Managed care law west of the Pecos - Texas law on managed care and utilization review - column

Business & Health, July, 1991 by Robert McCarthy

"It's become a turf issue," says Ed Pocaro, a health care policy consultant with Washington, D.C.-based Competitive Health Care Strategies. "For as long as anyone can remember, physicians and other health care providers have been sole-source decision makers in the health care universe. Now, with managed care, non-physicians are intervening and holding physicians accountable for decisions."

The first reaction of many providers to this untoward turn of events, says Porcaro, is to wave the quality-of-care flag. Any interference with the physician's absolute prerogatives must automatically spell inferior health care. Providers' second reaction is to say of such interventions: "That is against the law!" And if there aren't any such laws, medical associations get busy trying to pass them.

"One of the most serious obstacles to managed care," says Porcaro, who is also project consultant to the Washington Business Group on Health's new Office of Managed Care Policy, "is the proliferation of state laws, and bills, aimed at inhibiting and even out-lawing managed care techniques. Hence the formation of the OMCP, which will be developing key policy information to help employers and regional health care/business coalitions understand and fight such legislative efforts."

One of the first such educative efforts of OMCP, which was established in February, was a series of meetings held in Houston and Dallas. There Porcaro addressed the Houston Area Health Care Coalition and the Dallas Business Group on Health. "Our goal," he says, "was to galvanize these groups to fight a piece of legislation that would have set up nearly impassible barriers to utilization review."

According to Randall Hodde, executive director of the Houston coalition, the UR bill, which was strongly supported by the Texas Medical Association, would effectively have abolished UR, "since," he says, "the bill would have put in place a very narrow window--60 days--for the licensing of UR personnel. It's unlikely that many of the UR firms could have gotten in under the wire."

Hurrahing the legislature

Coalition members responded to OMCP's call by sending letters to the legislature decrying attempts to gut UR. Several employers sent benefits and human resource executives to the state capital in Austin, where they testified at public hearings concerning the UR bill. The upshot was a compromise version from which some of the more employer-objectionable provisions were eliminated.

"But, unfortunately, the bill that passed still contains some red flags for both employers and the UR industry," says Nancy Sims, public affairs director of the Texas Business Group on Health, an omnibus organization made up of nine regional Texas coalitions. "One of the things we don't like is that during the appeal process-that is, when a physician appeals a UR decision--the UR firm will be obliged to disclose its utilization protocols."

The problem with disclosing protocols, say some UR experts, is that many UR firms consider them proprietary. Plus, disclosure may make it easier for providers to circumvent the gatekeeper functions of UR.

"But the real red flag for the business community," says Sims, "is the provision that seems, on its face, to prevent UR firms from disclosing data gathered in the performance of UR functions--including quality and cost data gathered from reviews of providers. In other words, the law seems to say that the UR firm hired by an employer could not share with that employer data concerning the health care providers used by the beneficiaries of the health plan. Which means, for example, that the UR firm could not inform the employer about those physicians notable for overutilizing tests, or for prescribing brandname-only pharmaceuticals.

"I had a number of legislators lined up to fight that provision. But the way the bill was passed--as part of a 600-page Omnibus Bill that was rushed through the House minutes before the session ended--made it impossible to pull a point of order."

But Sims and the Texas Business Group on Health, with the help of OMCP, promise to continue to work, in future sessions, to protect UR's ability to function in Texas.