Insurers, Behave Yourselves
By Crystal Conde Texas Medicine September 2009

TMA Pushes National Code of Conduct

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Law Feature - October 2009  


Tex Med. 2009;105(10):33-36.  

By  Crystal Conde
Associate Editor  

While lawmakers in Washington, D.C., work on reforming the health care system, the Texas Medical Association and other organizations are pushing for a nationwide health insurance code of conduct that would benefit patients and physicians by reforming restrictive health plan practices.

Although TMA narrowly failed to win approval of its own proposed state insurance code of conduct in this year's session of the Texas Legislature, the association's attempt bolstered a similar effort nationally. The TMA-backed legislation helped strengthen national momentum among other state medical societies and the Alliance for Patient Access (AfPA), a national physician network promoting pro-access health policy initiatives, to encourage the American Medical Association to develop a code of conduct for the entire nation.

TMA, along with other state medical societies, is working with AMA to draft a proposed code. AMA expects to vote on a final version at this year's November interim meeting.

"TMA's effort during the session to codify some of the ideas around better management and better business practices for insurance companies helped generate the movement for a code of conduct at the national level," said Lewis Foxhall, MD, a member of TMA's Board of Trustees and a former member of the Council on Legislation. He also chaired the TMA Select Committee on Health Insurance.

TMA's Health Insurance Code of Conduct Act of 2009 sought to ensure transparency and accountability in the way health insurance companies operate and protect patients from loss of coverage and increased out-of-pocket expenses.

The proposal explicitly detailed how health plans can conduct business in a more open and responsible way by addressing insurance policies such as cancellation and rescission; the calculation of premium quotes; the calculation of the medical loss ratio; unregulated secondary networks (aka silent PPOs); physician rankings; and claims processing. To download a PDF of the Health Insurance Code of Conduct Act of 2009, visit  TMA's Health Insurance Reform Resources  page.

As filed, Senate Bill 1257 by Sen. Kip Averitt (R-Waco) and its companion House Bill 2750 by Rep. Craig Eiland (D-Galveston) reflected TMA's code of conduct act this session.

"Texas needs a health care system that ensures there are no barriers to affordable health care coverage," Senator Averitt said. "With that goal in mind, the bill was designed to give consumers recourse against unnecessary increases in health care premiums and bring more transparency to how Texans' health care coverage plans are administered."

The Senate State Affairs Committee and the full Texas Senate approved an amended version of the bill with only a single opposing vote on the Senate floor. The bill was referred to the House Insurance Committee, where it remained pending after a hearing. Despite Senator Averitt's attempt in the waning days of the session to attach SB 1257 to another piece of legislation, the code of conduct language died along with the other bill in a conference committee.

Dr. Foxhall says code of conduct legislation undoubtedly will be introduced again in the 2011 legislature.



Code to Reveal Insurance Hassles  

The notion of a health insurance code of conduct debuted when the Medical Society of the State of New York introduced a resolution at the AMA's November 2008 interim meeting. AMA adopted the resolution, demonstrating a commitment to establish ethical and professional guidelines by which insurance companies should operate.

The adopted resolution outlines that AMA:

  • Develop a code of conduct setting forth clear and concise principles addressing medical care policies and payment concerns;
  • Seek concurrence among health insurers in complying with the code;
  • Develop a mechanism to monitor insurer compliance with the code; and
  • Widely disseminate information regarding the code of conduct and health insurer compliance to physicians and consumers.

This year, the Indiana House of Representatives adopted a resolution that reinforces the push for AMA to develop a code of conduct for health insurers. House Resolution 91 stipulates that:

  • Indiana representatives support and encourage AMA to see its efforts through to a fully implemented and monitored code of conduct;
  • The appropriate state regulatory agencies take note of AMA's development of a health insurer code of conduct that will attempt to set forth clear and concise principles addressing both medical care policies and payment issues; and
  • The state regulatory agencies will help promote the adherence to and monitoring of compliance with the code of conduct.

Another group encouraging AMA to adopt a national health insurance code of conduct is AfPA, which at press time had garnered 1,150 signatures supporting its National Health Insurer Code of Conduct initiative. AfPA's online petition encourages AMA to develop the code of conduct and calls upon health plans to adopt it voluntarily. You can sign the petition at .

Brian Kennedy, JD, executive director of AfPA, says his group's efforts, along with HR 91 and TMA's Health Insurance Code of Conduct Act of 2009, increase the public's and the legislature's awareness of insurance company-imposed administrative burdens that bog down physicians on a daily basis.

"Physicians face many frustrations. For instance, they may prescribe a particular therapy for a patient only to find the health plans won't pay, or the plans make the physician and the patient jump through hoops to access the therapy," he said.

A study by the Medical Group Management Association, Weill Cornell Medical College, the University of Toronto, and the University of Chicago found that physicians spend three hours per week interacting with health insurance plans. Staff time dedicated to insurance matters amounts to $21 billion to $31 billion each year.

Mr. Kennedy says arbitrary changes in formularies affect physicians and can have an impact on patients.

"Oftentimes the formularies are cost-driven rather than evidence-based," he said. "A health insurance code of conduct could protect patients from capricious changes in formularies that might affect their responses to certain therapies."

Indeed, the study of physicians' interactions with health plans noted that practices spend the most time dealing with formulary matters - 1.3 hours per week for physicians and 3.6 hours per physician per week for nursing staff.

Bringing to light the insurance company bureaucracy that inhibits physicians in their ability to function autonomously and in the best interest of the patient, Mr. Kennedy says, is one goal of a national code of conduct.



Insurers in the Exam Room  

National interest in a health insurance code of conduct educates patients on health insurance business practices, says Mike Rinebold, Indiana State Medical Association (ISMA) director of Government Relations. ISMA is working with AMA on drafting a health insurance code of conduct.

"It helps get the message across that the payers are the third parties in the exam rooms with the doctor and patient," he said. "Insurers aren't always thought of as having an impact on medical care, but they do have more influence than people realize."

One way insurers affect delivery of care is the calculation of the medical loss ratio, defined as the percentage of premium dollars spent on payments to physicians, hospitals, and other practitioners. By minimizing the amount of the premium dollar they spend on a patient's health care, insurers can maximize their profits. (See " Medical Loss Ratios Q1-Q3, 2007 .")

The code of conduct developed by TMA requires a consistent reporting formula for the medical loss ratio that specifies what insurers can include as a medical cost versus profit or expenses for items such as marketing, administration, and recruitment. Doing so allows patients to compare performance among health plans and aids them in purchasing health insurance.

In addition to drawing attention to health plans' payment policies, a national health insurance code of conduct would also highlight insurers' interference with the physician-patient relationship, according to Dr. Foxhall.

"The practices of insurance companies directly affect, for better or worse, the physician and the patient in their daily interactions," he said. "This process of providing a mode of financing for health care has become intrusive over time and has been used to modify patient and physician behaviors primarily related to the cost of care."

An insurance plan tactic that disrupts patient-physician relationships involves the use of physician-ranking programs to determine a physician's network status. Physicians assert that the programs rarely include any review of the quality of care and focus primarily on claims data and cost.

TMA succeeded this legislative session in lending greater transparency to health plans' ratings programs. House Bill 1888 by Rep. John Davis (R-Houston) and Sen. Robert Duncan (R-Lubbock) took effect Sept. 1.

The legislation requires health plans to ensure that any physician-rating system uses a valid methodology for measuring performance, gives physicians due process before publishing ratings, and mandates disclosure of the measurement standards to physicians before the evaluation period. (For more information about HB 1888, read " Get Out! Humana Kicks Physicians Out of Its Networks ," August 2009 Texas Medicine , pages 41-47.)

According to Mr. Kennedy, adopting a code of conduct at the national level and the health insurance industry adhering to it would lead to better patient care and health outcomes, cost savings, greater access to care, and recognition of the primacy of the physician-patient relationship.

To create true reform in the insurance industry, Dr. Foxhall says physicians must collaborate with health plans to maximize the health benefits patients receive from the premium dollars invested.

"The code of conduct strives to align the goals of the insurance industry with that of the medical profession and of the best interest of the patient. What we're trying to achieve is a more open and transparent environment of finance for the health care that's needed," he said.

Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at  Crystal Conde .  




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