As Insurance Commissioner Steven B. Larsen ends his first year as head of the Maryland Insurance Administration ("MIA"), he has clearly shown his intention to rein in the State's HMOs. In the last fourteen months, Larsen has taken numerous steps to curtail practices of HMOs and other insurers deemed detrimental to providers and consumers. This, coupled with a slight expansion of the MIA's ability to respond to consumer grievances and complaints, effectively puts Commissioner Larsen in the position of being the healthcare watchdog of the State.
Larsen has taken his health care stances with little additional legislative authority. In three areas in particular, Larsen has used existing authority or recently enacted authority to address aggressively certain industry practices. He took a firm stand in enforcing retroactive reimbursement law. Larsen launched market conduct surveys of Blue Cross/BlueShield and Mid-Atlantic Medical Services, Inc. ("MAMSI"). Finally, he rejected an HMO argument that, under coordination of benefits clauses, they were not responsible for paying medical bills until workers' compensation claims had been adjudicated. In each case, Larsen acted without additional legislative assistance or regulations.
The retroactive reimbursement issue has been brewing for some time. In 1997, the General Assembly passed legislation setting strict limits on insurers' ability to deny payment for services already provided. In most cases, the law limits insurers to a six-month period within which to deny most claims. This measure helps providers, who often bear both the administrative burden and the actual cost of these retroactive denials. The industry, lead by MAMSI, argued that the law applied only to claims filed after October 1, 1997. Larsen disagreed and was subsequently supported by Attorney General J. Joseph Curran. Although a court challenge is still possible, the MIA recently affirmed its initial ruling on this issue.
More significantly, Larsen has been willing to use the MIA's broad regulatory powers to address consumer complaints about mistreatment by HMOs. Although other states are currently experimenting with patients' bills of rights or tort liability for HMOs, the Maryland legislature has rejected these efforts. Commissioner Larsen has moved to address the concerns on a systematic basis. In response to complaints, the Commissioner had already indicated that he would launch a market conduct survey of MAMSI. In June, he stated that the MIA would subject Blue Cross/Blue Shield to the same measure. This is a victory for Maryland's hospitals, who have succeeded in directing Larsen to cases they find abusive. For insurers, these market conduct surveys are extremely time-consuming, inconvenient and costly. Besides highlighting abuses, the MIA can use market conduct surveys to manage corporate behavior by increased enforcement of existing law.
More recently, the MIA under Larsen has refused to allow HMOs to use coordination of benefits clauses to avoid paying claims that may involve workers compensation claims. Led by MAMSI, a number of insurers and HMOs argue that the coordination of benefits clauses of their contracts do not obligate them to pay such claims until the Workers Compensation Commission has issued a final ruling. The MIA reiterated its position that such clauses do not apply in this context. There will almost certainly be further appeals.
Larsen has accomplished these changes more through increased enforcement than through legislation. Only in the area of appeals and grievances has the legislature increased MIA's authority. With the passage of House Bill 3 during the 1998 session, MIA effectively becomes the main route of appeal for HMO grievances.
Despite these achievements, however, individual providers and consumers still have not yet seen concrete and specific gains. Instead, MIA apparently is pursuing a systemic approach that attempts to improve conditions for all consumers and providers by aggregating their complaints and by forcing insurers to toe the line. The difference is an important one: it has spared Maryland the fate of Texas, where enforcement of a tort liability bill awaits resolution before a Texas court. On the other hand, it also lacks the immediacy and clarity of New York's patient's bill of rights, which its Attorney General Dennis Vacco has already used to launch a crackdown on HMOs.
For more information contact Brian E. Messaris at 410-752-9732.