PROFESSIONAL POINT

Refocusing reform

By Russ Newman, PhD, JD
APA Executive Director for Practice

As the House of Representatives prepared to debate patient-protection bills in early October, the center of controversy was clear: whether to enact a legal accountability provision governing managed health plans. When APA first proposed legislative language four years ago to establish plan accountability, no one on Capitol Hill was much interested in taking on this battle. Rep. Charlie Norwood (R-Ga.) later emerged as a strong advocate, and the provision has garnered growing bipartisan congressional support over the past couple of years. Yet many Republican leaders and other key legislators have lined up on the side of the managed-care industry in strong opposition. The degree of industry resistance might even suggest that plan accountability is the essential ingredient needed to achieve meaningful health-care reform, as opposed to "fig leaf" reform.

APA's strategic steps

Having spent millions on advertising, the managed-care industry has captured substantial media attention for its key messages: plan liability will cause a wave of litigation, drive up health-insurance costs and force many employers to drop employee health benefits. APA has been working to convey the contrasting messages that accountability offers a sound way of encouraging greater attention to quality and less attention to profits, and can actually serve to prevent patient injury, as well as provide a remedy after injury has occurred. In the weeks preceding House deliberations, APA's Practice Directorate took a series of strategic steps aimed at refocusing congressional debate on the critical role of plan liability in assuring quality patient care.

This past summer, the directorate asked PriceWaterhouseCoopers (PWC) to analyze the profits that insurance and managed-care companies can generate by investing the money saved while denied claims are appealed. The financial assumptions were based on a scenario reflecting the Senate Patients' Bill of Rights Plus Act (S 1344). The PWC study found that the insurance and managed-care industries could gain interest income of up to $280 million each year if as few as 1 percent of a year's claims were denied and later paid after the maximum amount of time allowed by the review process.

Industry leaders are fond of characterizing legal accountability as a means of lining trial lawyers' deep pockets. What they don't talk about is the considerable profit that their own organizations stand to make by denying even a tiny percentage of claims and waiting for the review process to overturn the decision. The PWC study is helping to make this point more tangible.

On the eve of House debate, APA, joined by the Center for Patient Advocacy, placed an advertisement twice in Roll Call, a Capitol Hill newspaper. The intent was to remind Congress that little incentive exists for MCOs to provide high quality care, while considerable financial incentive exists to restrict patient access. The ad--which asks, "Do HMOs care about the treatment your family gets?"--caricatures an HMO executive whose decisions to deny care through the utilization review process result in considerable company profits (see page 20). The ad encourages Congress to counter this financial incentive by enacting health plan accountability through the Norwood-Dingell bill (HR 2723). This message has been further supported by a fact sheet regarding the role that tort liability has played in changing behavior in a number of industries and making various products and practices safer for consumers.

Of course, legal accountability would offer injured patients the kind of remedy that our legal system historically has made available to everyone harmed by negligence except at the hands of ERISA managed-care companies. We believe, however, that just as important a purpose for plan liability is preventing patient injury from inappropriate claim denials from happening in the first place. This message has been lost in congressional debate, where anxieties about dollars and lawyers have all too often prevailed.

Facing a formidable opponent

Not unexpectedly, managed-care industry representatives have attempted to counter organized psychology's efforts. The Health Insurance Association of America wrote APA to criticize the PWC study of potential interest earnings from denied claims and suggested that the association issue a "correction" to our press release publicizing the results. We stand by the study and continue to believe that it underscores an important disincentive to quality in the current health-care system.

Psychology remains committed to pursuing legal accountability largely because managed care's inappropriate cost-containment strategies have taken a particularly serious toll on psychological services delivery. We recognize that we face a formidable opponent with considerably greater fiscal resources. Yet we will continue to fight because we believe that federal policy-makers must not be distracted by the managed-care industry's self-serving messages.



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