HMO Appeals: No Halfway

Protecting patients in managed health care plans is the No. 1 crusade in Washington, propelled by voters angry with their powerlessness at the hands of HMOs. Republicans and Democrats last week held dueling media events on managed care reforms they hope to take home to those voters as their major accomplishment in an otherwise lackluster year.

The leading Democratic and Republican bills, and a proposal last week by a coalition of 25 HMOs, espouse a common set of principles--from requiring HMOs to disclose quality-of-care information to guaranteeing emergency room care. These should be merged into a single bill for prompt approval in both houses.

Fractious debate is inevitable, however, over how consumers can question, or take legal action against, managed care plans that deny them care that their doctors have recommended. Democrats want to amend a federal law that prevents patients from suing HMOs and insurance companies for pain and suffering, lost wages or any damage other than the cost of the benefit denied. Most Republicans want to duck the right-to-sue issue and focus on giving patients the right to appeal to an independent panel of medical experts.

There is no question that an Alice-in-Wonderland legal system exists in which HMOs can advertise state-of-the-art medical care but avoid legal liability by insisting they are not medical providers, merely administrators of employee benefit plans. But Congress will have to be careful in removing this liability loophole if it is to prevent health care dollars from being sucked into the pockets of trial lawyers. A new Kaiser Family Foundation study estimates that removal would raise monthly costs by 13 cents per enrollee at most, but business leaders correctly point out that medical malpractice jury awards are rising and that in litigious parts of the country, doctors tend to practice costly defensive medicine, ordering extra tests to protect against malpractice charges.

The lack of agreement on what liability reform will cost and its poor political prospects underscore the need for an interim solution, and that solution lies in guaranteeing Americans the right to promptly appeal a health insurer’s denial of needed care.

California legislators are well ahead of the national curve, with several pending bills to define the nature of the appeals process. The first recourse for patients whose managed care plan has denied them needed care is to request an internal review by the plan. One state bill deserving passage, authored by Assembly members Don Perata (D-Alameda) and Deborah Ortiz (D-Sacramento), would require health plans to disclose the criteria they use to authorize or deny treatment.

Patients turned down in the internal review deserve the right to external review by medical experts independent of the health care provider. Legislators are now trying to fold several external appeals bills into one that can be sent to Gov. Pete Wilson. At a minimum, the final bill should require health care plans to pay for treatments recommended by the independent reviewers and impose punitive fines on HMOs that make grossly negligent decisions.

Legislators should not give in to HMO demands that Medicare and Medi-Cal patients be excluded or that a patient be required to obtain a note from his or her HMO doctor to request an external appeal, for doctors may fear a backlash from the HMOs.

Establishing a credible appeals process is a fundamental reform. Consumers, sensitized to the issue by horror stories and their own experiences with managed care, are waiting to see what comes from Washington and Sacramento. They won’t put up with half measures.