Managed Care: State Approaches on Selected Patient Protections
(Testimony, 03/11/99, GAO/T-HEHS-99-85).

Pursuant to a congressional request, GAO discussed selected state
patient protection provisions already in place and congressional
proposals under consideration, focusing on state statutes that relate to
seven types of patient protections: (1) coverage of emergency services;
(2) access to obstetricians and gynecologists; (3) access to
pediatricians; (4) access to other specialists; (5) continuity of care
for enrollees whose providers leave the plan; (6) drug formularies; and
(7) patient-provider communication.

GAO noted that: (1) many states have responded to managed care
consumers' concerns about access to health care and information
disclosure; (2) however, they often differ in their specific approaches,
in scope and in form; (3) two states--California and Minnesota--have
laws or regulations that address all seven types of protections GAO
analyzed; (4) two other states--Colorado and Massachusetts--have laws
that address three or fewer protections; (5) the patient protection most
common among the 15 states addresses open patient-provider
communication; (6) provisions addressing coverage of emergency health
care and access to certain specialists were also prevalent among states;
(7) in contrast, only four states had specific provisions to guarantee
direct access to pediatricians; (8) although several states have
continuity-of-care provisions, they can differ markedly in the criteria
for coverage and time period allowed for transition; (9) about half of
the states specify pregnancy as a condition subject to
continuity-of-care coverage; (10) most of these states allow women in
their second trimester of pregnancy to qualify for continuity-of-care
protection if their physician leaves the plan; and (11) one state
requires that women be in their third trimester to receive such
coverage.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-99-85
     TITLE:  Managed Care: State Approaches on Selected Patient 
             Protections
      DATE:  03/11/99
   SUBJECT:  Health maintenance organizations
             Patient care services
             State law
             Physicians
             Consumer protection
             Health services administration
             Proposed legislation
             Health insurance
IDENTIFIER:  California
             Colorado
             Connecticut
             Florida
             Kentucky
             Maryland
             Massachusetts
             Minnesota
             New Jersey
             New York
             Ohio
             Oregon
             Pennsylvania
             Texas
             Vermont
             
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HE99085T.book GAO United States General Accounting Office

Testimony Before the Committee on Health, Education, Labor, and
Pensions, U. S. Senate

For Release on Delivery Expected at 10: 00 a. m. Thursday, March
11, 1999 MANAGED CARE

State Approaches on Selected Patient Protections

Statement of William J. Scanlon, Director Health Financing and
Public Health Issues Health, Education, and Human Services
Division




GAO/T-HEHS-99-85

  GAO/T-HEHS-99-85

Page 1 GAO/T-HEHS-99-85

Managed Care: State Approaches on Selected Patient Protections

Mr. Chairman and Members of the Committee: We are pleased to be
here today as you discuss various approaches the states have taken
to enhance consumer protections for the millions of privately-
insured Americans who receive health coverage under managed care
arrangements. 1 To control rising health care costs and to promote
enrollee health, managed care organizations attempt to control or
coordinate the use of health services by their enrollees,
particularly for

high- cost services, such as hospital emergency department
services or specialty care referrals. At the same time, consumers
have increasingly voiced concerns about the effect of such
constraints on their ability to obtain appropriate care. As the
primary regulator of private employerbased health insurance for
about 76 million people, states have responded to these concerns
by implementing various measures designed to protect managed care
consumers. However, an estimated 48 million people are

enrolled in health plans exempt from state regulation and thus not
covered by state patient protections. Pending before the Congress
today are a number of bills that would extend certain protections
to these individuals.

At your request we reviewed selected state patient protection
provisions already in place and congressional proposals under
consideration. You specifically asked us to examine state statutes
that relate to seven types of patient protection areas: coverage
of emergency services, access to

obstetricians and gynecologists, access to pediatricians, access
to other specialists, continuity of care for enrollees whose
providers leave the plan, drug formularies, and patient- provider
communication (including prohibitions on gag clauses). 2 We
reviewed the health insurance statutes and regulations in 15
states that collectively account for about two- thirds of those
enrolled in HMOs nationwide. In addition, we examined three Senate
bills introduced in the 106 th Congress-- S. 6, the Patients' Bill
of Rights Act

of 1999; S. 300, the Patients' Bill of Rights Plus Act; and S.
326, the Patients' Bill of Rights Act.

1 Health maintenance organizations (HMO) are the most recognized
form of managed care. Other prevalent arrangements include
preferred provider organizations and provider sponsored
organizations, many of which offer more open- ended access to
providers than do traditional HMOs.

2 Our 1997 review of HMO contracts with physicians found that none
of the 529 HMOs surveyed used contract clauses that explicitly
restricted physicians from discussing all appropriate medical
options with patients. However, plans' ability to terminate
physician contracts can bring significant pressure to bear on
physician- patient communication. See Managed Care: Explicit Gag
Clauses Not Found in HMO Contracts, but Physician Concerns Remain
(GAO/HEHS-97-75, Aug. 29, 1997).

Managed Care: State Approaches on Selected Patient Protections
Page 2 GAO/T-HEHS-99-85

My remarks today will focus on the 15 states' experience with
crafting selected patient protection measures. In brief, we found
that many states have responded to managed care consumers'
concerns about access to

health care and information disclosure. However, they often differ
in their specific approaches. For example:  Two states California
and Minnesota have laws and/ or regulations

that address all seven types of protections we analyzed. Two other
states Colorado and Massachusetts have laws that address three or
fewer protections.  The patient protection most common among the
15 states addresses

open patient- provider communication. Provisions addressing
coverage of emergency care and access to certain specialists were
also prevalent among states. In contrast, only four states had
specific provisions to guarantee direct access to pediatricians.
Although several states have continuity- of- care provisions, they
can

differ markedly in the criteria for coverage and time period
allowed for transition. About half of the states specify pregnancy
as a condition subject to continuity- of- care coverage. Most of
these states allow women in their second trimester of pregnancy to
qualify for continuityof- care protection if their physician
leaves the plan. One state requires that women be in their third
trimester to receive such coverage. Background Because the
majority of privately insured Americans is now enrolled in

some form of managed care and concerns have often been voiced
about the associated controlled access to health services,
legislators are increasingly addressing managed care issues.
States and the federal government each have a role in regulating
managed care plans. For individuals who buy insurance directly,
state laws apply. For the 124 million people with employer-
provided (group) coverage, the application of federal or state law
depends on whether employers self- insure (that is, accept most or
all of the financial risk for the coverage) or purchase insurance.
The federal Employee Retirement Income Security Act of 1974
(ERISA) preempts the application of state laws for the
approximately 48 million people who are

enrolled in self- insured group health plans. Approximately 76
million people with private employer- sponsored group health
insurance are in fully insured ERISA plans in which the employer
purchases coverage from a health insurance issuer who assumes the
risk of paying for covered

items and services. State insurance laws cover individuals in such
plans.

Managed Care: State Approaches on Selected Patient Protections
Page 3 GAO/T-HEHS-99-85

The three federal bills that we reviewed differ in the extent to
which they would extend certain protections to managed care
enrollees. All three bills would cover self- insured plans. S. 6
would also cover those participating in fully insured group and
individual health plans. Certain provisions in S. 300 and S. 326
would apply to self- insured group health plans and other
provisions would apply to all ERISA plans.

Overview Of Patient Protections In Selected States

Although all 15 states in our review have enacted legislation and/
or implemented regulations addressing patient concerns about
managed care, they do not all cover the same set of issues. As
shown in table 1, two

states California and Minnesota have provisions encompassing all
seven protections. Two other states Colorado and Massachusetts
have laws or regulations that incorporate three or fewer of the
seven issues.

We found no direct relationship between a state's rate of HMO
penetration and the presence of the seven protections in its laws
for the 15 states in our review. Massachusetts, with an HMO
penetration rate of 54 percent, the

highest among the states in this study, addresses only one of the
seven protections. Yet Vermont, with less than half the HMO
penetration rate of Massachusetts, addresses six of the patient
protection areas.

Managed Care: State Approaches on Selected Patient Protections
Page 4 GAO/T-HEHS-99-85

Table 1: Number of Patient Protections Adopted and HMO Enrollment
Rates

a The number of patient protections credited to each state was
determined by whether the state had a law or regulation that
addressed all or some facets of the issue. Sources: Information on
number of protections for each state was determined by GAO. State
HMO penetration rates are from InterStudy Publications,
Competitive Edge Part 2: HMO Industry Report (8.2) (Oct. 1998).
Vermont HMO penetration rates are from InterStudy Publications,
Competitve Edge Part 3: Regional Market Analysis (8.2) (Dec.
1998).

Of the seven types of protections, open patient- provider
communication, including prohibitions on gag clauses, is the only
one addressed by all 15 states we reviewed. Also common is
coverage of emergency care. Continuity of care is addressed by 9
of the 15 states and access to pediatricians is addressed by only
4 states. (See table 2.)

State Number of patient protection

areas covered by state law or regulation a

Percent of population enrolled in HMOs,

as of 1998

California 7 47 Colorado 3 36 Connecticut 5 43 Florida 5 32
Kentucky 5 35 Maryland 4 44 Massachusetts 1 54 Minnesota 7 32 New
Jersey 6 31 New York 6 38 Ohio 4 23 Oregon 5 45 Pennsylvania 6 37
Texas 6 18 Vermont 6 21

Managed Care: State Approaches on Selected Patient Protections
Page 5 GAO/T-HEHS-99-85

Table 2: Number of States That Have Addressed Selected Patient
Protections

Because the legislative action in some of the 15 states has been
relatively recent, implementation issues, cost implications, and
actual benefits for consumers are not yet well understood.
Furthermore, some state officials we interviewed indicated that
the absence of certain patient protections in statutes or
regulations may be an indication that they did not see a need for
such regulation, given health plan practices in the state. It may
be general practice among managed care plans to have policies that
are concordant

with consumer protections. For example, many officials told us
that they have no requirements that HMOs classify pediatricians as
primary care physicians because HMOs already generally do so.

States Often Varied in Their Specific Approaches

While we found some common ground among states in the types of
patient protections they have addressed, the scope and standards
of the provisions vary from state to state. 3 In general, when
states address disclosure of

information to plan members, their provisions were similar, while
in the case of access issues, the provisions varied significantly
in detail. These variations affect who receives protection and
under what circumstances, as illustrated below. (App. II provides
more detail on each of these seven types of patient protections
and their comparison to three pending federal bills.) Coverage of
emergency services: Concerned about cost- effectiveness, most
health plans attempt to manage enrollees' use of emergency
services. One common approach is to require members to call the
plan before Patient protection provision Number of states

Patient- provider communications 15 Coverage of emergency care 14
Access to other specialists 12 Access to obstetricians and
gynecologists 11 Drug formularies 11 Continuity of care 9 Access
to pediatricians 4

3 To help standardize laws on patients' rights, the National
Association of Insurance Commissioners has developed several model
statutes addressing aspects of consumer protection that may be
adopted by state legislatures.

Managed Care: State Approaches on Selected Patient Protections
Page 6 GAO/T-HEHS-99-85

seeking emergency care, unless the member has a truly serious,
lifethreatening emergency (such as a bleeding wound or heart
attack). When there is no prior authorization and the emergency
care provided is not found to have been medically necessary, then
coverage can be denied.

Many states have attempted to define emergency medical condition
in their statutes and regulations. They have used somewhat
different terms, such as prudent layperson and reasonable
expectation, to specify what a nonmedically trained individual
would reasonably assume to be an emergency. 4 However, three of
the states that have adopted such definitional standards do not
prohibit plans from requiring prior authorization for coverage of
emergency care.

Access to obstetricians and gynecologists: Plan enrollees
generally must obtain a referral from their primary care physician
before obtaining services from a specialist. However, women may
prefer to see a gynecologist for the provision of routine and
preventive women's health care services.

States attempt to facilitate access to obstetricians/
gynecologists (OB/ GYN) through various means. One approach is to
allow female enrollees to designate an OB/ GYN as their primary
care provider. Another approach is to prohibit plans from
requiring authorization or referral for coverage of certain
gynecological care and pregnancy- related services by an OB/ GYN.

Some states such as Pennsylvania and Vermont-- further stipulate
that OB/ GYNs must communicate with the patient's primary care
physician concerning the services provided, while others such as
California and New York allow plans to establish communication
protocols between OB/ GYNs and primary care physicians.

Continuity of care: Enrollees may be undergoing a course of
treatment or be receiving pregnancy- related care when their
health care provider leaves a health plan. In some circumstances,
the departure of the provider can have an adverse effect on the
enrollee. Some states have adopted measures to enable enrollees to
continue seeing their original health care provider for a period
of time.

4 The prudent layperson standard refers to a person having an
average knowledge of medicine and health and whether that person
would believe that the absence of immediate medical attention
would jeopardize health. The reasonable expectation standard
specifies that the absence of immediate attention could reasonably
be expected to jeopardize health.

Managed Care: State Approaches on Selected Patient Protections
Page 7 GAO/T-HEHS-99-85

States' provisions differed in the duration of the transition
period and the circumstances under which individuals would be
permitted to continue to be treated by their original provider.
Only seven states specify pregnancy

as a condition subject to this coverage. Most of these states
allow pregnant women in their second trimester to qualify for
continuity- of- care protection if their physician leaves the
plan. However, one state requires that women be in their third
trimester to receive such coverage.

Drug formularies: Managed care plans often provide coverage for
prescription drugs through a formulary. However, some enrollees
may require drugs that are not on the plan's formulary. States
have responded in various ways to consumers' concerns about the
inclusion of drugs and their desire for a process to consider
exceptions to a plan's formulary. Many states require that plans
disclose the use of a drug formulary to plan members. Several
states require plans to provide an exception process that allows
coverage of nonformulary alternatives when medically indicated.
Many of the states simply require plans that have a procedure to
obtain nonformulary drugs to disclose the process. There is also a
distinction in

how states address cost- sharing requirements for prescription
drugs. Oregon requires full disclosure of cost- sharing for plans
with procedures to obtain nonformulary drugs. Ohio specifies that
a plan may not charge more for a nonformulary drug than for a
formulary drug, if a provider certifies that the formulary drug is
ineffective or harmful for the patient.

Conclusion States are responding in myriad ways to managed care
consumers' concerns about the ability to get the medical care they
need. In many cases, these state actions closely parallel each
other, such as coverage of emergency care and open patient-
provider communications. But it is also apparent that the states'
approaches often vary in their scope and in the details, as they
are tailored to the needs and priorities within the individual
states.

Realizing the promise of managed care especially its ability to
constrain health care cost growth is dependent upon many factors,
including consumers' satisfaction with their ability to obtain
timely, needed health

services. Perceived or real undue obstacles to accessing needed
care will undermine consumer acceptance and confidence in managed
care. They could also lead to a backlash resulting in overly
restrictive regulation that could thwart the advantages and
efficiencies to be gained in a managed care environment. Balancing
regulatory approaches, such as the assurance

Managed Care: State Approaches on Selected Patient Protections
Page 8 GAO/T-HEHS-99-85

of minimum standards, with quality- based competition among
providers can be an effective approach that ensures quality and
efficient health care for managed care enrollees. We will be happy
to continue to work with you to monitor the further development
and implementation of these and other issues.

Mr. Chairman, this concludes my statement. I will be happy to
answer any questions that you or other Members of the Committee
may have.

Page 9 GAO/T-HEHS-99-85

Appendix I Scope and Methodology Appendi x I

Our review focused on 15 states and seven types of patient
protection provisions. The 15 states collectively account for
about two- thirds of HMO enrollees nationwide. The criteria we
used to select the states included (1) HMO penetration (the
percentage of the state population enrolled in HMOs); (2) HMO
enrollment; and (3) geographic diversity. The seven types

of patient protections in our study were selected to include some
of the types of protections in Senate bills 6, 300, and 326, and
protections of particular interest to the Committee.

To obtain information on laws or regulations the 15 states used to
address the seven types of patient protections, we (1) researched
work done by others, such as the National Conference of State
Legislatures; (2) searched databases of state laws and regulations
in place as of January 1, 1999; and

(3) contacted insurance and/ or health department officials in all
15 states. Working with our Office of General Counsel, we analyzed
the state laws and regulations to identify provisions relevant to
the seven types of patient protections. We provided our summaries
of the state provisions to officials at the state health and
insurance departments for their review. We made technical changes
as needed for the 14 states that responded with

comments and provided additional documentation. In cases where
state officials indicated they imposed requirements on managed
care plans not documented in state laws or regulations, we based
our analysis on the laws

and regulations. In doing our work, we did not determine whether
managed care plans' practices complied with the state laws and
regulations. Actual practices may either provide more protections
than required by the states or violate the state laws and
regulations. Also, we did not determine which of the state laws
and regulations, if any, are being challenged in the courts, or
whether those that have been decided had any bearing on our
analysis and

conclusions. We conducted our review between January and March
1999 in accordance with generally accepted government auditing
standards.

Page 10 GAO/T-HEHS-99-85

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal Provisions Appendi x I I

All 15 states in our review have laws or regulations that place
some patient protection requirements on health plans. The seven
types of patient protections included in our review are addressed
separately below. Collectively, the information we have developed
shows considerable variation in the details of how the states have
addressed these issues. In some cases, their different approaches
lead to similar health care protections; in other cases similar
provisions include subtle differences in

language that lead to different health care protections. Also
provided in this appendix are comparisons of state actions with
Senate bills 6, 300, and 326.

Coverage of Emergency Care Many states have laws or regulations
intended to protect enrollees if a

health insurance plan denies coverage for emergency services
because the enrollee did not seek prior approval or because the
condition was not, in fact, a medical emergency. Most states we
reviewed:  Specify a standard for determining when an emergency
medical

condition exists. For example, some states use a prudent layperson
standard (a person having an average knowledge of medicine and
health would believe that the absence of immediate medical
attention would

jeopardize health); other states use a reasonable expectation
standard (the absence of immediate attention could reasonably be
expected to jeopardize health), or a life and limb standard (the
absence of immediate attention would be a threat to life or limb);
and/ or

 Prohibit plans from requiring enrollees to obtain prior
authorization for coverage of emergency services, including
screening and stabilization, in circumstances that meet the
standard used to define an emergency.

As shown in table II. 1, all 3 Senate bills and 14 of the 15
states use a standard for defining emergency conditions. Of the 14
states that use a standard, 9 use the prudent layperson standard.

As further shown in table II. 1, all 3 Senate bills and 11 of the
15 states prohibit plans from requiring enrollees to seek prior
authorization for emergency services. In some states, prior
authorization for emergency

care is not necessary if a prudent layperson would believe that
the absence of immediate care would jeopardize health. While
Maryland, Minnesota, and Oregon use a prudent layperson or
reasonable layperson standard to define a medical emergency, these
states do not prohibit a health plan from requiring prior
authorization for coverage of emergency care.

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 11 GAO/T-HEHS-99-85

Table II. 1: Coverage of Emergency Care

a The Colorado life or limb standard applies when enrollees use
the local emergency medical system (911) to obtain emergency
services. Colorado statutory law is not clear on what standard, if
any, applies in other situations.

Access to Obstetricians and Gynecologists

Although plan enrollees generally must obtain a referral from
primary care physicians before obtaining services from
specialists, many states have enacted laws and regulations that
make it easier for women to obtain care from obstetricians and
gynecologists (OB/ GYN). For example, some states

 require that health plans provide women enrollees the option to
designate an OB/ GYN as their primary care physician, or have an
essentially equivalent requirement that health plans include OB/
GYN physicians in their definition of allowed primary care
physicians; and/ or

Standard used to define emergency medical condition

Prohibits prior authorization requirements for coverage of
emergency care Senate bills

S. 6 Prudent layperson Yes S. 300, S. 326 Prudent layperson Yes

States

California Reasonable expectation Yes Colorado Enrollee believes
it is a

life- or limb- threatening emergency a Yes

Connecticut Prudent layperson Yes Florida Reasonable expectation
Yes Kentucky Prudent layperson Yes Maryland Prudent layperson No
Massachusetts No comparable standard No Minnesota Reasonable
layperson No New Jersey Reasonable expectation Yes New York
Prudent layperson Yes Ohio Prudent layperson Yes Oregon Prudent
layperson No Pennsylvania Prudent layperson Yes Texas Prudent
layperson Yes Vermont Prudent layperson Yes

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 12 GAO/T-HEHS-99-85

 require that plans allow women direct access to obstetricians and
gynecologists for specific services, such as annual gynecological
examinations, routine gynecological care, and obstetrical care
during

pregnancy. As shown in table II. 2, Senate bill 6 and 7 of the 15
states require plans to provide women the option to designate an
OB/ GYN as their primary care physician. Senate bill 6, and five
of these seven states also have provisions that provide women
direct access to an OB/ GYN under certain circumstances, such as
for an annual exam or pregnancy care, even if a

woman decides not to designate an OB/ GYN as her primary care
physician. Senate bills 300 and 326 and eight states do not
require plans to provide women the option to designate an OB/ GYN
as their primary care physician, but these Senate bills and four
of the eight states do have provisions requiring plans to provide
women direct access to an OB/ GYN for certain types of services,
such as annual examinations, prenatal care, and

treatment of gynecological conditions.

Table II. 2: Access to Obstetricians and Gynecologists Explicit
option to designate OB/ GYN as primary care physician

Direct access without a referral Comments

Senate bills

S. 6 X X S. 300, S. 326 X Does not preclude the health plan from
requiring that the OB/ GYN notify the primary care provider or the
plan of treatment decisions

States

California X X Direct access required, but plans may establish
protocols for communication between OB/ GYN and primary care
physician regarding treatment

Colorado See comment Plans have the option of granting direct
access or developing timely referral procedures

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 13 GAO/T-HEHS-99-85

Explicit option to designate OB/ GYN as primary care physician

Direct access without a referral Comments

Connecticut X X Direct access required for care related to
pregnancy, all active gynecological conditions, and all primary
and preventive OB/ GYN services Florida

Kentucky X Maryland X X Direct access required for

medically necessary and routine care; in certain circumstances,
the OB/ GYN must confer with primary care physician for nonroutine
care Massachusetts

Minnesota X X Direct access required for annual exams, medically
necessary follow- up care,

maternity care, and gynecological conditions and emergencies

New Jersey X New York X Direct access required for at least two
exams per year for

primary and preventive OB/ GYN services or care related to
pregnancy and any follow- up care; if required by the plan, the
OB/ GYN must confer with primary care physician for follow- up
services Ohio

Oregon X X Direct access required for annual exams and pregnancy
care

Pennsylvania X Direct access required for annual exams, medically
necessary and appropriate

follow- up care, and referrals related to pregnancy and
gynecological care; OB/ GYN must inform primary care physician of
such services

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 14 GAO/T-HEHS-99-85

Access to Pediatricians If managed care plans classify
pediatricians as specialists, enrollees could be required to
obtain referrals before taking their children to a pediatrician.

To promote access to pediatric care  Senate bills 300 and 326
prohibit plans from requiring enrollees to obtain

prior authorization or referrals for pediatric care and  Senate
bill 6 requires plans to offer enrollees the option to designate a

pediatrician as a child's primary care physician. As shown in
table II. 3, none of the 15 states prohibit plans from requiring
enrollees to obtain prior authorization or referrals for pediatric
care; but, 4 states achieve the same objective-- allowing direct
access to pediatricians- by including pediatricians in their
definition of primary care physicians. According to officials in
many of the 15 states, health plans generally

consider pediatricians to be primary care physicians. As a result,
most of the state officials we contacted do not believe there is a
problem obtaining direct access to pediatricians. Explicit option
to designate OB/

GYN as primary care physician

Direct access without a referral Comments

Texas X Direct access required for annual examinations and care
related to pregnancy and active gynecological conditions Vermont X
Direct access required for at least two visits per year and for

all follow- up care for problems identified during such visits;
OB/ GYN must furnish all relevant information to the primary care
physician

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 15 GAO/T-HEHS-99-85

Table II. 3: Access to Pediatricians

Access to Specialists Controlling access to expensive specialty
care is integral to most managed care plans, but consumers are
concerned that such controls may

inappropriately restrict their access to specialty care,
especially for chronic medical conditions such as diabetes or
cardiac disease. Also, managed care enrollees with chronic
conditions may find it particularly burdensome to repeatedly seek
referrals to a specialist while receiving ongoing care from the
specialist. To provide easier access to specialists, the majority
of states we reviewed have laws and regulations that require plans
to:

Prohibits prior authorization or required referral

Requires option to designate pediatrician as primary care
physician

Definition of primary care physician

includes pediatricians Senate bills

S. 6 X S. 300, S. 326 X

States

California X Colorado Connecticut Florida Kentucky X Maryland
Massachusetts Minnesota X New Jersey X New York Ohio Oregon
Pennsylvania Texas Vermont

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 16 GAO/T-HEHS-99-85

 Have and/ or disclose procedures for referrals to specialists;
Have procedures for designating a specialist to be an enrollee's
primary

care physician for enrollees with chronic, disabling, or life-
threatening conditions or for allowing specialists to coordinate
care for certain enrollees; and/ or  Have procedures for granting
enrollees a standing referral to a specialist. Standing referrals
allow enrollees to obtain ongoing care for specific medical
conditions from a specialist without seeking further

referrals from the primary care physician. As shown in table II.
4, all three Senate bills and 12 of the 15 states have one or more
of these provisions, and 6 states have all three provisions.

None of the 15 states have provisions guaranteeing direct access
to all specialists. As previously noted, some states provide
direct access to OB/ GYN and pediatric physicians. Some states may
also require plans to provide direct access to other types of
specialists. For example, Florida requires plans to allow
enrollees up to five visits per year to a dermatologist without
prior approval.

Table II. 4: Access to Specialists Requires that plans have and/
or disclose procedures for referrals to specialists

Requires that plans have procedures for designating specialist as
primary care physician

Requires that plans have procedures for granting enrollees
standing referrals to specialists Comments

Senate bills

S. 6 X X X S. 300, S. 326 X

States

California X X X Colorado X Plans must have a

process for timely or expedited referrals to specialists

Connecticut X Florida X X Kentucky Maryland Massachusetts

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 17 GAO/T-HEHS-99-85

Continuity of Care When a provider leaves a health care plan, the
plan generally will not continue to cover services obtained from
that provider. Enrollees may face

the choice of changing providers in the midst of their treatment
or paying out- of- pocket to continue care with the provider. To
enable continuity of care in certain circumstances, many states
have laws or regulations that:

 require managed care plans to cover care with a provider that
leaves the plan if an enrollee is undergoing a course of treatment
or has a specific condition; and/ or  require plans to continue
coverage for a specific period of time.

As shown in table II. 5, the 3 Senate bills and 9 of the 15 states
have continuity of care provisions for enrollees in managed care
plans. 1 However, all of these states have some continuity of care
conditions that are different than those in the Senate bills. For
example, the 3 Senate bills

require continuity of care for enrollees in institutional care,
but none of the 15 states explicitly require continuity of care
for institutionalized enrollees. The Senate bills and most states
require that pregnant women be in their

second trimester of pregnancy to be eligible for continuity of
care, while Florida limits eligibility to women in their third
trimester. For states that require continuation of coverage during
the course of a treatment or for

patients with special needs, the duration of required coverage
ranges from 60 to 120 days, though for a terminal illness, Texas
requires coverage for 9 months, and Senate bill 6 has no duration
limit. In Texas, however, Requires that plans have and/ or
disclose

procedures for referrals to specialists

Requires that plans have procedures for designating specialist as
primary care physician

Requires that plans have procedures for granting enrollees
standing referrals to specialists Comments

Minnesota X X X New Jersey X New York X X X Ohio X X X Oregon X
Pennsylvania X X X Texas X X Vermont X X X

1 These continuity of care provisions do not apply to situations
where providers have been terminated by the plan due to concerns
about quality of care.

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 18 GAO/T-HEHS-99-85

continuity of care provisions for pregnancy, disability, acute
care needs, and terminal illness apply only if discontinuing care
with a provider that leaves the plan could harm the patient.
Florida and New Jersey require

continued coverage for non- pregnancy- related care only when
preserving the relationship between the patient and the provider
is medically necessary.

States that do not address these specific continuity of care
issues may have related provisions. For example, Colorado requires
that plans provide 60 days continuation of coverage in cases where
the plan fails to provide proper advanced notice to enrollees that
their provider's contract is being terminated.

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 19 GAO/T-HEHS-99-85

Table II. 5: Continuity of Care Conditions for continuing care if
provider leaves plan Required duration of

coverage Comments Senate bills

S. 6 Course of treatment 90 days Pregnancy Through postpartum care
Must be in second trimester to qualify Terminal illness No limit
Institutional care Until discharge S. 300, S. 326

Course of treatment 90 days Pregnancy Through postpartum care Must
be in second trimester to qualify Terminal illness 90 days
Institutional care Lesser of 90 days or discharge States

California Pregnancy Through postpartum care Must be in second
trimester or high risk to qualify

Acute or serious chronic conditions 90 days Colorado See comment
See comment Plans must provide 60 days continued coverage if they
do not give enrollee

proper advanced notice that their provider's contract is being
terminated Connecticut Florida

Pregnancy Through postpartum care Must be in third trimester Life
threatening disease 60 days Only medically necessary conditions
qualify

Disabling or degenerative disease 60 days Only medically necessary
conditions qualify Kentucky Maryland Course of treatment 90 days
The state law has a discrepancy as to whether 90 days is a minimum
or

maximum Massachusetts Minnesota Special medical needs 120 days New
Jersey

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 20 GAO/T-HEHS-99-85

Drug Formularies Managed care plans often use drug formularies
(lists of prescription drugs normally covered by the plan) to
reduce the variety of drugs they cover, thereby enabling plans to
negotiate larger volume discounts with pharmacies and
pharmaceutical manufacturers. Although plans may try to structure
their formularies to include some varieties of most types of
drugs,

some individuals may require a specific drug not in the formulary
because of the enrollees' individual characteristics (such as
race, age, or gender), the complexity of their medical conditions,
or unusual adverse reactions to Conditions for continuing care if
provider leaves plan Required duration of

coverage Comments

Course of treatment 120 days Only "medically necessary" conditions
qualify Pregnancy 6 weeks after delivery New York

Course of treatment 90 days Pregnancy Through postpartum care Must
be in second trimester to qualify Ohio

Oregon Pennsylvania

Course of treatment 60 days Pregnancy Through postpartum care Must
be in second trimester to qualify Texas

Disability or acute care 90 days Applies only if discontinuing
care could harm the patient. Pregnancy 6 weeks after delivery
Applies only if discontinuing care could harm the patient or if
the patient is past the 24 th week of pregnancy when her provider
leaves the plan.

Terminal illness 9 months Applies only if discontinuing care could
harm the patient. Vermont

Pregnancy Through postpartum care Providers must agree to abide by
plan's payment rates, and special provisions exist for new members
Life- threatening disease 60 days Providers must agree to abide by
plan's payment rates, and special provisions exist for new members
Disabling or degenerative disease 60 days Providers must agree to
abide by plan's payment rates, and special provisions exist for
new members

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 21 GAO/T-HEHS-99-85

certain varieties of a drug. In response to concerns that a health
plan's formulary may prevent coverage of a drug most appropriate
to an enrollee's needs, states often have laws or regulations
that:  Require managed care plans to disclose the use of drug
formularies and/

or the drugs included in the formulary, upon request;  Require
managed care plans to disclose procedures for obtaining drugs not
on a formulary, if the plan selectively provides coverage for

nonformulary drugs; and/ or  Require managed care plans to have
procedures for obtaining nonformulary drugs.

As shown in table II. 6, the three Senate bills and 10 of the 15
states have one or more provisions regulating the use of
formularies. Four states California, Oregon, Pennsylvania, and
Vermont have all three of the above drug formulary provisions.
Nine states require managed care plans to disclose the use of drug
formularies and/ or the drugs included in the formulary upon
request by the enrollee, and six states require that plans

have procedures for enrollees to obtain nonformulary drugs. Some
states, such as Vermont, provide enrollees with access to
nonformulary drugs under specific circumstances, including when a
formulary drug is ineffective or may reasonably be expected to
cause adverse reactions.

Beyond these regulations of drug formularies, some states mandate
coverage of some specific drug treatments and off- label uses of
drugs.

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 22 GAO/T-HEHS-99-85

Table II. 6: Drug Formularies

Patient- Provider Communications

Concerned that health plans may try to prevent physicians from
discussing certain issues with their patients, such as treatment
options not covered by the plan and grievance and appeal rights,
states generally have laws or regulations that

 prohibit gag clauses (restrictions on certain communications) in
contracts between plans and health care providers, and/ or
prohibit plans from terminating or otherwise penalizing health
care

providers for discussing issues such as treatment options with
their patients.

Requires disclosure of formularies Requires disclosure

of procedures to obtain nonformulary drugs

Requires procedures to obtain nonformulary drugs

Senate bills

S. 6 X X S. 300, S. 326 X X

States

California X X X Colorado Connecticut X Florida X Kentucky X
Maryland Massachusetts Minnesota X X New Jersey New York X Ohio X
Oregon X X X Pennsylvania X X X Texas X Vermont X X X

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 23 GAO/T-HEHS-99-85

As shown in table II. 7, the three Senate bills 2 and 13 of the 15
states have provisions that prohibit gag clauses in contracts
between health plans and providers. While Massachusetts and New
Jersey do not have these specific provisions, they do have other
relevant requirements. Massachusetts health plans are prohibited
from refusing to contract with or compensate providers who have
discussed the health plan's rules with their patients as they
relate to the patients' needs. Similarly, New Jersey regulations

stipulate that enrollees are entitled to receive from their
physician or provider an explanation of their medical condition,
recommended treatment, risks of treatment, expected results, and
reasonable medical

alternatives, whether or not they are covered benefits. As further
shown in table II. 7, Senate bill 6, and 14 of the 15 states
explicitly prohibit managed care plans from penalizing providers
for discussing certain issues with their patients, such as
treatment options not covered by

the plan. Some states, such as Massachusetts, prohibit specific
types of penalties, such as refusing to compensate a provider,
while other states prohibit penalties without specifying any type
of penalty.

Table II. 7: Patient- Provider Communications

2 Senate bills 300 and 326 prohibit any restrictions on
communications between health care providers and plan enrollees,
in effect prohibiting gag clauses in contracts between plans and
providers.

Prohibits gag clauses in insurer/ provider contracts

Explicitly prohibits penalizing providers for medical
communications with patients Comments

Senate bills

S. 6 X S. 300, S. 326 X

States

California X X Colorado X X Connecticut X X Florida X Kentucky X X
Maryland X X

Appendix II Detailed Comparison of State Patient Protection
Provisions and Proposed Federal

Provisions Page 24 GAO/T-HEHS-99-85

Prohibits gag clauses in insurer/ provider contracts

Explicitly prohibits penalizing providers for medical
communications

with patients Comments

Massachusetts See comments X Health plans may not refuse to
contract with or compensate providers because of

content of medical communications

Minnesota X X New Jersey See comments X Members are entitled to

receive from the member's physician explanations of the member's
health conditions, treatment

options, and similar issues

New York X X Ohio X X Oregon X X Pennsylvania X X Texas X X
Vermont X X

Page 25 GAO/T-HEHS-99-85

Page 26 GAO/T-HEHS-99-85

Page 27 GAO/T-HEHS-99-85

Page 28 GAO/T-HEHS-99-85

Related GAO Products Private Health Insurance: HCFA Cautious in
Enforcing Federal HIPAA Standards in States Lacking Conforming
Laws (GAO/HEHS-98-217R, July 22, 1998).

Employer- Based Managed Care Plans: ERISA's Effect on Remedies for
Benefit Denials and Medical Malpractice (GAO/HEHS-98-154, July 13,
1998).

HMO Complaints and Appeals: Most Key Procedures in Place, but
Others Valued by Consumers Largely Absent (GAO/HEHS-98-119, May
12, 1998).

Consumer Health Care Information: Many Quality Commission
Disclosure Recommendations Are Not Current Practice (GAO/HEHS-98-
137, Apr. 30, 1998). Health Insurance Standards: New Federal Law
Creates Challenges for Consumers, Insurers, Regulators (GAO/HEHS-
98-67, Feb. 25, 1998).

Managed Care: Explicit Gag Clauses Not Found in HMO Contracts, but
Physician Concerns Remain (GAO/HEHS-97-175, Aug. 29, 1997).

(101794) Lett er

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