[Congressional Record Volume 146, Number 36 (Tuesday, March 28, 2000)]
[House]
[Pages H1465-H1468]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




  IMPORTANT ISSUE FACING HOUSE-SENATE CONFERENCE ON HEALTH CARE REFORM

  The SPEAKER pro tempore (Mr. Simpson). Under the Speaker's announced 
policy of January 6, 1999, the gentleman from Iowa (Mr. Ganske) is 
recognized for 60 minutes.
  Mr. GANSKE. Mr. Speaker, tonight I am going to talk about a very 
important issue before the House-Senate conference committee on HMO 
reform. I think it is important for the members of the conference to 
understand the issue of medical necessity. It is probably one of the 
two or three most important issues that they will have to deal with.
  I think it would be useful for those members to know about testimony 
that occurred before the Committee on Commerce on May 30, 1996. We have 
been working on this for many years now. On that day, a small nervous 
woman testified before the House Committee on Commerce. Her testimony 
was buried in the fourth panel at the end of a very long day about the 
abuses of managed health care. The reporters had gone, the television 
cameras had packed up, most of the original crowd had dispersed.
  Mr. 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.'' Her name was Linda Peno. She 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, 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 that I could do what was asked, expected of me, 
I exemplified the good company employee. I saved a half a million 
dollars.''
  Now, Mr. 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 
gripped by 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 to bear 
her soul. She continued:

[[Page H1466]]

  ``Since that day, I have lived with this act and many others eating 
into my heart and soul. The primary ethical norm is do no harm. I did 
worse, I caused death. 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.'' She continued: 
``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 the moment. When any moral qualms arose, I was to remember, `I am 
not denying care, I am only denying payment.' ''
  Well, by this time, Mr. Speaker, 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 
associations, were thanking God that this witness came at the end of 
the day when all the press had left.
  Linda Peno'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 that 
action. I accept my responsibility now for that 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 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. It rarely is standardized across the field. The criteria is 
rarely available for prior review by the physicians or members of the 
plan.'' She continued: ``We have enough experience from history to 
demonstrate the consequences of secretive unregulated systems that go 
awry.''
  Well, Mr. Speaker, after exposing her own transgressions, she closed 
by urging everyone in the room to examine their own conscience. ``One 
can only wonder how much pain, suffering and death will we have before 
we have the courage to change our course. Personally, I have decided 
that even one death is too much for me.''
  The room was stone quiet. The chairman mumbled thank you. Linda Peno 
could have rationalized her decisions, as so many do ``Well, I was just 
working within guidelines''; or ``I was just following orders''; or 
``We just have to save resources''; or ``Well, this isn't about 
treatment, it's really just about benefits.'' But this brave woman 
refused to continue that denial, and she will do penance for her sins 
for the rest of her life by exposing the dirty little secret of HMOs 
determining medical necessity.
  My colleagues on the conference committee, please 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 this HMO reviewer so poignantly observed, ``Insurers now 
make treatment decisions by determining what goods and services they 
will deliver, they will pay for.''
  The difference between clinical decisions about medically necessary 
care and decisions about insurance coverage are especially blurred. 
Because all but the wealthy rely on insurance, the power of insurers to 
determine coverage gives them the power to dictate professional 
standards of care. And 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.
  Now, Mr. Speaker, 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 what is called prevailing standards of 
medical practice. 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. So the courts have used ``clinically 
derived professional standards of care'' to reverse insurers' attempts 
to deviate from those standards.
  This 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 
guaranties that the decision of the review board is made without regard 
to the financial interest of either the HMO or the doctor. On the other 
hand, if the review board has to use the health plan's definition of 
medical necessity, there is no such guaranty.
  In response to the growing body of case law, and their own need to 
demonstrate profitability to 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.

  Let me give my colleagues one example out of many of a health plan's 
definition of medically necessary services. ``Medical necessity means 
the shortest, least expensive or least intense level of treatment, care 
or service rendered or supply provided as determined by us.'' Well, Mr. 
Speaker, 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 may say, well, what is wrong with the least 
expensive treatment? Well, let me show my colleagues just one example 
out of thousands I could cite. Before coming to Congress, I was a 
reconstructive surgeon. I treated children with cleft palates, like 
this baby. Clinical standards of care would determine that the best 
treatment is surgical correction. But under this HMO's definition of 
medical necessity, the shortest, least expensive and least intense 
level of treatment, that HMO could limit coverage for correction of 
this child's roof of his mouth to a piece of plastic to fill the hole.

                              {time}  2115

  After all, a piece of plastic would be cheaper. However, instead of 
condemning this child to a lifetime of using a messy prosthesis, the 
proper treatment, reconstruction using the child's own tissue, would 
give this child the best chance at normal speech and a normal life.
  But now, Mr. Speaker, now the conference between the House bill, the 
Norwood-Dingell-Ganske bill, a good strong bill, and the Senate bill, 
which is a joke, could paradoxically give insurers legislative changes 
that displace even case law.
  Last year, the patient protection legislation that passed the Senate 
would grant insurers the explicit power to define ``medical necessity'' 
without regard to current standards of medical practice. This would be 
accomplished by allowing insurers to classify as medically unnecessary 
any procedures not specifically found to be necessary by the insurer's 
own technical review panel.
  The Senate bill would even give insurers the power to determine what 
evidence would be relevant in evaluating claims for coverage and would 
permit insurers to classify some coverage decisions as exempt from 
administrative review.
  Now, I know that many of our colleagues in the Senate who supported 
that Senate bill had no idea about the implications of the ``medical 
necessity'' provisions in that bill.
  Specifically, insurers now want to move away from clinical standards 
of care applied to particular patients to standard linking medical 
necessity to what are called population studies or to ``guidelines'' by 
companies like Milliman & Robertson.
  Now, on the surface this may seem to be scientific and rational. 
However, as a former medical reviewer myself 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 and that we not bind the independent review panel to 
the plan's own guidelines.
  In the version of patient protection that passed this House, if there 
is a dispute on a denial of coverage and it goes

[[Page H1467]]

through internal review and then goes to external review and to that 
independent external review panel, unless there is a specific exclusion 
of coverage, that independent panel can use in its decision many 
things.
  It can use medical literature, the patient's own history, 
recommendation of specialists, NIH statements. It can even use the 
plan's own guidelines. But, critically, it is not bound by the plan's 
own guidelines. That is the provision that we should have come out of 
conference.
  Here are some reasons why we should not rely solely on what are 
called outcome studies or guidelines. First, sole reliance on broad 
standards from generalized evidence is not good medical practice. 
Second, there are practical limits to designing studies that can answer 
all clinical questions. And third, most of the studies are not of 
sufficient scientific quality to justify overruling clinical judgment.
  Let me explain these points further. And for anyone who wants more 
depth on this discussion, I refer them to an article by Rosenbaum, et 
al., in the January 21, 1999, edition of the New England Journal of 
Medicine.
  First, while it may sound counterintuitive, it is not good medicine 
to solely use outcomes-based studies or guidelines for ``medical 
necessity,'' even when the science is rigorous. Why? 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. But I would 
ask my colleagues, what about quality?

  Now, as a surgeon, I treated many patients with broken fingers simply 
by reducing the fracture, putting the bones back in the right place, 
and splinting the finger. And for most patients, that would restore 
adequate function. But what about the musician, what about the piano 
player or the guitar player who needs a better range of motion? In that 
case, surgery might be necessary. So I would ask, 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 involves much variation. 
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 that 
is bad medicine, period.
  Second, there are practical limitations on basing medical necessity 
on ``generalized evidence'' or on ``guidelines,'' particularly as 
applied by HMOs.
  Much of medicine is as 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 
numbers of procedures and the circumstances of their applications are 
infinite.
  In addition, by their very nature, many controlled clinical trial 
study treatments are in isolation, whereas physicians need to know the 
benefits of one type of treatment over another in a particular patient.
  Prospective randomized comparison studies, on the other hand, are 
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.
  Mr. Speaker, come to think of it, maybe that is why HMOs are so keen 
to get away from prevailing standard 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 trade associations, or printed by companies 
like Milliman & Robertson ranked ahead of information from national 
experts, government documents, NIH consensus conferences.
  The most highly respected source, medical journals, was used in less 
than 60 percent of the time. Industry guidelines are frequently done, 
as I mentioned, by a company by the name of Milliman & Robertson. This 
company is 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. Remember 
their drive-through deliveries? Remember their outpatient mastectomies? 
Well, the National Cancer Institute released in June a study that found 
that women receiving outpatient mastectomies face significantly higher 
risks of being rehospitalized and have a higher risk of surgery-related 
complications like infections or blood clots that could be life 
threatening.
  A 1997 study published in the Journal of the American Medical 
Association showed that babies discharged within a day of birth faced 
increased risks of developing jaundice, dehydration, and dangerous 
infections. So much for those specific guidelines from Milliman & 
Robertson.

  The 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 secrets and potentially biased guidelines simply cannot be 
called scientific.
  Now, this is not to say that outcomes-based studies do not make up a 
part of how clinical standards of care are determined, because they do. 
But we are all familiar with the ephemeral nature of new 
``scientific,'' quotes, studies such as those based on the dangers of 
Alar.
  There has recently been a report in one of the medical journals about 
discharging patients from a hospital within a day or two of having a 
heart attack. There was also an editorial in that medical journal 
expressing severe reservations about that and expressly saying that 
HMOs and managed care companies should not use this article out of 
context as an excuse to send heart attack patients home within a day or 
two of being in the hospital.
  Clinical standards of care do 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 even guidelines prepared by insurers 
that have been determined to be free of conflict of interest.
  These are all things that can be considered by that independent 
review panel in the House bill. But they are not bound by any one of 
them. But most importantly, they also include the patient's individual 
health and medical information and the clinical judgment of the 
treating physician.
  Well, Mr. Speaker, Congress should pass legislation defining the 
standard of medical necessity. Because first, the Employee Retirement 
Income Security Act, ERISA, shields plans from the consequences of most 
decisions about medical necessity. Second, under ERISA, patients 
generally can only recover the value of the benefits denied. And third, 
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 those protections, Congress should provide patients with a 
speedy external review of all coverage disputes, not merely those that 
insurers decide are subject to review. It is time for Congress to 
defuse what former HMO reviewer Linda Peno described as the smart bomb 
of HMOs.
  Now, Mr. Speaker, for years Milliman & Robertson, the company that 
has created the practice guidelines of HMOs, has operated sort of in 
the background. I think it is time, Mr. Speaker, to shine a spotlight 
on Milleman & Robertson's role in setting HMO standards that are the 
smart bombs that this HMO reviewer described as giving her authority to 
kill a man.
  The operating practices of this company are just becoming public 
because of fact-finding in a lawsuit that has been filed by two 
pediatricians, two pediatric doctors, Tom Cleary and Bill Riley, who 
charged that the company falsely credited them as coauthors of a book 
on pediatric utilization review.
  These pediatricians are filing suit not just because they did not 
write the sections that Milliman & Robertson credits to them, but to 
get the book off the market because they consider the

[[Page H1468]]

length-of-stay criteria in the book to be dangerous.
  Dr. Cleary said, ``Milliman & Robertson limits hospital stays for 
serious diseases such as meningitis, that is infection of the covering 
of the brain and the spinal cord, and endocarditis, infection of the 
heart, to just 3 days, when it should be more than a week.''
  ``I want Milliman & Robertson to get out of the business of writing 
pediatric guidelines,'' says Dr. Cleary. But the company is not 
budging. It has not recalled thousands of copies of those pediatric 
guidelines or agreed to stop publishing so-called guidelines.

                              {time}  2130

  Let me remind you what Milliman & Robertson is. That is the company 
that proposed one-day limits on delivery of babies. That caused such an 
outcry that Congress and 41 States passed laws overriding drive-through 
deliveries. Milliman & Robertson's guidelines are cited in class action 
HMO liability suits against Humana in Florida and Prudential in New 
York.
  Why is it that Milliman & Robertson continues to write the type of 
rules that Linda Peno cried out against? Mr. Speaker, because they make 
so much money from the denial of care business. Milliman & Robertson's 
book Pediatric Health Status Improvement and Management, 1998, is part 
of a nine-volume set on utilization management. The company has sold 
more than 20,000 copies, charging $500 for each book, while at the same 
time selling consultant services to help HMOs implement those 
guidelines. Its list of customers includes Anthems, Incorporated; Signa 
Health Care; Kaiser Foundation Health Plan; and Pacific Care among many 
others. Although Milliman & Robertson says its length of stay limits 
are ``best case scenarios,'' its own promotional material maintains 
that they apply to fully 80 percent of hospitalized patients younger 
than the age of 65.
  Plus, a company official told the AMA Council on Scientific Affairs 
that 90 percent of admissions exceed guidelines. I ask you, how can a 
guideline described as a best case be exceeded 90 percent of the time? 
The suit brought by Drs. Cleary and Riley gives us a rare glimpse into 
how Milliman & Robertson creates its utilization review guidelines.
  The company produced the pediatrics book with the paid help of Dr. 
Robert Yetman, who Milliman & Robertson officials found when he agreed 
with their assertion that lead screenings are unnecessary in Texas 
because few homes have lead paint. In his deposition, Dr. Yetman said 
that he did not ask for written authorization from 17 department 
colleagues listed as coauthors. Getting written authorization is 
customary in academic studies. But Dr. Cleary says he never orally 
agreed, either, to join the study and his only relation to it was to 
review one page of material for Dr. Yetman. Dr. Cleary said he first 
learned his name was being used as an author 10 months after 
publication, and he immediately asked Yetman to remove it. Dr. Yetman 
said the company refused until a new edition was printed. Well, this 
made Dr. Cleary furious. He was the only infectious disease 
subspecialist listed as an author for that volume on pediatric 
utilization management, and he felt that everyone would assume that he 
wrote the hospitalization limits for his subspecialty, such as 
endocarditis and meningitis, even though he never reviewed them.
  Dr. Riley had similar concerns as the only pediatric endocrinologist 
listed. Dr. Riley says that the lengths of stay in his field are ``so 
clearly outside any reasonable approach to the standard of care as to 
be wholly reckless.'' Dr. Riley says that he fears that Milliman & 
Robertson's length of stay goals, quote-unquote, are fast becoming 
standards of care, and I would add that this is exactly the problem 
with these HMO guidelines. They are not peer reviewed nor published in 
respected medical journals.
  Dr. John Neff, the chair of the Hospital Care Committee of the 
American Academy of Pediatrics, calls guidelines such as Milliman & 
Robertson's ``opinions.'' Dr. Neff points out that patients' conditions 
vary tremendously and that there are not enough reliable scientific 
studies on lengths of stay for specific conditions to form objective 
standards. Exactly what I was speaking about earlier in this talk.
  I know that most physicians have no idea what is in this company's 
guidelines. They may even be cited as authors without their consent, as 
happened to Dr. Riley and Dr. Cleary. Here is a brief list of 
conditions with Milliman & Robertson's length of stay compared to 
commonly accepted standards for length of stay. For diabetic 
ketoacidosis, that is a child who goes into coma from diabetes. 
Milliman & Robertson says that child only needs to stay in the hospital 
1 day. One day. Mr. Speaker, the standard would be 3 days. But Milliman 
& Robertson can save that HMO 2 days in the hospital.

  How about osteomyelitis. That is an infection in the bone. Milliman & 
Robertson says this child can only stay in the hospital 2 days. Mr. 
Speaker, do you know what the standard of care is for a child with a 
serious bone infection? Four to 6 weeks in the hospital on IV 
antibiotics. But Milliman & Robertson says 2 days is enough.
  Neonatal sepsis. That is a child who has an infection that is in the 
blood. Milliman & Robertson's guidelines say only need to keep that 
child in the hospital 3 days. The standard of care is 2 to 3 weeks. How 
would you feel if you were a parent with a child with these diseases? 
How about bacterial meningitis. That is a bacterial infection of the 
meninges. This is the covering of the brain, the covering of the spinal 
cord. According to the Milliman & Robertson standards, you only need to 
keep that child in the hospital for 3 days. Anything over that, that is 
excessive. What is the standard? Ten to 14 days. How about an infection 
in your heart, an infection in the heart of a baby? Milliman & 
Robertson says only need to keep that child in the hospital 3 days. 
What is the standard of care? One week.
  Mr. Speaker, these ``guidelines'' are not just scary. In my opinion, 
they represent malpractice. I urge my colleagues to consider this 
information when they deal with medical necessity in conference. And, 
my friends, the next time you read a Milliman & Robertson study on HMOs 
supplied to you by the American Association of Health Plans, or the 
Health Insurance Association of America, just remember that this 
company is a flak for the industry and has a significant financial tie 
to HMOs and health plans. Do you think they are going to say anything 
that critical of HMOs when their business depends on HMOs?
  Mr. Speaker, the conferees on patient protection in the conference 
committee should adopt the language of the House bill. Any less on this 
medical necessity issue will not be worth the paper that it is printed 
on. I hope that my colleagues on the conference committee are 
listening, because the lives of a lot of people in this country are 
depending on how you write that section.

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