UNITED STATES CONGRESS – Class 10

There are multitude of bills pending in Congress effecting health care providers such as proposed legislation involving patient’s bill of rights, confidentiality of medical records, prescribing medicine over the Internet, fraud and abuse issues, unions and antitrust issues, and the list goes on.  Some bills get passed, like the federal Health Insurance Portability and Accountability Act 9of 1996 (HIPAA) and others may fail and some may pass in the House and fail in the Senate or vice versa or get tied up in some kind of committee.

In terms of managed care, back in 1995, Congressman Dennis Hastert from Batavia, Illinois, who as head of the health subcommittee in Congress (and as Newt Gingrich’s point person along with Congressman Bill Thomas from Bakersfield, California) indicated that Congress will be looking at the following three issues in 1995:

(1) Portability of health insurance coverage. Portability means that if an employee works for one company and then switches jobs for whatever reason or becomes self-employed, that this employee could continue with the same health insurance coverage at the same rates as he or she had with the original employer. The Consolidated Omnibus Reconciliation Act (“COBRA”) allows coverage for a defined period of time under certain circumstances such as death of employee, divorce, termination.

(2) Limit companies ability to deny coverage to applicants with pre-existing medical condition. This is self explanatory. It could also go with open enrollment type issues where the insurer accepts or rejects everyone in its entirety, meaning take one take all, where the insurer cannot underwrite experience.

(3) Move Medicare/Medicaid to more managed care type plans. Some Medicare beneficiaries may elect to move into lower cost managed care networks to save an increase in costs from higher deductibles, premiums, copayments.

The legislation that did pass is called the 1996 Health Insurance Portability and Accountability Act. This legislation included the following:

Limit pre-existing condition exclusions. Insurers and employers would be prohibited from limiting or denying coverage under group plans for more than 12 months for a medical condition diagnosed or treated during the first six months. Once those 12 months expired, no new exclusion could be set even if the individual switched jobs or group insurance plans.

Help workers maintain coverage when they change or lose jobs. It would require insurers who offer individual coverage to sell individual policies to anyone who had group coverage for at least 18 months, lost it and has exhausted or was ineligible for COBRA coverage.

Medical Savings Accounts (MSAs). Individuals and families can make tax-free contributions to special accounts. The money goes toward purchasing less costly, high-deductible policies and for paying uncovered medical bills. Any leftover savings in the accounts could be accumulated through the years as in an IRA. These MSA’s would apply to individuals who opt for catastrophic only health insurance could make deductible contributions to medical savings accounts to help pay for routine expenses.

Opponents of the Medical Savings Accounts criticized them as tax-sheltered windfall for healthy affluent people who would drop out of standard insurance risk pool. The opponents to the MSA’s predicted that their departure would drive up premium rates for others and also claimed that one particular insurance company that is a large Republican contributor would benefit from MSA’s. (Golden Rule Insurance Co.).

The politics in passing this legislation was complicated because MSA’s were in the House Bill. Senate Majority Leader Bob Dole is said by his critics to have been putting President Clinton in a tough spot: either sign a bill with MSA’s or veto a measure voters like. Dole claimed that MSA’s were being used in 13 states at the time and had bipartisan support for many years. He claimed that MSA’s are a way to give consumers more flexibility to choose plans and more control over medical spending. The legislation that eventually did pass included MSA’s.

Some states are shifting Medicaid recipients into mandatory managed care plans. This requires a federal waiver from the Health Care Financing Administration (HCFA). In 1995, nine states had such waivers and Illinois had requested the waiver. The process is slow (in 1994 only 2 states received waivers) because Congress and HCFA are in a deficit cutting mode. States have to demonstrate beyond any doubt that waiver requests will be budget neutral. This means that the federal government will pay no more than it would under an existing Medicaid program. Some states are looking at a 20% across the board reduction in Medicaid reimbursement rates to hospitals and nursing homes. This means an automatic reduction in charity care payments to hospitals because these payments are based on the rate Medicaid pays hospitals. However, hospitals are likely to sue the state under the federal Boren Amendment which requires that Medicaid reimbursements be reasonable and adequate.

Consider the following question: Is every elderly American entitled to the same access to health care or should health care be no different from food, clothing and housing – more available to people with money? If Medicare goes private, would the way for HMO’s to make money be to “sign up people with single-digit golf handicaps” – people presumably wealthier and healthier than average. Some articles indicate that the U.S. government needs to learn how to reimburse HMO’s correctly. These articles suggest that it will take many years to devise a way to determine proper payments to HMO’s, medical savings accounts and other private options so that they get paid more for sick enrollees and less for healthy ones.

HCFA issued final regulations in 1996 that restrict how much risk managed care plans can force on physicians who treat Medicare and Medicaid patients. This rule requires prepaid healthcare organizations to disclose physician incentive plans to HCFA or the state Medicaid agency, and to provide a summary of the arrangements to patients upon request. The HCFA Administrator said that this final rule “addresses some of the concerns of Congress and the public about the pressures and incentives HMO’s create for physicians’ care decisions.”

The regulations require managed care plans that put physicians at substantial financial risk for referrals to limit the physicians’ financial losses and to conduct annual beneficiary surveys. Substantial risk is defined as any physician or group with more than 25% of its potential payment at risk for services it refers elsewhere. There are other provisions that apply including: dealing with stop-loss protection and health plans cannot pay physicians to limit or reduce medically necessary services for a specific patient. The American Association of Health Plans which is the HMO trade group created from the merger of the Group Health Association of America and the American Managed Care and Review Association criticized the regulations as unwieldy.

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