Commentary—assessing the impact of managed care patient protection laws: problems and pitfalls

Health Services Research, June, 2005 by Fred J. Hellinger

In their article "Impacts of Managed Care Patient Protection Laws on Health Services Utilization and Patient Satisfaction with Care," Sloan, Rattliff, and Hall use data from three rounds (1996-1997, 1998-1999, and 2000-2001) of the Community Tracking Study (CTS) to assess the impact on health utilization and patient satisfaction of "patient protection" laws. Each of the three rounds of the CTS surveyed approximately 32,000 individuals about the care received by themselves and their families (a total of approximately 60,000 persons).

Patient protection laws include those that address: the size and scope of provider networks, the range of covered benefits, the procedures essential to access covered benefits, and the financial incentives used by managed care plans to affect provider behavior. Specifically, they include gag-clause bans, direct-access to specialist laws, any-willing-provider laws, freedom-of-choice laws, mandated minimum length of stays for delivery laws, and laws limiting the size of physician withholds and bonuses. The basic purpose of these laws is to improve the care provided to enrollees of managed care plans. The proportion of American workers enrolled in managed care plans has risen from 4 percent in 1977 (Gabel 1999) to 93 percent in 2001 (Supreme Court to Rule on Patients' Rights 2003), and all but three states have enacted a comprehensive set of patient protection laws (Sloan and Hall 2002). Thirty-five states enacted patient protection laws between 1997 and 1999.

Proponents of these laws maintain that they help ensure that enrollees have a reasonable choice of providers at the time of service, do not face limits on services that may adversely affect their health, are not arbitrarily denied access to covered services, and are not treated by a physician who faces inordinately high financial risks for ordering necessary services. Opponents of these laws (who often refer to them as "anti-managed care" laws) maintain that they reduce the flexibility of plans in their dealings with physicians, prevent plans from limiting particular services in order to increase efficiency, preclude plans from implementing cost-effective utilization management techniques, and prohibit plans from employing financial incentives that encourage cost-effective behavior on the part of health care providers. Moreover, opponents maintain that these laws increase the number of people who are unable to afford health insurance.

Several studies of any willing provider laws have shown that they increase the cost of care (Hellinger 1995; Jensen and Morrisey 1999; Rogal and Stenger 2001), and there have been a number of studies of the impact of specific patient protection laws (Hellinger 1996). This study is an important addition to this literature because it is the first to examine the impact of patient protection laws in their entirety, employing multivariate regression analytic techniques to examine a rich data base to evaluate the impact of controversial laws. Supporters of patient protection laws insist these laws protect patients and strengthen public trust while opponents insist they increase the cost of care. Yet, this study finds that patient protection laws have had little or no impact on either the utilization of health care services or on patient trust in the health care system.

There are two plausible explanations for these findings, and the two explanations are not incompatible. The first explanation is that patient protection laws have (as found by the authors) indeed had little impact. It is certainly possible that recent changes frequently attributed to patient protection laws (e.g., increased size of provider networks and reduced requirements for enrollees to access services from specialist physicians) have resulted from a confluence of market forces and not as a result of legislation.

It also is possible that these laws have little impact because they have not been actively enforced. There is evidence that the length of stay for many maternity cases was below the mandated minimum stated in Illinois' minimum length of stay law (Rogal and Stenger 2001). There is also reason to believe that any willing provider laws were not actively enforced during the time period studied by the authors because of a court order in 1997 blocking Arkansas' broad-based any willing provider law, passed in 1995 (Crowley 2003; McLean and Richards 2003; Bleed 2004a).

Arkansas' 1995 any willing provider law was blocked because both the U.S. District Court and the U.S. Court of Appeals found that it was barred under federal rules pursuant to employee benefits as specified in the Employee Retirement Income Security Act of 1974. It was not until after the April 2003 decision of the Supreme Court to uphold a similar any willing provided law that had been passed in Kentucky that the Arkansas law was enforced (Bleed 2004b).

Moreover, part of the reason why the authors found that patient protection laws had little effect may be related to their choice of dependent variables. In this study, the authors examine the impact of patient protection laws on six measures of utilization (number of overnight hospital stays, number of emergency room visits, number of outpatient surgical procedures, number of office visits to physicians and other health care professionals, whether the respondent had a mental health visit, and whether or not the most recent visit was to a specialist). The authors do not examine the impact of these laws on the cost of services. Yet, much of the opposition to these laws is based on the premise that these laws increase the cost of providing a service, and it is certainly possible that these laws increase the cost of care without affecting the utilization of care. Indeed, there is evidence from California that laws that limit the ability of health plans to selectively contract with providers (e.g., any willing provider laws) increase the price that insurers pay for health services and in turn increase health care premiums (Zwanziger, Melnick, and Bamezai 2000).