[Congressional Record (Bound Edition), Volume 146 (2000), Part 10]
[House]
[Pages 13826-13831]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          MANAGED CARE REFORM

  The SPEAKER pro tempore (Mr. Taylor of North Carolina). 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, I am going to speak tonight on managed care 
reform, HMO reform. About a week or so ago, the Senate had a short 
debate and voted on the Nickles amendment, which was the GOP Senate 
version of patient protection.
  Now, that amendment was given to Members with very short notice 
during that debate. I have the full text here. As one can see, it is 
quite dense. It consists of 80-some pages of legislative language, and 
so it was not easy to read through this so-called patient protection 
bill to understand exactly what was in the bill.
  Mr. Speaker, I advised several of my Republican Senate colleagues to 
be very careful about voting for that bill, unless they had had a 
chance to review the specific language, because, as Members of both 
sides of the aisle know, the devil is always in the details in terms of 
whether a bill is a good bill or bad bill.
  Over the last several days, I have had the opportunity to start 
reading the Nickles bill from the Senate, and it sadly is deficient in 
several areas. I would liken this more as an HMO protection bill rather 
than a patient protection bill.
  Mr. Speaker, I am going to go into some detail about why that is, but 
it is very important for colleagues on both this side of the Capitol, 
as well as the other side of the Capitol to understand what is in this 
bill, because we passed a strong patient protection bill here on the 
floor of the House of Representatives in October of last year, the 
Norwood-Dingell-Ganske Bipartisan Consensus Managed Care Reform bill, 
and it had significant bipartisan support, not just 1 or 2 Members of 
one party, but 68 Republicans supported that bill, despite intense 
opposition by the HMO industry. So we have something to compare the 
Senate bill to.
  As my colleagues on both sides of the aisle know, there has been a 
conference going on between the bill that passed the House and the bill 
that passed the Senate. I would say that the conference is not over, 
neither the Republicans nor the Democrats in the conference have said 
that the conference is over, but nothing much is happening now.
  I think it is useful to go into some of the details of the Senate 
bill. The Senate bill limits many of its patient protections to only 
those Americans in self-insured plans. In fact, more than 135 million 
Americans would not receive most of the patient protections identified 
in the GOP Senate bill, including access to routine OB/GYN care for 
women, and pediatric care for children, continuity of care for 
terminally-ill patients, patients receiving in-patient and 
institutional care, and pregnant patients in their second trimester of 
pregnancy.
  It would not include specialty care or access to specialty care, 
health care professionals for 135 million Americans; 135 million 
Americans would not have access to a point-of-service option. We have 
dealt with gag clauses that HMOs have put out in Medicare legislation 
that passed both the House and the Senate several years ago that 
prohibits contractual clauses that HMOs would try to limit the amount 
of information that a doctor could tell a patient without getting an 
expressed okay from the HMO; that would not be covered for more than 
135 million Americans in the Senate bill.
  The GOP Senate bill for 135 million Americans would not cover 
emergency medical screening exams or stabilization treatment. There are 
many different things.
  I want to talk for the longest part of this special order about the 
Senate GOP plan's biggest fault, and that has to do with the 
enforcement provision or the liability provision.
  Mr. Speaker, I have here an analysis of the Nickles GOP Senate bill 
by Professor Sara Rosenbaum, who is a Harold and Jane Hirsch Professor, 
Health Law and Policy at George Washington University; Professor David 
Frankford, Professor of Law at Rutgers University; and Professor Rand 
Rosenblatt, Professor of Law at Rutgers University School of Law.
  I am going to primarily read this analysis. I think it is very 
important to get this into the Congressional Record. This is their 
analysis. I know Professor Rosenbaum personally. I respect her opinion 
and legal expertise a lot. This is how it goes.
  By classifying medical treatment injuries as claims denials and 
coverage decisions governed by the Employee Retirement Income Security 
Act, the Senate bill, this is the Senate GOP bill, insulates managed 
care companies from medical liability under State law.

[[Page 13827]]

  Section 231 of the Senate bill, and I have that here, amends ERISA 
section 502 to create a new Federal cause of action relating to a 
denial of claim for benefits, quote unquote, in the context of prior 
authorization.
  Now, this is all kind of technical language, but I will try to make 
this clear as we go through. The bill defines the term, quote, claim 
for benefits as a request for benefits, including requests for benefits 
that are subject to authorization of coverage or utilization review, or 
for payment, in whole or in part, for an item or a service under a 
group health plan or health insurance coverage offered by a health 
insurance issuer in connection with a group health plan, end quote.
  Thus, the bill would classify prior authorization denials as claims 
for benefits that are in turn covered by the new Federal remedy. You 
have to remember that Federal remedies under ERISA section 502 preempt 
all State law remedies.
  This classification in the Senate GOP bill would have profound 
effects, particularly in light of the recent Supreme Court decision 
Peagram versus Herdrich. As drafted, the Senate bill would preempt 
State medical liability law as applied to medical injuries caused by 
the wrongful or negligent withholding of necessary treatment by managed 
care companies.
  The Senate GOP bill thus would reverse the trend in State law which 
has been to hold managed care companies accountable for the medical 
injuries they cause, just as would be the case for any other health 
provider.
  In recent years, courts have considered the issue of managed care 
relating injuries, have applied medical liability theory and law to 
managed care companies in a manner similar to the approach taken in the 
case of hospitals. Thus, like hospitals, managed care companies can be 
both directly and vicariously liable for medical injuries attributable 
to their conduct.
  In a managed care context, the most common type of situation in which 
medical liability arises tends to involve injuries caused by the 
wrongful or negligent withholding of necessary medical treatment; 
otherwise known as denials of requests for care.
  Now, State legislatures have also begun to enact legislation to 
expressly permit medical liability actions against managed care 
companies. The best known of these laws is a medical liability 
legislation enacted in 1997 by the State of Texas and recently upheld 
in relevant part against an ERISA challenge by the United States Court 
of Appeals for the 5th Circuit.
  My friends and colleagues from both side of the aisle, you should 
know that the Senate GOP bill would preclude Texas law. In the case 
Peagram versus Herdrich, the Supreme Court implicitly addressed this 
question of whether managed care State liability law should cover 
companies for the medical injuries they cause.
  The court decided that liability issues do not belong in Federal 
courts and strongly indicated its view that in its current form ERISA 
does not preclude State law actions. It is that decision that the 
Senate bill would appear to overturn.

                              {time}  2030

  Mr. Speaker, continuing this legal analysis of the GOP Senate bill, 
in the Supreme Court case Pegram, the Supreme Court set up a new 
classification system for the types of decisions made by managed care 
organizations contracting with Employee Retirement Income Security Act 
plans, ERISA plans. The first type of decision, according to the court, 
was a peer eligibility decision. In the ERISA context, that constitutes 
an act of plan administration and thus represents an exercise of ERISA 
fiduciary responsibilities. Remedies for injuries caused by that type 
of determination would be addressed under the ERISA law which currently 
provides for no remedy other than for the plan to provide the benefit 
itself.
  But then the Supreme Court dealt with a different type of situation. 
The second type of decision is, according to the Supreme Court, a mixed 
eligibility decision. While the court's classification system contains 
a number of ambiguities, it appears that, in the court's view, the 
second class of decision effectively occurs any time that a managed 
care company, acting through its physicians, exercises what is called 
medical judgment, regarding the appropriateness of treatment.
  Such decisions as medical decisions rather than pure eligibility 
decisions are not part of the administration of an ERISA plan and thus 
not part of ERISA's remedial scheme because, according to the Supreme 
Court, in enacting ERISA, Congress did not intend to displace State 
medical liability laws.
  The court thus strongly indicated that these claims are not preempted 
by ERISA and may be brought in State court. In the court's view, these 
mixed decisions represent ``a great many, if not most'' of the coverage 
decisions that HMOs make.
  So what we have is a situation where the GOP Senate bill is actually, 
through legislative language, trying to change the Supreme Court's 
recent decision, which held that, where one has decisions related to 
medical judgment and not pure eligibility, for instance, a plan that 
says we are not going to cover liver transplants, that is pretty 
straightforward, if a patient needs a liver transplant, but the plan 
explicitly in the contract says we do not provide liver transplants, 
that is a coverage decision.
  But let us say one has a patient like some of the patients I have 
taken care of prior to coming to Congress, I was a reconstructive 
surgeon, let us say one has a child born with a cleft lip and a cleft 
palate, and the plan then says, oh, that is a cosmetic procedure, that 
is a medical judgment, the Supreme Court in Pegram versus Herdrich is 
saying that, if that HMO's decision results in a neglect injury, they 
should be liable according to State law.
  But the Senate GOP bill is trying to change that Supreme Court 
decision. The Senate bill would appear to reverse Pegram by effectively 
classifying all prior authorization determinations as Section 502 
decisions without any regard as to whether they are, ``pure'' or 
``mixed''.
  As a result, State medical liability laws that arguably now reach 
mixed decisions apparently would be preempted by the Senate GOP bill, 
leaving individual physicians, hospitals, and other health providers as 
the sole defendants in a State court when the HMO has actually made the 
decision.
  Under the complete preemption theory of Section 502, remedies against 
managed care companies would now be governed by the new Federal remedy, 
which would effectively shield the industry from accountability under 
State law.
  See, it is not easy to read through this legislative language when 
one is given a bill 15 minutes before it appears on the floor. It is 
not easy to make these kinds of arguments to understand what the 
language is showing when a bill is kept in secret and then brought up 
as an amendment on the floor. So that is why we are going through this 
tonight in some detail.
  The Federal ``remedy'' in the Senate bill would leave Americans 
basically with no remedy. If one looks closely at the Senate GOP bill, 
the new Federal remedy simply creates the illusion of relief while at 
the same time foreclosing other more meaningful approaches to holding 
managed care accountable.
  Now, here are some specifics as outlined by Professors Rosenbaum and 
Frankford and Rosenblatt. This liability provision in the Senate GOP 
bill is unclear on the meaning of the term ``denial'' in the context of 
claims that are actionable under the new Federal remedy. Were the 
remedy to be interpreted by the courts to encompass only outright 
denials, many of the worst types of HMO treatment delays would go 
unaddressed.
  Here is an example. A recent decision from New York, Aetna U.S. 
Health Care used a series of appalling tactics to delay making any 
decision regarding treatment for an individual with profound mental 
illness related problems over 7 months. When the New York State 
Department of Insurance finally ordered coverage, it was too late. The 
patient died 8 days before Aetna finally entered a favorable initial 
determination.

[[Page 13828]]

  So my colleagues see, the Senate GOP bill says that a negligent 
action can only be brought to trial if there is actually a denial. But 
what happens frequently is that HMOs will string patients out, they 
will delay and delay and delay and delay. In this case, for instance, 
in New York, if the patient dies before making that denial, then, under 
the Senate GOP bill, HMO is not liable. That is a huge loophole.
  By focusing only on denial itself and not covering delays, the Senate 
GOP bill effectively would incentivize the HMO industry to put patients 
through a delay after delay after delay as a strategy for avoiding any 
liability.
  The Senate GOP bill also bars any actions that challenge the 
company's denial of treatment that it asserts to be ``excluded'', 
rather than not medically necessary.
  I have come to the floor many times to talk about how HMOs will deny 
treatment on the basis of it not being medically necessary. That is the 
terminology that they will use. Then they will use their own definition 
of medical necessity and can do that under Federal law.
  But the Senate Republican bill basically creates a loophole that 
would encourage companies to classify denials as exclusions rather than 
as denials of claims based on a lack of medical necessity.
  The irony is that the external review provisions of the Senate bill 
seem to permit review of decisions involving analysis of medical facts, 
a broader standard of review than a strict medical necessity standard. 
But despite this, the remedy would bar any relief for an individual 
whose denial is couched in exclusion terms, rather than medical 
necessity terms.
  Now, I will just have to tell my colleagues that any good HMO 
insurance lawyer is going to advise his HMO to draft all denial letters 
in a manner that conforms to that limitation on remedies, another big 
loophole for the HMOs in the Senate GOP bill.
  Here is another one. In the Senate liability provision, in order to 
successfully prove a claim, the injured party would have to prove, not 
only a negligent denial, a denial that was made by incompetent staff or 
using incompetent standards or using insufficient evidence, but would 
have to prove that the denial was made in bad faith.
  So let us say that this HMO makes this denial and one's son or one's 
daughter is injured because of that. Not only does one have to prove 
under the Senate GOP bill that it was a negligent decision, one also 
has to prove the motives. One is going to have to prove that it was bad 
faith. That is a virtually impossible standard to prove, and it is 
particularly egregious in light of the fact that plaintiffs cannot even 
bring such an action under the Senate bill unless they have gotten a 
reversal of the denial at the external review stage.
  Even where they have proven that a company wrongfully withheld 
treatment, the injured party can recover nothing for their injures 
without taking the level of proof far beyond what is needed to win at 
the external review stage. Under the Senate GOP bill, virtually all 
injuries would go uncompensated.
  Here is another problem with the enforcement provision in the Senate 
GOP bill. The injured party would be forced to show ``substantial 
harm'' defined in the law as loss of life, significant loss of limb or 
bodily function, significant disfigurement, or severe chronic pain. But 
that definition excludes some of the most insidious injuries, such as a 
degeneration in health or functional status or loss of the possibility 
of improvement that a patient could face as a result of delayed care, 
particularly a child with special health needs.
  I almost wonder whether this provision was put into the Senate GOP 
bill specifically to address the case Bedrick versus Travelers 
Insurance Company. The managed care company cut off almost all physical 
and speech therapy for a toddler with cerebral palsy.
  The Court of Appeals in one of the most searing decisions ever 
entered in a managed care reversal case found that the company had 
acted on the basis of no evidence. With what could only be described as 
outright prejudice against children with disabilities, the managed care 
companies medical director concluded that care for the baby never could 
be medically necessary because children with cerebral palsy have no 
chance of being normal.
  The consequences of facing years without therapy were potentially 
profound for that child. Failure to develop mobility, the loss of a 
small amount of motion that a child might have had, a small amount of 
motion that could make a big difference in terms of a child's function, 
and the enormous cost both actual and emotional suffered by the 
parents. Arguably, none of those injuries fall into any of the 
categories in the Senate GOP so-called patient protection bill.
  Here is another problem. The maximum award in the Senate GOP bill 
permitted is $350,000, and even that amount is subject to various types 
of reductions and offsets. That limitation on recovery can make 
securing adequate representation pretty difficult.
  To compound that, in order to mount a case involving bad faith denial 
of treatment that we have talked about, that is an enormously expensive 
proposition. The limitations on recovery are in addition to the fact 
that the Senate bill gives Federal courts exclusive jurisdiction over 
cases brought under the new provision.
  The costs and difficulties associated with litigating a personal 
injury claim requiring proof of bad faith would thus be exponentially 
increased, and it would make it virtually impossible for injured people 
to find attorneys to represent them. The deck is stacked in that Senate 
GOP bill against an injured patient.

                              {time}  2045

  I see my colleague from New Jersey. Would he like to enter into this?
  Mr. ANDREWS. If the gentleman would yield, let me first begin by 
commending him for his tireless advocacy night after night, week after 
week, year after year on behalf of health care and patients in our 
country.
  My friend from Iowa is a physician first and a Member of Congress 
second, and I say that as a compliment. He has carried his Hippocratic 
oath to the halls of this chamber and he has done so, Mr. Speaker, with 
great distinction, and I want to commend him as a Member of the 
opposite party, as a Democrat, commending my friend from Iowa, as a 
Republican, for his work on this issue.
  I was listening to him tonight, Mr. Speaker, and I wanted to just 
supplement what he so very ably is saying in two ways, because I too 
have read the legal analysis that my friend from Iowa makes reference 
to. I am proud that it was produced by, in part by two scholars from my 
district, from the Rutgers University School of Law in Camden, New 
Jersey, Dean Rand Rosenblatt and Professor David Frankford were among 
two of the three authors who did such an outstanding job on that, and 
Sara also was fabulous and I do not want to omit her, from George 
Washington University.
  Let me say, first of all, the remedy that is in the bill in the other 
body is a remedy in form only. It would not have the compensatory or 
deterrent effect that a real remedy has. And I believe, frankly, it is 
designed to be deficient in those ways. It would make people less than 
whole. A person who is denied the ability to see an oncologist and 
contracts a form of debilitating cancer would not be made whole by the 
bill in the other body. A person who is advised that he or she needs a 
test and does not get that test and suffers a fatal or debilitating 
injury will not be made whole by the bill in the other body. The damage 
limitations are arbitrary and capricious.
  The second problem is the lack of a deterrent effect. The value of 
the real accountability that is in the bill that passed this House 
authored by our colleagues, the gentleman from Georgia (Mr. Norwood), 
by the gentleman from Michigan (Mr. Dingell), and by the gentleman from 
Iowa (Mr. Ganske), the value of that bill is not the lawsuits that 
would be brought under it, it is the lawsuits that would never have to 
be brought as a result of it because a managed care company making an

[[Page 13829]]

arbitrary and unreasonable decision contrary to the best medical 
interest of the patient would be held strongly accountable. And when 
that managed care company weighs the balance that it has in front of 
it, it would more than likely choose the side of granting the care. It 
would choose the side of following the duly-given advice of the 
professionals who gave the advice in the first place. It would restore 
the primacy of the doctor-patient relationship to American medicine. 
And that is what this is about.
  The third point that I would make is that we very often hear from the 
opponents of the Patient's Bill of Rights and from the supporters of 
the Senate ersatz version that our bill would lead to a flood of 
litigation; that it would put lawyers in the place that doctors ought 
to be. And there is a certain superficial appeal to that argument. I 
understand, Mr. Speaker, that Americans do not want the right to sue, 
they want the right to the treatment they have paid for and deserve. 
But without the right to sue, without the right to hold people 
accountable in a meaningful way, that care and treatment is going to 
continue to be arbitrarily and unreasonably withheld by the oligarchs 
of the managed care industry.
  And people are not going to sit and wait for us to do something about 
it. Instead, they are already marching to the courthouse door in State 
and Federal Courthouses around this country. As a result, we are now 
witnessing what I would call a crazy patchwork quilt of legal decisions 
all designed to get around this unreasonable barrier that exists in the 
present law that says that under the normal law of tort, under the 
normal law of responsibility, managed care companies are immune from 
that responsibility. So we have theories about unauthorized practice of 
medicine, and we have theories about civil racketeering, and we have 
theories about unlawful conspiracy, and we have theories about denial 
of quality of care.
  To those who fear a flood of litigation if the Norwood-Dingell-Ganske 
bill becomes law, I would say that that fear is misplaced; that if the 
Norwood-Dingell-Ganske bill does not become law, we can be assured that 
there will be a flood of litigation by dissatisfied Americans. And 
instead of that litigation being predictable, under a clearly 
established set of legal rules and principles written in the statute by 
us as the duly-elected representatives of the people, instead those 
rules will be written on an ad hoc, case-by-case basis by State and 
Federal judges around this country. So I would suggest that that is the 
flood of litigation that people should most fear.
  So I want to thank my friend for yielding his time. I again salute 
him for his truly heroic and tireless work on this issue, and I assure 
him that the day is coming when his efforts will bear fruit and this 
bill will be signed into law.
  Mr. GANSKE. Reclaiming my time, but I hope the gentleman will stay 
for a few minutes, because some of the things in that Senate GOP bill 
relating to the liability provisions are just amazing. Let me just 
relate a couple more for the gentleman.
  There is a provision in that Senate GOP bill that says that any group 
health plan that offers its members the choice of either an insured 
benefit or an individual benefit payment to be used by the Member to 
buy an individual insurance policy could not be held liable.
  What does that mean? That means that any employer could say to an 
employee that they have a group health plan that they can join, or they 
can be offered a payment to buy their our own health insurance. In that 
situation, the HMO and the employer could not be held liable, 
specifically by the language in the Senate GOP bill. There would be no 
liability.
  Now, the problem with that is that, as most people know, as an 
individual it is very difficult to go out and purchase our own 
insurance. So that what we would have is, we would have every employer 
in the country that offers health insurance saying, well, here is an 
option for you. You can buy your own insurance. Of course, no one will 
do that because they will not find any individual insurance for their 
family. But in so doing, then they totally exclude those plans from any 
liability for a negligent decision that they would make.
  Mr. ANDREWS. If the gentleman will yield, I want to explain the 
consequences for what he has just correctly stated for constituents in 
my State.
  In my State of New Jersey, an individual buying family health 
insurance would pay in the neighborhood of $10,000 a year. But the 
price that would be offered through the group plan would be 
considerably less, probably $6,500 to $7,000 a year picked up by the 
employer. So let us say the employer gives the employee a $6,500 
voucher toward the purchase of health insurance. The choice that my 
constituents would face under this Senate bill that my friend talks 
about would be to either have the right to hold the HMO accountable and 
pay $3,500 for that privilege, which the constituent clearly would not 
have, or not have the right to hold them accountable.
  Now, that is like saying to someone that we are going to give 
everyone in America the right to buy a Mercedes Benz for $75,000. Nice 
right to have in theory, but if a person does not have the money to 
afford it, they cannot do it.
  Mr. GANSKE. Here are a couple other provisions in the Senate GOP 
bill. Remember, this bill made its first appearance in the light of day 
about an hour before it was offered on the floor, and it was offered to 
the minority about 15 minutes before it was offered. So not much chance 
to review the language. And that bill has never had any hearings.
  There are a couple of provisions in there that are very significant. 
One provision would basically preclude class actions under the new 
ERISA remedy in the Senate GOP bill no matter how widespread the 
misconduct of the defendant. For example, an HMO might engage in a 
practice of systematically denying every request for treatment in order 
to push individuals into external review and delay treatment.
  They could just do that all the time. They could deny, deny, and push 
everybody into an external appeals thing. They could save a lot of 
money on the float that way. But under this provision that is in the 
Senate bill, even were the defendant pursuing such a strategy as a 
matter of design, the way they are setting up their plan, an individual 
could not seek any class action relief.
  Here is another problem. We know from a case, Humana v. Forsythe, 
that the United States Supreme Court held RICO applicable to a managed 
care company that has systematically defrauded thousands of health plan 
members out of millions of dollars in benefits by systematically lying 
to members about the proportional cost of the treatment they were being 
required to bear.
  This is how it worked. This HMO had gotten discounts from hospitals, 
but the hospitals would send the full price bill to the patient. The 
patient typically had an 80/20 policy, meaning that the health plan is 
supposed to cover 80 percent of the cost and the patient is supposed to 
cover 20 percent. So they would get the full price bill from the 
hospital and then Humana would tell them that they had to pay 20 
percent of that full price bill, even though Humana was only paying a 
fraction of the 80 percent because of a discount. In other words, they 
were leaving their beneficiaries paying a much higher percentage of the 
bill so that they could pay even less than their discounted part.
  Well, that was looked at, and the Supreme Court held that Humana was 
fraudulently lying to its beneficiaries and ordered a multimillion 
dollar settlement. That is a proper use of the RICO statute. Under the 
Senate GOP bill, that would be precluded. A patient could not do that.
  Mr. ANDREWS. If the gentleman will yield briefly, under the facts as 
the gentleman just outlined them, let us say the patient had a $1,000 
hospital bill, as legitimately presented, and the HMO only paid $800. 
Under the terms of

[[Page 13830]]

the contract, the patient would be liable for one quarter of that $800: 
$200. But the way the bill was being presented to the patient, the 
patient would pay $250. Now, $50 is a lot of money to people, but it is 
not enough money to retain an attorney and file suit and pursue the 
claim.
  Those kind of claims only get meaningfully pursued through class 
actions. If thousands of people are owed $50, the economic incentive 
exists for someone to file suit and pursue the claim. But if a patient 
cannot do that through a class action, person after person after person 
who is defrauded out of their $50 will never pursue a legal remedy. And 
that is another deficiency in the Senate bill.
  Mr. GANSKE. Let me just finish in reading the conclusion from 
Professors Rosenbaum, Frankford, and Rosenblatt.
  ``The central purpose underlying the enactment of Federal patient 
protection legislation is to expand protections for the vast majority 
of insured Americans whose health benefits are derived from private 
nongovernmental employment and who, thus, come within the orbit of 
ERISA. Not only would the GOP Senate measure not accomplish this goal, 
but, worse, it appears to be little more than a vehicle for protecting 
managed care companies from various forms of legal liability under 
current law. Viewed in this light, congressional passage of the Senate 
GOP bill would be far worse than were Congress to enact no measure at 
all.''
  Now that is a sad commentary on a bill. But as I have been looking 
through the Nickles bill, I can come to almost every page and have 
questions about the legislative language.
  I will just talk about this one.

                              {time}  2100

  One of the things that we should be able to reach a bipartisan 
consensus on is how do you do an external review and should the 
external reviewer be independent?
  Let us say that an HMO denies care to your child. Your doctor says 
the kid needs the care. So you go through an appeals process within the 
HMO. The HMO still says, ``No, we're not going to give that care. It 
doesn't meet our own definition of medical necessity.'' So you say, I 
want an independent review. And let us just say the Senate GOP bill had 
become law. Would that reviewer be independent under the Nickles 
independent review plan? Looking at the language, it is real 
interesting. The language says that the reviewer could consider the 
claim under review without deference to determinations made by the 
plan. Could consider but not be bound by the definition used by the 
plan of medically necessary.
  Then the next clause is very important. Notwithstanding the 
independent reviewer would have to adhere to the definition used by the 
plan or issuer of medically necessary or experimental investigation if 
such definition is the same as, one, that which has been adopted 
pursuant to State statute or regulation or, two, that which is used for 
purposes under titles 18 or 19 of the Social Security Act.
  So what does that mean? I looked at this for a while and I wondered, 
because in the bill that passed the House, we just say that that 
independent reviewer will be able to determine medical necessity 
looking at a number of factors and as long as that benefit was not 
explicitly excluded in the contract, then the reviewer would be able to 
determine medical necessity. But here they have added a couple of 
provisos. They say the medical reviewer has to go use the definition of 
the plan, what the plan says is medically necessary if that has been 
adopted pursuant to a State statute.
  Well, I know exactly why that clause was put in there, because a year 
or so ago my home State of Iowa was doing some patient protection 
legislation, and I have some expertise in this so some of the State 
legislators came to me and asked me about some specific language that 
had been provided by the insurance industry. In that language very 
cleverly they had a provision that basically said medical necessity is 
what we define it to be, i.e., what the plan defines it to be. So if 
that happens to be what is in State law, then this independent reviewer 
cannot do anything except decide whether the plan has followed its own 
definition.
  Mr. ANDREWS. There is another grave danger here. And, that is, that 
the HMOs will certainly take the position that even if there is not an 
explicit statutory definition of medical necessity in State law, that 
the State laws which permit them to incorporate their insurance 
companies carry with them the implicit right of the HMOs to fix by 
contract the definition of the terms of their contract. To sort of 
unpack that and put it in less legalese, they will take the position 
that State laws implicitly give them the right when they organize 
themselves to declare what definitions in their contracts mean, that it 
is a matter of contract. And I assure you that every HMO worth its salt 
will then put a boiler plate clause in their contract that says medical 
necessity means whatever we say that it means. So if your child's 
pediatrician thinks that it is medically necessary for your child to 
have an MRI but the reviewer for the HMO does not think so because the 
statistics show that very few 7-year-olds have a tumor problem, the HMO 
wins. That is a loophole that is very subtle but very disingenuous and 
very dangerous.
  Mr. GANSKE. Reclaiming my time, here is another loophole in the 
Senate GOP bill. Who gets to select that external reviewer according to 
the Republican plan in the Senate? On page 47, the plan gets to select 
that, quote, independent reviewer. That certainly was not in the 
version that passed the House.
  Here is another loophole. Does that independent reviewer, is that in 
the House bill a person who has expertise related to that problem? You 
betcha. What about in the Senate? Only if a specialist is, quote, 
reasonably available would you get, for instance, an orthopedist 
reviewing an orthopedic problem. These are just multiple things that 
you can go through nearly every page.
  Mr. ANDREWS. The gentleman has just very eloquently described what in 
sports we call the home field advantage. Imagine if the home football 
team got to pick the referees for every game at its stadium without any 
consultation with the visitors or with the conference in which they 
play. The home team would win a lot of the games. If you were an 
external reviewer, external reviewer A has a track record of favoring 
the HMO three-quarters of the time and external reviewer B has a track 
record of favoring the HMOs one-quarter of the time, and the reviewers 
get paid according to the number of reviews that they do and the HMO 
gets to pick the reviewer, you can imagine which reviewer is going to 
get more work and what message is going to be sent out to the 
reviewers. That is a home field advantage if I have ever heard of one 
and it renders the Senate external review procedures to be farcical in 
my opinion.
  Mr. GANSKE. Let me give the gentleman another example from the Senate 
GOP bill. The bill contains a prohibition on plans from requesting or 
requiring predictive genetic information. An exception, however, allows 
plans to request but not require such information for diagnosis, 
treatment or payment.
  The problem is that the plan can request that information but does 
not have to tell the patient that they do not have to give them the 
information. See, that is the type of little legislative language 
tricks that you can put into a bill.
  Here is another one. The Senate GOP bill allows plans to fulfill 
their disclosure obligations by providing prospective enrollees with, 
quote, summaries, or, quote, descriptions or, quote, statements of 
beneficiary rights rather than specifically enumerating those rights 
such as in the bill that passed the House.
  These are, I think, minor provisions. They are not as important as 
the one related to enforceability, the one related to whether that 
independent reviewer is actually independent, whether that independent 
reviewer, where there is a difference of opinion on whether care should 
be provided or not, is competent or knowledgeable in that

[[Page 13831]]

area. But there is still, in aggregate, important provisions for those 
individuals.
  As you pointed out earlier, I believe firmly that the bill that 
passed the House, the Norwood-Dingell-Ganske bill because it is written 
to actually protect patients and provide them with due process will in 
the long run decrease legal activity rather than increase it. It will 
prevent the injury from happening which would then require a legal 
remedy because it sets up a bona fide real process for dispute 
resolution. Unfortunately, we are just not seeing that in the language 
as we have gone through the Senate GOP bill.
  I am going to provide my colleagues in the next few days with a more 
detailed analysis of the Senate GOP bill. I think it needs to be 
examined in-depth. I am very hopeful that as this process continues 
over the next several months, we will have an opportunity to correct 
the deficiencies.
  Mr. ANDREWS. If the gentleman will yield one more time, I want to 
conclude my remarks by saying that the gentleman is not a member of the 
conference committee that is negotiating the final version of this 
bill. I am privileged to be a member of that. I suspect that the 
gentleman is not a member of the conference committee because he holds, 
as do dozens of his Republican colleagues, the views that he has 
expressed tonight. This bill passed the House with 61 percent of the 
Members of the House voting for it, a broad bipartisan coalition. This 
is not a Republican or Democratic issue. I am hopeful as a conferee 
that we will return to the conference table, we will do so under the 
scrutiny of the public and the media, that we will discuss the issues 
that the gentleman has raised tonight, and that we will resolve our 
differences and give the President a bill that he can sign.
  I have been on this conference since it initiated in March, and I 
said a few weeks ago that someone on the other side said the conference 
was sailing right along, and it was sailing right along smoothly and I 
said that they had used the wrong nautical analogy, that the conference 
was not sailing right along, that it reminded me more of the 
legislative equivalent of the Bermuda triangle, that good ideas go into 
the conference and are never heard from again. The gentleman has many 
good ideas. I commend him again for his good work and look forward to 
working with him to make this the law.
  Mr. GANSKE. I thank the gentleman for joining me in this special 
order tonight. I look forward to working with him and other Members in 
a bipartisan fashion on both the House side and the Senate side to 
actually get signed into law a real patient protection piece of 
legislation.

                          ____________________