The backlash against managed care

Nation's Business, July, 1998 by Stephen Blakely

A dentist elected to Congress in 1994, Norwood says he has "absolutely" no interest in making employers liable for the mistakes of doctors or health plans. He says his goal with PARCA is to make managed-care plans more accountable and to stop what he calls "corporate bureaucrats" from denying necessary treatment arbitrarily or restricting care to substandard levels.

The Health Benefits Coalition, a Washington-based group of employers and business organizations, described Norwood's latest revisions as "little more than rearranging deck chairs on the Titanic." The coalition warns that trial lawyers--who strongly support PARCA--have proved adept at expanding vaguely written laws, and it says "the additional costs of liability [from PARCA] would force many employers, particularly small businesses, to drop coverage entirely."

The Patients' Bill of Rights Act, introduced in the House by Rep. John Dingell, D-Mich., and in the Senate by Minority Leader Thomas Daschle, D-S.D., takes a slightly different legal path to the same objective. It would authorize states to let patients sue employer health-plan sponsors.

The threat of medical liability posed by both PARCA and the Patients' Bill of Rights has employers seriously rethinking whether to provide health insurance.

Jerry Jasinowski, president of the National Association of Manufacturers, has echoed the Chamber's Donohue in warning that many small firms "will have no choice but to drop health insurance for their employees entirely" if PARCA's liability provisions are enacted. "These mandate proposals spell disaster for employers and employees alike," he says.

Rekindling Medical Inflation?

Critics of mandates argue that the proposed regulations in PARCA and the Patients' Bill of Rights Act would cripple the ability of managed-care plans to control costs, thereby reigniting medical inflation.

In addition to their liability provisions, PARCA and the Patients' Bill of Rights Act would impose a vast array of new federal regulations on all health plans nationwide, including the self-insured plans that currently escape state regulation. Some provisions in the two proposals would apply only to managed-care plans, however.

The major mandates in PARCA, which are found to varying degrees in other health-mandate bills, include:

* A federal ban on gag clauses, which managed-care critics say are used by some plans to limit what doctors can tell patients about treatment options.

* A ban on pre-authorization requirements for emergency-room care, or adoption of the "prudent layperson" threshold for defining a medical emergency.

* Guaranteed access to medical specialists when recommended by the treating physician, as well as a requirement that all health networks offer an option more flexible than an HMO.

* Limitations on the ability of health plans to exclude doctors or certain other health-care specialists.

* Creation of independent grievance panels for patients and doctors to appeal adverse decisions by a managed-care health plan.

The Democrats' Patients' Bill of Rights Act would require a 48-hour minimum hospital stay for mastectomies and 24 hours for lymph-node dissection. Various other proposals introduced in Congress would impose mandates related to specific treatments or illnesses, such as breast cancer.