[Congressional Record Volume 145, Number 41 (Tuesday, March 16, 1999)]
[House]
[Pages H1312-H1316]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
MANAGED CARE REFORM
The SPEAKER pro tempore. Under the Speaker's announced policy of
January 6, 1999, the gentleman from Iowa (Mr. Ganske) is recognized for
60 minutes as the designee of the majority leader.
Mr. GANSKE. Madam Speaker, tomorrow on the other side of the Capitol,
in the Senate, debate begins on managed care reform legislation.
I would like to take my colleagues back to May 30, 1996, when a
small, nervous woman testified before the House Committee on Commerce.
Her testimony, Madam Speaker, was buried in the fourth panel at the end
of a long day about the abuses of managed care. The reporters were
gone, the television cameras had packed up, most of the original crowd
had dispersed.
{time} 1615
Madam Speaker, she should have been the first witness that day, not
one of the last. She told about the choices that managed care companies
and self-insured plans are making every day when they determine medical
necessity.
This woman, Linda Peeno, had been a claims reviewer for several HMOs.
Here is her story:
``I wish to begin by making a public confession. In the spring of
1987, as a physician, I caused the death of a man. Although this was
known to many people, I have not been taken before any court of law or
called to account for this in any professional or public forum. In
fact, just the opposite occurred. I was rewarded for this. It brought
me an improved reputation in my job and contributed to my advancement
afterwards. Not only did I demonstrate I could do what was expected of
me, I exemplified the good company doctor. I saved half a million
dollars.''
Madam Speaker, as she spoke, a hush came over the room. The
representatives of the trade associations who were still there averted
their eyes. The audience shifted uncomfortably in their seats, both the
gripped and alarmed by her story.
Her voice became husky, and I could see tears in her eyes. Her
anguish over harming patients as a managed care reviewer had caused
this woman to come forth and bear her soul.
She continued:
``Since that day I have lived with this act and many others eating
into my heart and soul. For me a physician is a professional charged
with the care or healing of his or her fellow human beings. The primary
ethical norm is: Do no harm. I did worse; I caused death.''
She went on:
``Instead of using a clumsy, bloody weapon, I used the simplest,
cleanest of tools: my words. This man died because I denied him a
necessary operation to save his heart. I felt little pain or remorse at
the time. The man's faceless distance soothed my conscience. Like a
skilled soldier, I was trained for this moment. When any moral qualms
arose I was to remember I am not denying care, I am only denying
payment.''
Madam Speaker, by this time the trade association representatives
were staring at the floor, the Congressmen who had spoken on behalf of
the HMOs were distinctly uncomfortable and the staff, several of whom
subsequently became representatives of HMO trade organizations, were
thanking God that this witness came at the end of the day.
Dr. Peeno's testimony continued:
``At the time this helped me avoid any sense of responsibility for my
decision. Now I am no longer willing to accept the escapist reasoning
that allowed me to rationalize this action. I accept my responsibility
now for this man's death as well as for the immeasurable pain and
suffering many other decisions of mine caused.''
She then listed the many ways managed care health plans deny care to
patients, but she emphasized one particular issue: the right to decide
what care is medically necessary.
She said:
``There is one last activity that I think deserves a special place on
this list, and this is what I call the smart bomb of cost containment,
and that is medical necessities denials. Even when medical criteria is
used, it is rarely developed in any kind of standard traditional
clinical process.''
She continued:
``It is rarely standardized across the field. The criteria is rarely
available for prior review by the physicians or the members of the
plan. We have enough experience from history to demonstrate the
consequences of secretive, unregulated systems that go awry.''
After exposing her own transgressions, she closed by urging everyone
in the room to examine their own consciences:
``One can only wonder how much pain, suffering and death we will have
before we have the courage to change our course. Personally, I have
decided even one death is too much for me.''
Madam Speaker, the hearing room at that time was stone cold quiet.
The chairman mumbled, ``Thank you, Doctor.''
Linda Peeno could have rationalized her decisions, as many do. Oh, I
was just working within guidelines, or I was just following orders, or,
you know, we have to save resources, or this is not about treatment, it
is really just about benefits.
Madam Speaker, Dr. Peeno refused to continue this denial, and she
will do penance for her sins the rest of her life by exposing the dirty
little secret of HMOs determining medical necessity.
Madam Speaker, if there is only one thing to consider before our
colleagues
[[Page H1313]]
vote on patient protection legislation, I urge our colleagues to
consider the following:
Before we vote on any patient protection legislation, we must keep in
mind the fact that no amount of procedural protection or schemes of
external review can help patients if insurers are legislatively given
broad powers to determine what standards will be used to make decisions
about coverage. As Dr. Peeno so poignantly observed, insurers now
routinely make decisions by determining what goods and services they
will pay for. The difference between clinical decisions about medical
necessary care and decisions about insurance coverage are especially
blurred, and, Madam Speaker, because all but the wealthy rely on
insurers, the power of insurers to determine coverage gives them the
power to dictate professional standards of care.
Make no mistake. Along with the question of health plan liability,
the determination of who should decide when health care is medically
necessary is the key issue in patient protection legislation.
Contrary to the claims of HMOs that this is some new concept, for
over 200 years most private insurers and third party payers have viewed
as medically necessary those products or services provided in
accordance with prevailing standards of medical practice, quote,
unquote. This is the definition that I use in my own managed care
reform bill, the Managed Care Reform Act of 1999, and the courts have
been sensitive to the fact that insurers have a conflict of interest
because they stand to gain financially from denying care and have used
clinically-derived professional standards of care, the courts have, to
reverse insurers' attempts to deviate from those standards. That is why
it is so important that managed care reform legislation include an
independent appeals panel with no financial interest in the outcome. A
fair review process utilizing clinical standards of care guarantees
that the decision of the review board is made without regard to the
financial interests of either the HMO or the physician. On the other
hand, if the review board has to use the health plan's definition of
medically necessary, there is no such guarantee.
Now, Madam Speaker, in response to a growing body of case law and the
HMOs' own need to demonstrate profitability to their shareholders
insurers are now writing contracts that threaten even this minimal
level of consumer protection. They are writing contracts in which
standards of medical necessity are not only separated from standards of
good practice but are also essentially not subject to review.
Here is one example of many of a health plan's definition of
medically necessary services. This is directly from the language of a
contract from an HMO:
``Medical necessity means the shortest, least expensive or least
intense level of treatment, care or service rendered or supply provided
as determined by us, the health plan.''
Contracts like this demonstrate that some health plans are
manipulating the definition of medical necessity to deny appropriate
patient care by arbitrarily linking it to saving money, not the
patient's medical needs.
Now on the surface some might say, so what is wrong with the least
expensive treatment? Well, let me give my colleagues one example out of
thousands I could cite:
Before I came to Congress, I was a reconstructive surgeon. I treated
children with cleft palets, a fissure on the roof of the mouth.
Clinical standards of care would determine that the best treatment is
surgical correction, but under this HMO's definition, the one that says
shortest, least expensive, the plan could limit coverage to a piece of
plastic to fill the hole in the roof of that patient's mouth. After
all, that plastic obturator would be cheaper. However, instead of
condemning children to a lifetime of using a messy prosthesis, the
proper treatment, reconstruction using the child's own tissue, would
give that child the best chance at normal speech and a normal life, and
let me warn my colleagues paradoxically insurers stand to benefit from
misguided legislative changes that can displace case law.
Last year legislation passed this House and the GOP bill in the
Senate would have granted insurers the explicit power to define medical
necessity without regard to current standards of medical practice. This
would have been accomplished by allowing them to classify as medically
unnecessary any procedures not specifically found to be necessary by
the insurer's own technical review panel. The Senate bill also would
have given insurers the power to determine what evidence would be
relevant in evaluating claims for coverage and would have permitted
insurers to classify some coverage decisions as exempt from
administrative review.
Madam Speaker, I know that many of our colleagues who supported those
bills last year had no idea of the implication of the medical necessity
provisions in them.
{time} 1630
That is why I hope my friends in both the House and the Senate are
listening. As I said, tomorrow the Senate starts to address this issue.
Specifically, insurers now want to move away from clinical standards
of care applied to particular patients to standards linking medical
necessity to what are called population studies.
On the surface, this may seem to be scientific and rational. However,
as a physician who is a former medical reviewer myself and who worked
with many insurers, large and small, let me explain why I think it is
critical that we stick with medical necessity as defined by clinical
standard of care.
First, sole reliance on broad standards from generalized evidence is
not good medical practice. I will explain these. Second, there are
practical limits to designing studies that can answer all clinical
questions. Third, most studies are not of sufficient scientific quality
to justify overruling clinical judgment.
Let me explain these points, and I also recommend an article on this
by Rosenbaum in the January 21, 1999, edition of the New England
Journal of Medicine.
First, while it may seem counterintuitive, it is not good medicine to
solely use what are called outcomes-based studies of medical necessity,
even when the science is rigorous. Let me explain why.
The reason is because the choice of the outcome is inherently value
laden. The medical reviewer for the HMO is likely, as shown by the
above-mentioned contract, to consider cost the essential value.
What about quality? As a surgeon, I treated many patients with broken
fingers merely by reducing the fracture and splinting the finger and,
Madam Speaker, for most patients this inexpensive treatment would
restore adequate function.
What about the musician, the piano player who needs a better range of
motion? For that patient, surgery might be necessary.
Which outcome should be the basis for the decision about insurance
coverage? Playing the piano or routine functioning?
My point is this: Taking care of patients requires a lot of variation
and a lot of individualization. Definitions of medical necessity have
to be flexible enough to take into account the needs of each patient.
One-size-fits-all outcomes make irrelevant the doctor's knowledge of
the individual patient and is bad medicine, period.
Second, there are practical limitations on basing medical necessity
on what is called generalized evidence, particularly as applied by
HMOs.
Much of medicine is a result of collective experience, and many basic
medical treatments have not been studied rigorously. Furthermore, aside
from a handful of procedures that are not explicitly covered, most care
is not specifically defined in health plans because the number of
procedures and the circumstances of their application is limitless.
In addition, by their very nature, many controlled clinical trials
study treatments in isolation; whereas physicians need to know the
benefits of one type of treatment over another when they are taking
care of an individual patient. Prospective randomized comparison
studies, on the other hand, are very expensive. Given the enormous
number of procedures and individual circumstances, if coverage is
limited to only those that have scientifically sound generalized
outcomes, care could be denied for almost all conditions.
Come to think of it, Madam Speaker, maybe that is why HMOs are so
keen to
[[Page H1314]]
get away from prevailing standards of care.
Third, the validity of HMO guidelines and how they are used is open
to question. Medical directors of HMOs were asked to rank the sources
of information they used to make medical decisions. Industry
guidelines, generated by the trade associations representing health
plans, were ranked ahead of information from national experts,
government documents and NIH consensus conferences. The most highly
respected source, medical journals, was used less than 60 percent of
the time.
Industry guidelines are frequently written by a firm by the name of
Milliman and Robertson, a strategy shop for the HMO industry. This is
the same firm that championed drive-through deliveries and outpatient
mastectomies. Many times these practice guidelines are not grounded in
science but are cookbook recipes derived by actuaries to reduce health
care costs.
Here are two examples of the errors of their guidelines. In reference
to outpatient mastectomies, a National Cancer Institute study released
in June found that women receiving outpatient mastectomies face
significantly higher risks of being rehospitalized and have a higher
risk of surgery-related complications like infections and blood clots.
In regard to drive-through deliveries, in 1997, a study published in
the Journal of the American Medical Association showed that babies
discharged within a day of birth faced increase risk of developing
jaundice, dehydration and dangerous infections.
Objectivity of medical decision-making requires that the results of
studies be open to peer review, yet much of the decision-making by HMOs
is based on unpublished proprietary and unexamined methods and data.
Such secret and potentially biased guidelines simply cannot be called
scientific.
This is not to say that outcomes-based studies do not make up a part
of how clinical standards of care are determined. They do, but we are
all familiar with the ephemeral nature of new scientific studies such
as those on the supposed dangers of alar. Remember the apple scare a
few years ago?
Clinical standard of care, the standard that we should use for
medical necessity, does take into account valid and replicable studies
in the peer-reviewed literature, as well as the results of professional
consensus conferences, practice guidelines based on government-funded
studies and guidelines prepared by insurers that have been determined
to have been free of conflict of interest, but most importantly, they
also include the patient's individual health and medical information
and the clinical judgment of the treating physician.
Madam Speaker, Congress should pass legislation defining this
standard of medical necessity because, one, the Employee Retirement
Income Security Act, ERISA, shields plans from the consequences of most
decisions about medical necessity. Two, under ERISA, patients generally
can only recover the value of the benefits denied. Three, even this
limited remedy is being eroded by insurance contracts that give
insurers the authority to make decisions about medical necessity based
on questionable evidence.
To ensure these protections, Congress must provide patients with a
speedy external review of all coverage decisions, not merely those that
insurers decide are subject to review. It is time for Congress to
defuse the smart bomb of HMOs.
Madam Speaker, the issues of managed care reform should go from the
drawing board to the signing ceremony this year. Last year, I joined
with the gentleman from Michigan (Mr. Dingell) and offered the
Patients' Bill of Rights as an amendment on the House floor. While I
regret that it did not pass, there may have been at least one good
thing about that. In the last few weeks, many HMOs have announced
double digit premium increases. We can be sure that if the Patients'
Bill of Rights had passed, there would be a whole lot of HMO fingers
pointing at Congress blaming us now for those skyrocketing premiums
which are really due to HMO mismanagement.
I think it is important to remember why it is so important that
Congress should pass HMO reform legislation. I will bet, Madam Speaker,
that every one of our colleagues has heard from constituents describing
their own HMO horror story.
We have all seen headlines like, HMO's rules leave her dying for the
doc she needs, or ex-New Yorker is told get castrated so we can save
dollars. Or how about this headline: What his parents did not know
about HMOs may have killed this baby.
Consider the 29-year-old cancer patient whose HMO would not pay for
his treatments. The HMO case manager told him instead to hold a fund-
raiser, a fund-raiser.
Well, Madam Speaker, we just had an hour of debate about campaign
fund-raising. I certainly hope that campaign finance reform will not
stymie that man's chance to get his cancer treatment.
During congressional hearings 2 years ago we heard testimony from
Alan DeMeurers who lost his wife Christy to breast cancer. When a
specialist at UCLA recommended she undergo bone marrow transplant
surgery her HMO leaned on UCLA to change its medical opinion. Who knows
whether Kristi would be with her two children today had her HMO not
interfered with her doctor/patient relationship?
Other plans have placed ridiculous burdens on those seeking emergency
care. Ask Jacqueline Lee how bad that can be. This 28-year-old lady was
hiking in the mountains, just west of Washington, D.C. in the
Shenandoah Mountains when she fell off a 40-foot cliff. She fractured
her skull, her arm, her pelvis. She was comatose, lying at the bottom
of this 40-foot cliff. Fortunately, her hiking companion had a cellular
phone and she was airlifted to a local hospital and she was treated in
the ICU for a month on morphine drips.
Now, one will not believe this. Her HMO refused to pay for the
services because she failed to get preauthorization. I ask, what was
she supposed to do with her fractured skull, her broken arm, her broken
pelvis, lying at the base of the cliff? Maybe wake up from her coma
with her nonbroken arm, pull a cellular phone out of her pocket, dial a
1-800 phone number and say, hey, I just fell off a 40-foot cliff; I
need to go to the hospital?
There are countless other examples. A pediatrician who worked in this
area took care of a pediatric ICU. She told me about how a few years
ago, a 6-year-old boy came into her ICU, after drowning. Prognosis was
terrible. The little boy had been in the unit about 5 hours. They had
him intubated. They had the drips running. Doctors and nurses and
family were standing around the bed praying for a sign of life when the
phone rings. It is a medical manager from the HMO.
Well, tell me about this little boy.
Well, he nearly drowned. The prognosis is not very good.
Now, one can almost picture the computer screen and the algorithm
from this medical manager a thousand miles away. Ventilator patient,
poor prognosis.
Well, came the next question, have you considered sending this little
boy home on home ventilation? After all, it is cheaper.
Think about that. Does not that just about make the hair stand up on
the back of your head? That is what we are dealing with.
{time} 1645
Madam Speaker, because our friends and our neighbors and our fellow
workers and our own families have had these types of experiences,
countless polls show that people want Congress to pass managed care
reform.
A recent Kaiser Family Foundation survey found that 78 percent of
voters support managed care reform, and a similar percentage support
allowing consumers to go to court to sue their health plans when those
health plans are negligent. No public opinion poll, however, conveys
the depth of emotion on this issue as well as movie audiences around
the country who spontaneously clapped and cheered Helen Hunt when she
gave an obscenity-laced evaluation and description of her HMO in the
Oscar-winning movie, ``As Good As It Gets.'' Audiences across the
country responded to the plight of her little boy with asthma because
they see the same thing happening to their friends, their neighbors,
and their family members.
The industry responds by saying, Christy DeMeurers, Jacqueline Lee,
this little boy who has just drowned,
[[Page H1315]]
they are just anecdotes; we do not legislate because of anecdotes.
Well, Madam Speaker, to paraphrase Shakespeare, Hath not these
anecdotes, these HMO victims, eyes? Hath not these anecdotes hands,
organs, dimensions, senses, affections, passions? If you prick the
anecdotes, do they not bleed? And if you cut short their care for
profits, do those anecdotes not die?
Madam Speaker, I hope we never hear that word anecdote when we debate
this issue on the floor this year.
Last year, I and a few other brave souls crossed party lines to push
for passage of the Patients' Bill of Rights. It was a good bill, and it
would have done a great deal to end the constant stream of HMO horror
stories. It contained, for example, very strong language ensuring that
health plans pay for emergency care.
Consider the plight of James Adams, aged 6 months old. At 3:30 in the
morning, his mother, Lamona, found him hot, panting, and moaning. His
temperature was 104 degrees. Lamona phoned her HMO and was told to take
little Jimmy to the Scottish Rite Medical Center. Quote: ``That is the
only hospital I can send you to,'' the HMO reviewer added. ``How do I
get there,'' Lamona asked. ``I don't know,'' the nurse said. ``I am not
good at directions.''
Well, it turns out that Scottish Rite Hospital was about 70-some
miles away. So, at 3:30 in the morning, Lamona and her husband wrap up
little Jimmy, put him in the car. Picture this: It is a stormy night.
They start their drive to the hospital. Madam Speaker, 20 miles into
their ride they passed Emory University Hospital, a renowned pediatric
center. Nearby were two more of Atlanta's leading hospitals, Georgia
Baptist and Grady Memorial. But the Adams did not have permission to
stop there, and so they pushed on. They had farther to go to get to
Scottish Rite Hospital. While searching for the hospital, James' heart
stopped.
There is a scene in the movie that is out now, A Civil Action,
showing a mother and a father in a car on the side of the road on a
stormy night administering CPR to their child. Think of Jimmy Adams
when you see that movie.
Well, Lamona and her husband eventually got Jimmy to Scottish Rite.
It looked like the boy would die. But he was a tough little guy, and
despite his cardiac arrest, due to delay in treatment by his HMO, he
survived. However, the doctors had to amputate both of his hands and
both his feet because of the gangrene that resulted from his cardiac
arrest.
All of this is documented in the book, Health Against Wealth, and as
the details of Baby James' HMO's methods were emerged, it became clear
that the margins of safety in that HMO were razor thin. Maybe as thin
as the scalpel that had to amputate both this little boy's hands and
both of his feet. For the rest of his life, this little boy will never
be able to play basketball. I talked to his mother last week. He has
learned how to put on his leg prostheses without his bilateral hooks,
but he cannot get on his bilateral hooks unless he has help from his
mom. He will never be able to touch and caress the cheek of the woman
that he loves some day.
Think of the dilemma an HMO places on a mother struggling to make
ends meet. In Lamona's situation, if she rushes her child to the
nearest emergency room, she could be at risk for hundreds or even
thousands of dollars because she was not given authorization. It was
not medically necessary to go to that nonprovider hospital. Or, she
could hope that her child's condition will not worsen as they drive
past one hospital after another, an additional 20 miles, to get to the
nearest emergency room affiliated with their plan.
Madam Speaker, a strong HMO reform bill would ensure that consumers
would not have to make that potentially disastrous choice.
Now, in recognition of problems in managed care, three managed care
plans joined with Families USA and other consumer groups in 1997 to
announce their support of an 18-point agenda. Here is a sample of the
issues that the groups felt required nationally enforceable standards:
Guaranteeing access to appropriate services, providing people with a
choice of health plans, ensuring the confidentiality of medical
records, protecting the continuity of care, providing consumers with
relevant information, covering emergency care, and banning gag rules.
These health plans and consumer groups wrote, ``Together, we are
seeking to address problems that have led to a decline in consumer
confidence and trust in health plans. We believe that thoughtfully
designed health plan standards will help to restore confidence and
ensure needed protection.''
After listening to some of these examples of the victims of managed
care, I would certainly agree with them, that we need some Federal
standards to correct the abuses, and from the viewpoint of the plans,
they certainly have a public relations disaster.
These plans said that they noted that they already make extensive
efforts to improve the quality of care, and the Chief Executive Officer
of the one plan said quote, ``We intend to insist on even higher
standards of behavior within our industry, and we are more than willing
to see laws enacted to ensure that result.''
Let me repeat that. The Chief Executive Officer of one of these
nonprofit plans said, ``We are more than willing to see laws enacted to
ensure that result.'' However, I am sad to say that despite strong
public support to correct problems like these and the support of some
responsible managed care plans, legislation stalled in Washington last
year. That is truly unfortunate, since the problem demands Federal
action.
While historically, State insurance commissions have done an
excellent job of monitoring the performance of health plans, Federal
law puts most HMOs beyond the reach of State regulations. Now, how is
this possible?
Well, more than two decades ago, Congress passed the Employee
Retirement Income Security Act. As I have said before, this is called
ERISA. It did this to provide some uniformity for pension plans in
dealing with different State laws. Health plans were included in ERISA,
almost as an afterthought. But the result has been a gaping regulatory
loophole for self-insured plans under ERISA. Even more alarming is the
fact that this lack of effective regulation is coupled with an immunity
from liability for negligent actions.
Now, Madam Speaker, personal responsibility has been a watchword for
this Republican Congress, and this issue should be no different. Health
plans that recklessly deny needed medical service should be made to
answer for their conduct. Laws that shield entities from their
responsibility only encourage them to cut corners. Congress created
this ERISA loophole, and Congress should fix it.
Now, many of the opponents to this legislation say, well, we will end
up, if we pass this, with nationalized health insurance. It is always
the big bogeyman, nationalized health insurance. But I ask my
colleagues, think for a moment about buying a car. Federal laws ensure
that cars have horns and brakes and headlights and seatbelts; they also
ensure that they do not pollute. Yet, despite these minimum standards,
we do not have a nationalized auto industry. Instead, consumers have
lots of choices. But they know that whatever car they buy will meet
certain minimum safety standards. One does not buy safety a la carte.
The same notion of basic protections and standards should apply to
health plans. Consumer protections will not lead to socialized medicine
any more than requiring seatbelts has led to a nationalized auto
industry. In a free market, these minimum standards set a level playing
field that allows competition to flourish.
Before closing, Madam Speaker, let me share some thoughts on how I
think this issue will evolve in the coming months. As we know, we came
close to passing the Patients' Bill of Rights last year in part,
because I and some other Republicans crossed party lines to support the
better bill. Already I see signs this year that the fight could break
out the same way. We simply cannot let the issue of managed care reform
die on the cross of partisanship.
So I decided not to cosponsor the Patients' Bill of Rights when it
was introduced earlier this year. Instead, I introduced my own bill:
The Managed Care Reform Act of 1999, H.R. 719. While my bill shares the
best features of other leading managed care reform proposals, it also
eliminates some provisions that would add regulatory burdens on health
plans without providing
[[Page H1316]]
much in the way of added patient safety. In addition, the bill has a
new formulation on the issue of health plan liability. I continue to
believe that health plans which make negligent medical decisions should
be accountable for their actions.
But a winning lawsuit is little consolation to a family who has lost
a loved one. The best HMO bill ensures that health care is delivered
when it is needed, and I also believe that the liability should attach
to the entity that is making medical decisions.
Many self-insured companies contract with large managed care plans to
deliver care. If the business is not making discretionary decisions,
they should not face liability. This is true of folks like third-party
administrators if they merely perform administrative functions. But if
they cross the line and determine whether a particular treatment is
medically necessary; remember, this brings us back to the medical
necessity issue that I started this speech about. If they cross that
line in a given case, then they are making medical decisions, and they
should be responsible for their actions.
To encourage health plans to give patients the right care without
having to go to court, my bill provides for both an internal and an
external appeals process. But unlike last year's Republican bill, the
external review is binding on the plan.
{time} 1700
It could be requested by either the patient or the health plan. The
review would be done by an independent panel of medical experts.
Frequently, patients pursuing cases through appeal win. They win their
treatment. But many times, also, the plan's decision is proven to be
the right one.
My bill provides that, if the plan follows the definition of the
external review panel, there could not be punitive damages liability on
either the health plan or the business. After all, there cannot be any
malice if they have bound themselves to the decision of an independent
panel of experts.
Madam Speaker, I suspect Aetna wishes they had had an independent
peer panel available, even with the binding decision on care, when it
denied care to David Goodrich. Earlier this year, a California jury
handed down a verdict with $116 million in punitive damages to Teresa
Goodrich, his widow. If Aetna or the Goodriches had had the ability to
send the denial of care to an external review, with a binding decision
on the plan, where that independent panel has the authority to
determine clinical standards of care as medical necessity, then they
could have avoided the courtroom. But more importantly, David Goodrich
might be alive today.
That is why my plan should be attractive to both sides. Consumers get
a reliable and quick external appeals process that will help them get
the care that they need. They can go to court to collect economic
damages like lost wages and future medical care and noneconomic damages
like pain and suffering.
If the plan fails to follow the external reviews decision, the
patient can sue for punitive damages. But if it has gone in a timely
fashion through the review process to that independent panel for a
binding decision on the plan, that plan then knows that it has no
punitive damages liability. That is the big unknown to an insurance
company. That eliminates for them the risk of a $50 million or $100
million punitive damages award. But they have to follow the
recommendations of that independent review panel.
I have heard from insurers that they fear that this legislation will
cause premiums to increase. I think there is ample evidence that this
would not be the case. Last year, the Congressional Budget Office
estimated that a similar proposal, which did not include punitive
damages relief, would only increase premiums around 2 percent over 10
years.
When Texas passed its own liability law 2 years ago, Scott and White
Health Plan estimated that premiums would have to increase just 34
cents per member per month to cover the cost. These are hardly alarming
figures.
The low estimate by Scott and White seems accurate since only one
suit has been filed against a Texas health plan since Texas passed
legislation similar to this. That is far from the flood of litigation
that opponents predicted.
Madam Speaker, I have been encouraged by the positive response my
bill has received. I think this could be the basis for a bipartisan
bill this year. In fact, I spoke with the CEO of a large Blue Cross
plan who confided to me that his organization is already implementing
virtually all of the recommendations of the President's Health Care
Quality Advisory Commission for little or no cost.
One part of the health care debate that concerns him is the issue of
liability. He has indicated that shielding plans from punitive damages
when they follow an external review body would strike an appropriate
balance.
Madam Speaker, passage of real patient protection legislation is
going to require a lot of hard work, dedication, and some compromise.
My new bill represents an effort to break through this partisan
gridlock and move this issue forward.
I hope to work with all my colleagues to help break the logjam
keeping patient protection legislation from becoming law. This issue is
vitally important to families across this country.
To my fellow legislators, please do not let the insurers define
``medically necessary'' or someday my colleagues or a family member or
a friend will find themselves defined out of a treatment that is a
clinical standard of care that could save their life or the life of
somebody else.
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