Publications

Patients' Bill of Rights (1998)

Last November, the President’s Advisory Commission on Consumer Protection and Quality in the Health Care Industry transmitted its recommendations for a Consumer Bill of Rights and Responsibilities to the Administration and to Congress.

The commission, on which AFSCME Pres. Gerald W. McEntee served, determined that patient protection standards were necessary in order to “strengthen consumer confidence by assuring the health care system is fair and responsive to consumers’ needs” and “to reaffirm the importance of a strong relationship between patients and their health care professionals.” The commission members, including representatives of the managed care industry, agreed on a set of standards. President Clinton quickly embraced the report and, where he had authority, required that its recommendations be adopted in federal programs such as Medicare, Medicaid and the Federal Employees Health Benefit Plan.

The commission’s report has also provided a powerful stimulus to Congress to pass legislation adopting patient protections. The Patients’ Bill of Rights, H.R. 3605/S. 1890, was introduced in Congress last spring as a direct response to the commission’s work, generating such a high level of public support that the House and Senate Republican leadership were forced to introduce their own counterproposals in July. That same month, the House of Representatives debated both alternatives, rejecting the Patients’ Bill of Rights H.R. 3605 by a slim six-vote margin and passing the Republican leadership bill on a 217-212 vote. H.R. 3605/S. 1890 is still pending in Congress. While it is highly uncertain whether comprehensive federal standards will pass in 1998 given the lack of Senate action, Congress is almost certain to take action in this area within the next sev-eral years. The debate over the next few months will set the stage for future legislation that will have considerable implications for health care consumers, health care workers and health care bargainers.

Are Federal Standards Needed?

The presidential commission was a response to growing concerns about managed care abuses. Managed care has been viewed as a mechanism to stop double-digit health care inflation by reducing spending for unnecessary care, promoting efficiency, and encouraging prevention. However, many consumers, purchasers and health care workers are concerned that the pendulum may have swung too far; that cost-cutting measures may be having a negative effect on health care quality and access. Their fear is that managed care plans, particularly for-profit plans, are keeping costs down by denying care, avoiding patients with significant health care needs, and limiting access to certain types of providers. Surveys demonstrate that these concerns are commonly held.

Despite these concerns, reliance on managed care is growing. According to a recent KPMG/Peat Marwick survey, managed care now covers 86 percent of the commercial market. While still committed to a managed care model, some large purchasers have moved aggressively to address quality problems. In fact, many proponents believe that managed care can only remain viable if public perception is changed.

Union bargainers, who provide health care for one out of every four Americans with employment-based coverage, can use negotiations and purchasing power to ensure access and quality. Large employers and unions have joined together in efforts such as the National Committee for Quality Assurance and the Foundation for Accountability. Most employers, however, continue to look for the cheapest plan available rather than the most affordable quality plan, while 44 percent of companies offer their workers only one plan option.

States have also jumped into the quality debate. Virtually every state has passed some type of patient protections, from information disclosure to external appeals procedures to whistleblower protections for nurses and doctors. Yet the variation in state approaches means that consumers and health care workers in many states lack important rights.

A key principle of the president’s commission was that all consumers should receive equal protections, regardless of the source of their coverage. Achieving that goal requires federal standards, not just because of the variations among states but because of limitations on state authority. The Employee Retirement Income Security Act of 1974 (ERISA) sets minimal federal standards for fully insured and self-insured private-sector health benefit plans and broadly prohibits states from regulating those plans. Self-insured plans are virtually exempt from state regulation. Employees in fully insured ERISA plans may benefit from state-passed protections if those protections are found to relate to the operations of the health insurance issuer rather than the employer plan itself. At various times the courts have taken different positions on ERISA pre-emption of state authority. For example, state minimum benefit laws apply to fully insured ERISA plans but not to self-funded plans. State medical malpractice laws regarding managed care plan liability do not apply to any ERISA plans, regardless of whether they are fully insured or self-funded.

Because they are exempt from ERISA, states retain the authority to regulate individually purchased policies, state and local public employee plans, and insurance companies. Yet 125 million workers and their families in private-sector, employer-sponsored health benefit plans can only enjoy complete protection through changes to federal ERISA law.

The lack of broad patient protections in ERISA creates wide disparities in quality. These disparities will grow as states continue to pass legis-lation that applies to public-sector plans while private employers continue to look for bargain basement coverage from for-profit plans cutting corners on quality. The pressures on higher quality plans to respond to this price competition has resulted in what many refer to as “the race to the bottom.” Not-for-profit plans such as Kaiser-Permanente and HIP Health Insurance Plans are so concerned about this trend that they put forward their own proposal for a federal Consumer Bill of Rights last summer.

What Standards Are Needed?

In 1997, Congress passed the Balanced Budget Act of 1997, encouraging increased managed care enrollment by Medicare and Medicaid beneficiaries while establishing some consumer protections in response to critics’ concerns.

The Patients’ Bill of Rights, introduced last March by Senators Tom Daschle (D-S.D.) and Ted Kennedy (D-Mass.) and Representatives John Dingell (D-Mich.) and Dick Gephardt (D-Mo.), includes all of the consumer protections recommended by the Presi-dent’s Advisory Commission. Nearly 200 labor, medical, consumer, disability, religious and senior organizations have endorsed the legislation.

The patient protection standards in the Patients’ Bill of Rights fall into several key categories.

Expanding Access to Care:

 The Patients’ Bill of Rights allows managed care plans to establish networks of health care professionals and institutional providers. It requires that network plans demonstrate that they have sufficient professionals and providers to assure that all enrollees in a service area have timely access to covered services. If there is no appropriate specialty care provider in the network to meet an individual’s needs, the plans must provide out-of-network referrals at no additional cost to the enrollee. Patients may not be discriminated against in their access to covered services on the basis of genetic information, sexual orientation, mental or physical disability, and other criteria.

The legislation also responds to specific concerns about access to specialists. Women enrollees must have direct access to obstetrical-gynecological services.

Finally, the Patients’ Bill of Rights would require that a limited point of service (POS) option be offered to employees if their only option is a closed panel HMO. This POS requirement does not apply if an employer offers a choice of more than one plan, even if they are both closed panel HMOs.

Right to Covered Services:

 One of the biggest complaints about managed care concerns decisions to deny approval for services that patients and their providers believe are covered under their plan. The Patients’ Bill of Rights does not require that specific services be included in a policy. It does, however, seek to ensure that patients get covered services when they are medically necessary or appropriate, and to give treating health care professionals more say in making those decisions.

The bill establishes internal and external appeals procedures that allow patients or providers to challenge decisions to deny, limit or terminate services. Explicit timeframes are set, including expedited resolution of urgent cases. Finally, the ERISA pre-emption of state managed care liability laws would be removed, allowing patients to sue HMOs and other plans for injuries caused by adverse determinations. Employers and union plan sponsors would not be liable if they did not have discretion to make the decision.

Promoting Quality:

 The Patients’ Bill of Rights includes a number of approaches to improving the quality of care. A private/public advisory board would be created to advise the Department of Health and Human Services on minimum data requirements and other activities to improve quality care.

Plans would be required to establish an internal quality assurance program and monitor care given to enrollees. Plans would have to provide information on voluntary disenrollment rates, numbers and resolutions of appeals, and the percentage of premium dollars spent on direct patient care.

Because frontline health care workers are a critical element in ensuring quality, the bill would prohibit retaliation against health care professionals who advocate for their patients or who report quality problems within the plan or at facilities under contract to the plan.

Improving the Patient-Provider Relationship:

 A key goal of the Patients’ Bill of Rights is to restore confidence in the patient-provider relationship and respond to concerns that managed care plans are intruding inappropriately in that relationship. Utilization review is not prohibited but it would be required to meet basic criteria, including administration by appropriately qualified professionals, deadline for timely decisions, and prohibitions on compensation mechanisms that reward adverse decisions.

Another goal is to promote appropriate medical decisionmaking by medical professionals. Financial incentives provided by plans to limit medically necessary or appropriate services would be restricted. Plans would be prohibited from discriminating against providers on the basis of their patient base or their location. “Gag clauses” preventing free discussion between health care professionals and their patients would be prohibited.

Navigating the System:

 The Patients’ Bill of Rights not only establishes patient rights and protection standards, it seeks to give patients and health care workers useful and understandable information along with due process rights. The bill authorizes grants for consumer assistance programs that would aid consumers in selecting plans, understanding their policy, and exercising their rights.

Many of AFSCME’s members already have access to at least some of the patient protections outlined in the Patients’ Bill of Rights. In many instances, such protections are the result of bargaining. In other cases, state and local government plans are covered under state consumer protection laws. While opponents of federal action argue that quality care and affordable coverage are mutually exclusive, experience shows that there can be a balance between cost and quality that provides maximum benefits to workers and their families.

A year ago, the Republican leadership blocked consideration of any federal patient protection legislation. That opposition changed due to overwhelming public support for reform. But while acknowledging the political need to act, the Republican leadership’s alternative lacks most of the protections included in the Patients’ Bill of Rights, including access to specialists, independent appeals rights, and medical decision making by medical professionals. The Republican leadership proposal also reflects the desire to eliminate employment-based health coverage altogether and replace it with individual coverage. Medical Savings Accounts and increased individual tax deductions are included as ways to move in that direction.

This is likely to be a pro-tracted debate, focusing not on whether to reform managed care and insurance company practices but how to do so. The Patients’ Bill of Rights, while certain to be amended and modified before any final action is taken, provides an important standard against which to judge other proposals that will be offered.

For more information on federal legislative efforts, please call the Department of Legislation at 1-800-732-8120; the department can also be reached at (202) 429-5020. For information or assistance in bargaining health benefits, contact the Department of Research and Collective Bargaining Services at (202) 429-1215.

 

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