Will the States Get Tough with HMOs?
Azevedo, David, Medical Economics
Consumer and media backlash against managed care has generated a host of legislation throughout the country But once the get-tough laws are on the books, will the states enforce them?
Flash back a couple of years to statehouses across the country, and you'll see heated debate on such healthreform issues as small-group coverage, community rating, and managed competition. Important items, yes, but they're loaded down with mind-numbing actuarial analyses and cryptic acronyms. Not surprisingly, none proved compelling enough to sustain the interest of constituents. Precious few bills made it into law, and the issues faded quickly.
Lately, though, state lawmakers have latched onto a health issue that does have wide appeal-the ways HMOs limit care. Each new HMO horror story-legitimate or not-produces protests in the community and vigorous hand-wringing in state capitols.
The result: an unprecedented blizzard of legislation aimed at managed-care organizations. According to the American Association of Health Plans, the HMO trade group, more than 400 anti-managed-care bills have been proposed this year-twice as many as last year and four times as many as in 1994. Uln my 20 years of looking at health-care legislation, I've never seen this kind of activity," says Geraldine Dallek, director of health policy for Families USA, a consumer group that lobbies for health-care reform.
Whether they're aimed at physician gag clauses, consumergrievance procedures, provider network rules, or maternity length-of-stay, the proposals share a common assumption: The market isn't capable of producing responsible health plans by itself, so government had better help it along.
Are the states up to it? That's an open question. Some have had trouble just figuring out how to monitor HMOs. Many, for instance, have split the responsibility between their insurance departments (which oversee licensure, solvency, organizational structure, and other traditional insurance company functions) and their health departments (which look at delivery-system and quality-of-care issues).
The lines of authority can be blurry. In Texas, for example, doctors and HMO enrollees often have had trouble determining where to take a complaint. "If it's a problem that involves utilization review, should the complaint go to the Department of Insurance because it's related to the financial and business part of the HMO?" asks Connie Barron, Associate Director of Legislative Affairs for the Texas Medical Association. "Or is UR a quality issue, since it deals with delaying or denying care? In that case, it goes to the Department of Health. We need to better outline the complaint process." In an effort to do that, the Department of Insurance recently agreed to field all complaints.
Such fumbling causes some to wonder how effectively state regulators are doing their job. To find out, we spoke with dozens of physician organizations, consumer activists, HMO leaders, and regulators themselves. Since each state has its own laws and regulatory strengths and weaknesses, it's difficult to compose a general picture. But one generality holds true: Few states stand out as shining examples of dependable oversight. "Laws are only as good as their enforcement," says Dallek. "My understanding is that many states aren't enforcing."
Starting from ground zero: getting laws on the books In some states, regulators can't be faulted for poor oversight because the law doesn't allow for much. In Arizona, for instance, no agency has the authority to respond to patient complaints or monitor quality-of-care issues in HMOs. That will likely change when a recently convened task force finishes its work on the issue, but, until then, HMOs are on the honor system.
Another problem is the federal Employee Retirement Income Security Act, which shields selffunded employer health-care plans from state rules. ERISA covers nearly three-quarters of all people who get health insurance through an employer. …