The Bipartisan Patient Protection Act (S. 283/H.R. 526)

March 2001
Government Relations
Practice Organization
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Myth 1: The McCain-Ganske bill will lead to a flood of litigation.

Fact: The McCain-Ganske bill's legal accountability provision will not create a widespread rush to the courthouse.

The McCain-Ganske bill ensures that the vast majority of disputes between managed health plans and patients will be resolved without the need for judicial intervention through the bill's strong, independent external appeals process. Under the bill, patients must complete the internal and external appeals process before proceeding to court unless there is danger of immediate and irreparable harm or death has already occurred.

The Texas experience shows that a good external review process will resolve most disputes. In Texas, the very first state to enact a patient protection law containing legal accountability for managed care, no more than 10 lawsuits have been brought since that law was enacted nearly four years ago (CQ Weekly, 2/24/01).

Myth 2: Employers can be sued under the McCain-Ganske bill.

Fact: Employers CANNOT be held liable unless they have directly participated in the actual making of the decisions about the care patients receive.

The McCain-Ganske bill provides that an employer only can be held legally accountable when it directly participates in the actual making of the decision, or the actual exercise of control in making the decision or in the conduct constituting the failure. In these rare instances, employers should be held accountable. Further, the bill expressly states that employers cannot be sued for: (a) picking the plan; (b) picking the third party administrator; (c) conducting a cost-benefit analysis to select a plan; (d) modifying or terminating a plan; (e) designing the plan benefit; or (f) advocating for coverage for one enrollee but not another. Defining medical necessity in a certain way also does not constitute direct participation.

Myth 3: With a strong appeals process, there is no need for legal accountability for managed care.

Fact: Although a strong and independent appeals process is essential, it will not always suffice.

Even under an expedited appeals process with a 72-hour deadline as contained in the McCain-Ganske bill, patients can sustain injuries that warrant appropriate compensation. Consider the following factual summaries drawn from actual cases where an appeals process alone would not have been able to prevent the negligent denial or delivery of treatment:

• A patient sustained injuries to his neck and spine from a motorcycle accident after which he was taken to a hospital. The hospital's physicians recommended immediate surgery but the health plan refused to certify the procedure and the surgery had to be cancelled. Soon after, the insurer did agree to pay for the surgery but it was too late; the patient was paralyzed.
• A patient was admitted to the emergency room of his community hospital complaining of paralysis and numbness in his extremities. The treating emergency room physician concluded that the gravity of the patient's neurological condition necessitated his immediate transfer to an academic hospital and made the arrangements. The health plan, however, denied authorization for transfer to the hospital the physician had selected and instead recommended three others. By the time the physician was able to have the patient transferred to one of these hospitals three hours later, the patient had sustained permanent quadriplegia.

Myth 4: The McCain-Ganske bill's legal accountability provision will significantly increase the cost of health insurance and the number of uninsured.

Fact: The McCain-Ganske bill's legal accountability provision will not add significantly to the cost of health insurance premiums or to the number of uninsured.

The Congressional Budget Office has scored other legal accountability provisions, such as that contained in the House-passed Norwood-Dingell bill (H.R. 2990) from the 106th Congress, as raising premiums only 1% when fully implemented (CBO, 2/10/00). A one-percent increase is the equivalent of employers paying a mere four cents per day for individual coverage with employees contributing just one additional penny per day.

Opponents have cited an ever-changing and ridiculously wide range of job loss figures for every one-percent increase. First, opponents of legal accountability cited figures that 400,000 individuals would lose their health coverage for every one-percent increase in premiums. When the General Accounting Office (GAO) challenged this figure, saying that it was based on outdated information and did not account for all relevant factors, opponents lowered the job loss figure to 300,000 for every one-percent increase in premiums. Subsequent criticism again from GAO caused opponents to lower their estimate a second time to 200,000. However, none of these dire predictions have come to pass as recent studies cited by GAO show. For example, between 1988 and 1996, the number of workers offered coverage actually increased despite premium increases each year.

Myth 5: The real problem is not negligent care being made by managed care, but medical errors being made by physicians.

Fact: Congressional action on medical errors is not a substitute for congressional action on patient protection legislation.

The American Association of Health Plans' desperate effort to divert attention from the need for patient protection legislation has been irresponsible and unsuccessful. Health care professionals do sometimes make mistakes that can and should be reduced. The McCain-Ganske bill, however, is needed to prevent and provide redress for the negligent denial and delivery of care by managed health plans. Under existing law, health care professionals are held responsible for the errors they make, but ERISA-regulated managed health plans are not. Only Congress can close this loophole and give consumers the right to hold these plans legally accountable.

Although of great importance, the issue of medical errors has not yet been fully explored by Congress and warrants additional examination. The need for congressional action on medical errors should not delay congressional action on patient protections in managed care. They are two separate and distinct concerns.

Myth 6: Consumer support for patient protection evaporates when they learn it will cost them money.

Fact: Patients want real, enforceable protections and are willing to pay for them when they understand what they will get for their money.

A 1998 nationwide survey by Penn, Schoen & Berland showed 86% support for a bill that would give patients health plan legal accountability, access to specialists, emergency services and point-of-service coverage. When asked if they would support such a bill if their premiums increased between $1 and $4 a month, 78% supported the bill. The House-passed bill would raise insurance premiums an average of 4.1% according to the Congressional Budget Office, which would mean increases in employee premiums of only $1.36 per month (individual) and $3.75 (family).

Myth 7: Patients and health care professionals are satisfied with the quality of care being provided by managed health plans.

Fact: Patients and health care professionals definitely are not satisfied with the quality of care being provided by managed health plans.

A recent public opinion survey found that most Americans believe problems with managed care have not improved (74%), and most think that legislative action is either more urgent or equally as urgent as it was when this debate began (88%) (Kaiser Family Foundation, Feb. 2000).

A 1999 survey of physicians and nurses reported that:

• 72% of physicians and 78% of nurses believe that managed care has decreased the quality of care for people who are sick;
• 65% of physicians who reported denials for mental health services for their patients said that the most recent denial had resulted in a "very serious" or "somewhat serious" decline in the patient's health;
• 18% of physicians reported denials for mental health services for their patients on a weekly or monthly basis (Kaiser Family Foundation and Harvard University School of Public Health, Survey of Physicians and Nurses, July 1999).