Health care professionals and providers, insurance companies and health maintenance organizations ("HMOs"), and individual consumers and groups are all praising the passage of the "Health Care Accessibility and Quality Assurance Act" (the "Act") by the Rhode Island legislature this July. Patterned after the American Medical Association's "Patient Protection Act," the new law empowers the state Department of Health to regulate and monitor managed care plans to ensure a proper balance between the rights of the plan, the people who pay the premiums, and the patients who receive the care.
Significant Disclosure Required
Nationwide concern over the medical practices and business policies of HMOs and other managed care plans has generated hundreds of bills in many state legislatures which would regulate the promotion and operation of such plans. The Act is one of the most expansive passed to date. Under the Act, the plans must provide extensive data on their coverage terms and results as prerequisites for conducting business in this state.
In a special signing ceremony at the State House July 3, 1996, Governor Lincoln Almond stated that the complexity of health care today requires that the average person have "easy-to-understand, clearly presented information." In essence, the law requires health plans to provide information that will assist the consumer to understand his or her coverage while at the same time protect physicians and other providers from arbitrary decisions to exclude them.
First introduced in 1995 by State Representative George Zainyeh (D-Warwick), the bill's enactment ended an extensive two-year study and revision effort by a special commission representing every interested party. The commission's task was to develop a regulatory framework to govern health plans and provide consumer protection at a time of increased concerns among consumers about the practices and potential abuses of managed care and large multiprovider networks.
According to Patricia A. Nolan, M.D., director of the state's Department of Health, the improvements in the quality of information on health coverage options required under the law as well as standardization of that information will allow people to become better health consumers and receive better care. Until passage of the Act, people would "buy things that looked like ducks and...find out they're dogs...," Dr. Nolan remarked at the bill-signing ceremony.
Comparison Shopping Possible
While the law does not prohibit the basic practices of managed care, it requires public disclosure of those practices and the terms and conditions of the plans so that subscribers know what they are buying when they obtain health insurance. They can easily compare and differentiate the several plans in a standard way to avoid surprises involving restrictions not evident when they chose certain benefits.
Specifically, the law requires the health plans to obtain certification from the Department of Health, which will regulate and review them to determine if they are capable of providing the care they promise. As part of that process, the Department of Health will design standard definitions for 20 common terms, including: allowable charge, capitation, copayment, credentialing, maximum lifetime cap, medical necessity, pre-existing condition, point of service, second opinion, provider network, urgent care, and requirements for certification.
The plans must also outline their policies regarding confidentiality, discrimination, payment for experimental treatments, prior authorization, second opinions, access to urgent care, payment for emergency services, capitation arrangements, provider incentives, the subscribers' financial responsibilities, and the process for appealing decisions on treatment and coverage. Those subscribers and also the plan's individual, noninstitutional providers must have a right to influence these and other policies of the plan.
Rights for Providers, Too
Plans must also publicly notify providers in a specific geographic area to allow them an opportunity to apply for credentials, and the plans must make credentialing profiles available to applicants and inform them of any reasons for denial. A comprehensive list of providers by office location and specialty must be made available to subscribers. The plans may not reject providers for treating a high volume of "costly" patients, or terminate them without cause, and must offer appropriate due process rights for adverse decisions regarding providers.
Finally, the Act bans financial arrangements that encourage doctors to deny care to individual patients -- but not those that would encourage lower use of services overall -- and prohibits "gag clauses" or provisions in participating provider contracts which prevent physicians from discussing with their patients available treatment options not covered by their plan.
"Gag clauses" received widespread attention earlier this year when a Cambridge, Massachusetts physician was dropped from a well-known HMO after he complained on national television about a provision in his provider contract which limited his ability to discuss treatment with a patient. A bill pending in Congress, the "Patient Right to Know Act," introduced February 26, 1996, would bar rules that prohibit physicians from open discussions with their patients about treatment optionsnot approved or funded by their plan. While most medical organizations and societies have strongly supported this bill, insurers have consistently opposed it.
The American Medical Association's Council on Ethical and Judicial Affairs has declared "gag clauses" to be unethical interference in the physician-patient relationship. Health maintenance organizations claim they require such provisions to prevent doctors from disparaging their products and recommending other plans. Most physician groups, however, believe that the HMO restrictions have a chilling effect on what they can say to their patients and interfere with a patient's right to make an informed decision.
New Regulations to Issue
Violations of the Act may result in administrative as well as criminal penalties. The Department of Health will promulgate regulations to implement the new law, which officially becomes effective January 1, 1997. The regulations will also set the standards and format for presenting and disseminating the information. When they are issued, lawmakers believe, consumers will be able to make educated decisions as they consider the vast selection of health care plans and products.
The law applies to insurance companies, HMOs, and groups offering dental or medical services through a network of selected providers. The Rhode Island Medical Society strongly supported its passage, as did advocates for the mentally ill, and a number of health insurers. The state physician group's executive director, Newell Warde, has described the law as "the most significant piece of consumer-oriented legislation this state has seen in maybe half a century...." Since the plans must provide clear descriptions of the criteria they use to authorize treatment; how much is spent on various kinds of health care; data on the frequency of subscriber complaints, denials of care, and appeal successes; and also a schedule of revenues and expenses, the Act clearly benefits health care consumers while allowing HMOs and other plans to continue their delivery of health services in a receptive environment. Many local commentators believe that other states will soon adopt similar measures to protect their own citizens, both patients and providers.