practice. I do not know one
doctor, frankly, that does not think what has been going on with these
so-called gatekeepers is a real tragedy.
Mr. Speaker, I include the article by Robert Pear of the New York
Times which appeared in the Long Beach Press-Telegram on July 8. It is
entitled ``U.S. rules on HMOs shelved.''
U.S. Rules on HMOs Shelved
incentives: plan attempted to protect patients from cuts in medical
referrals
(By Robert Pear)
Washington.--Facing a torrent of criticism from health
maintenance organizations, the Clinton administration has
temporarily shelved new rules that would have restricted the
common HMO practice of rewarding doctors who cut costs and
control the use of services by Medicare and Medicaid
patients.
On March 27, the administration issued rules to protect
consumers by limiting the use of such financial incentives to
reward doctors. But after the protests by HMOs, the
Department of Health and Human Services quietly suspended
enforcement of the rules, which are mandated by a 1990 law.
The rules were an effort by the administration to ensure
that elderly and poor people were not denied medically
necessary care.
But HMOs, including Kaiser Permanente, Aetna, Humana and
the Health Insurance Plan of Greater New York, denounced the
rules, saying they would force the companies to rewrite
contracts with tens of thousands of doctors. HMOs said the
government did not understand the importance of financial
incentives in a fast-moving, competitive industry.
The rules do not flatly prohibit such incentives, but limit
the amount of money that a doctor can lose on any one patient
or patients with very high medical costs.
The rules would require HMOs to disclose details of these
incentives to patients and the government.
Health plans say they establish such financial incentives
to deter inappropriate and unnecessary care. But critics say
the rewards have led to the denial of needed services.
Mark Hiepler of Oxnard, a lawyer who has successfully sued
several HMOs, said the incentives created conflicts of
interest and put a wedge between doctor and patient.
``The more a doctor treats a patient, the less money he
gets,'' Hiepler said. ``The less he treats a patient, the
more money he gets.''
The incentives take several forms. In many cases, a group
of internists or family doctors receives a flat payment--say
$70 a month--to manage all the care required by a Medicare
patient. If the patient needs tests or speciality care, the
physician group must provide it or pay for it. This might
encourage the group to minimize the referral of patients to
specialists.
In addition, doctors may receive cash bonuses if they meet
certain goals for controlling the use and cost of care. Or
the health plan may withhold a portion of the doctors' pay
and distribute it at the end of the year if spending was less
than projected.
In their comments on the new rules, HMOs said it is common
to make more than 25 percent of potential payments to doctors
contingent on the physicians' success in controlling the use
and cost of care, including referrals.
When the Clinton administration issued the rules limiting
such incentives March 27, Secretary of Health and Human
Services Donna Shalala declared: ``No patient should have to
wonder if their doctor's decision is based on sound medicine
or financial incentives. This regulation should help put
Americans' minds at rest.''
The rules were supposed to take effect May 28, but the
Clinton administration has pulled them back for further
review, without any notice to consumers.
In a brief memorandum mailed to HMOs on May 28, the
administration said, ``We realize this compliance date is
unrealistic.'' The memo added that the government would not
take any enforcement actions before Jan. 1, 1997.
Bruce Fried, director of the Office of Managed Care at the
Federal Health Care Financing Administration which supervises
Medicare and Medicaid, said, ``It would have been overly
burdensome are probably impossible'' for HMOs to comply
sooner. ``We were overly ambitious,'' he said in an
interview.
But the American Medical Association, medical specialty
groups and consumer organizations said that the rules were a
good first step in protecting patients and that the
government should impose even more stringent restrictions on
the use of financial incentives to limit care.
When the rules were first proposed in December 1992,
federal health officials solicited comments, and they tried
to address the concerns expressed by HMOs and the public in
the final regulations issued this year. The officials said
they were surprised by the vehement objections expressed by
HMOs in the last three months.
When the final rules were issued in March, federal
officials said few HMOs would be affected. The protests by
HMOs suggest that they make much greater use of bonuses and
other financial rewards than federal officials had assumed.
The U.S. District Court in Nashville expressed concern in a
recent case, saying HMOs had ``pecuniary incentives'' to deny
care to Medicaid recipients in Tennessee.
Rep. Pete Stark, D-Calif., the author of the 1990 law, said
its purpose was ``to protect patients from being killed by
denial of medical care.''
Stark said he was dismayed to read comments on the new
rules by HMOs and their lobbying organization, the American
Association of Health Plans. ``Their opposition speaks
volumes about what is wrong with managed care in America
today,'' he said.
Stark asserted that the industry's comments showed ``no
regard for the care of patients'' and were ``designed to
derail the regulations.''
Karen Ignagni, president of the American Association of
Health Plans, rejected the criticism. ``Any suggestion that
we don't support beneficiary protections or government
regulation of the quality of care is just plain wrong,'' she
said.
But Ignagni said the new rules ``are impractical and
unrealistic and do not reflect
[[Page H7151]]
recent developments in the market,'' where many doctors are
eager to share financial risks with HMOs.
More than 4 million Medicare beneficiaries and 12 million
Medicaid recipients are in HMOs and other managed-care plans,
and enrollment is rapidly increasing.
The rules place limits on the financial incentives that
HMOs may give to doctors. First, they say, ``No specific
payment of any kind may be made directly or indirectly under
the incentive plan to a physician or physician group as an
inducement to reduce or limit medically necessary services''
to a specific patient under Medicare or Medicaid.
The rules also say that if doctors stand to lose more than
25 percent of their pay because of the use of medical
specialists or other factors, the HMO must provide insurance
to the doctors to limit their financial losses.
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