Legislative Affairs - December 2008
Tex Med . 2008;104(12):25-27.
By Ken Ortolon
When Toto pulls aside the curtain in the Wizard of Oz , he reveals the powerful wizard to be nothing more than an ordinary mortal performing cheap tricks by pulling a few levers and speaking into a microphone.
Now, the Texas Medical Association wants to pull back the Oz curtain on the major health plans to reveal what levers they are pulling to manipulate premiums, medical loss ratios, coverage decisions, and other market actions affecting the ever-increasing premium dollars patients are being asked to pay.
TMA will ask the Texas Legislature in 2009 to require health plans to give individuals or employers purchasing health insurance policies much more information at the point of sale about how their premium dollars will be used. It also would require the plans to disclose more information to physicians about how they are ranked on cost and quality, as well as how their contract information is being shared with so-called "silent PPOs."
"Just like we're interested in more transparency to promote medical quality, we are interested in transparency to promote the quality of business transactions," said Lewis Foxhall, MD, chair of TMA's Ad Hoc Committee on Insurance and Managed Care. "This idea that in order to improve something you have to be able to measure it is key here. Without good data and an openness about what's going on in the market, it makes it very difficult. So all we're really asking is to begin to get some measures that we can all agree on and that we can apply across the board to all the different plans to get a better idea of what's going on in their business practices."
Setting a Code of Conduct
Dubbed the Health Insurance Code of Conduct Act of 2009, TMA's proposal seeks to bring some accountability to the multibillion-dollar health insurance industry in Texas and help employers and patients make knowledgeable decisions as they struggle to purchase health insurance coverage.
The proposal would not dictate how much of their premium dollars insurance companies would have to spend on health care, how much profit they could make, or how much they can charge as a premium. It would, however, hold health plans more accountable for the decisions they make in the marketplace and give more information to those paying for coverage.
"Some people say we probably have plenty of money in the health care system, it's just not being used in the right way," Dr. Foxhall said. "Certainly one opportunity on the physician side is to do everything we can to be sure we're providing efficient and effective care, and that's where a lot of the ideas related to process measures have come in. But on the business side, we want to apply that same principle. If there's money being wasted on administrative overhead or needless burden or needless complexity - whether that's within the plan or whether it's pushed back to the physician's office - then those are things we ought to be taking a look at to see what we can do to reduce that as much as possible."
TMA's proposal first would make health plans subject to the same "file and use" requirements on rates that govern other lines of insurance. Health insurance companies would not need prior approval to adopt new rates, but employers or individual purchasers could challenge what they believe to be unwarranted increases. The commissioner of the Texas Department of Insurance (TDI) could then investigate the proposed rates and require the insurance company to provide employers and enrollees information to substantiate the premium increase.
The bill also would require health plans to disclose information about their medical loss ratio so employers and individual purchasers of coverage can see how much a plan is spending on actual health care versus profit or expenses such as marketing, administration, and recruitment.
Other provisions of TMA's proposal would require that an independent review organization review any attempt by a health plan to cancel a policy after a beneficiary has already incurred high medical bills; would regulate how a physician's contract information is sold, leased, or shared among health plans and other companies and prohibit any business or insurance company from improperly using a physician's contract information; and would require plans to disclose to physicians the scientifically valid, peer-reviewed criteria they use to evaluate physician performance. Physicians could review their data and ranking before they are made public and could appeal to correct any misleading or incorrect information.
Finally, the proposal would codify a number of provisions dealing with claims processing that were included in settlements of state medical society lawsuits against health plans under federal racketeering laws. Outlawed practices would include refusing to process claims for vaccine administration, formulating clinical policies on criteria not supported by medical science, and unilaterally changing billing codes and amounts.
In addition, TMA supports requiring plans to provide consumers with information that could help them make better choices about purchasing insurance, similar to the standardized and reliable nutritional labeling that helps them make better food choices.
A standardized health insurance product label would enable employers and patients to easily compare health plans based on standardized measures of value. The label could identify premiums and copayments, medical loss ratios, average annual amount paid by the health plan versus out-of-pocket expenses paid by the patient, and out-of-network benefits.
Following the Money
In testimony to the Senate State Affairs Committee in May, Suzanne Madden, president and chief executive officer of New York-based health care consultants the Verden Group, said more disclosure is needed on how health plans calculate their medical loss ratio because they use various methods to manipulate those costs to increase their profits. One such way is through denial of claims. If physicians, hospitals, or other providers simply write off claims because the cost of appealing the denial is prohibitive, the plan can substantially increase its profits, Ms. Madden said.
Another way to save money is to change the contract so the plan no longer pays separately for certain services, such as when UnitedHealthcare decided it would no longer pay separately for pediatric vision screenings.
Ms. Madden told senators that health care payment plans are not managing health care but actually managing their medical loss ratio.
"We must start to implement measures that make the insurers' business practices more transparent to employers, patients, physicians, hospitals, and other health care providers," she said. "We also must start to hold insurers accountable for how they manage our health care dollars to ensure that the money that we entrust them with is actually spent on providing health care rather than garnering profits."
Dr. Foxhall also said there is very little understanding of how medical loss ratio is calculated because each health plan does it differently. In testimony to the State Affairs Committee, TDI officials admitted they do not have a standard definition of what goes into the medical loss ratio.
TMA had hoped some of these issues would be addressed as part of the Sunset Advisory Commission's review of TDI this year. The commission did recommend requiring PPOs to obtain a certificate of authority from TDI to operate in Texas, but it rejected a recommendation from Insurance Commissioner Mike Geeslin that legislators define principles PPOs must adhere to as a condition of maintaining that certificate of authority. The commission also rejected recommendations by TMA Council on Legislation Chair Albert Gros, MD, requiring TDI to verify and certify a PPO's network, similar to certification requirements now found in the workers' compensation system.
While specifics of TMA's proposal were still being drafted, TMA has shared the broad outline of the plan with other stakeholders, including the Texas chapter of the National Federation of Independent Business. They reacted positively to it. That organization's own "Small Business Principles for Healthcare Reform" call for increased transparency in the insurance market.
"In any market, buyers and sellers need accurate and useful information on costs, quality, and performance of the product," those principles state. "Health care is no different in this respect. Well-functioning health insurance and health care markets require information that is easy for consumers, providers, and insurers to obtain and that is comprehensible to all."
The Texas Medical Association Political Action Committee ( TEXPAC ) also shared the Health Insurance Code of Conduct Act proposal with incumbent lawmakers and candidates who sought medicine's support in this year's elections. TEXPAC Candidate Evaluation Committee Chair Susan Strate, MD, of Wichita Falls, says that many candidates and lawmakers seemed supportive once they understood how these health insurance issues impact patients.
"Many of the legislators do not have a good understanding of the complex issues surrounding insurance," Dr. Strate said. "That's our job to explain the nuances as well as we can. In general, when we go through the issues regarding insurance and explain to them in detail why our recommendations benefit patients, they've been very open to our solutions."
State Sen. Robert Duncan (R-Lubbock), chair of the Senate State Affairs Committee, says some of the proposals that TMA has put forward are "issues that we need to explore and see where the consensus is." But he says he's not interested in advancing the agenda of any one player in the health insurance debate.
"I'm very interested in moving forward for all of the stakeholders in this issue and I'm not interested at this point in time in adopting any of the stakeholders' agendas or positions. I think it's very important that we move the ball for all of the stakeholders."
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at Ken Ortolon .
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