Regulation of managed care
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Regulation of Managed Care. Plan for Today. Why (and why not) regulate? What is regulated? Who regulates what? Recent developments Federal insurance market reforms Proposed federal legislation to protect patients Your views of patient protection legislation.

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Regulation of Managed Care

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Regulation of managed care

Regulation of Managed Care


Plan for today

Plan for Today

  • Why (and why not) regulate?

  • What is regulated?

  • Who regulates what?

  • Recent developments

    • Federal insurance market reforms

    • Proposed federal legislation to protect patients

  • Your views of patient protection legislation


Regulation of managed care

Systems Framework for Understanding Managed Care

EMPLOYERS

Plan Choices, Employee Premiums, Information

Contract for Product, Premiums/Benefits, Risk

Marketing, Product Development

Job preferences, Wage and Benefit Preferences

Payment, Risk, Practice Guidelines, Profiling

MCO

Type of Plan, Philosophy and Procedures for Selection/Retention

Member services

Utilization management

Select Products, Join Plan

CARE

Provider Network

PHYSICIANS

CONSUMERS

Enrollees

Marketing, Advertising, Information, Reputation

Specialty, Style of Care, Discounts, Form of Organization

Taxes, Votes

Contract for Product, Risk, Premiums, Benefits

Discounts, Specialized Services

Employee Plans, Medicare, Medicaid, Information

Treatment

Facilities and

Prescribed

Services

Customer Volume

Admissions, Prescriptions, Referrals

Regulate Allowed Products, Behavior Relationships

GOVERNMENT

HOSPITALS & OTHER SUPPLIERS

Adapted from Gold , Medical Care Research and Review52(3): 307-341, Figure 1.


Types of regulation affecting managed care

Types of regulation affecting managed care

  • Insurance licensure and regulation

  • HMO licensure and regulation

  • Rules governing malpractice liability suits

  • Date privacy and standards

  • Fraud and abuse

  • Certificate-of-need

  • Anti-trust


State and federal roles in regulating hmos and insurance

State and federal roles in regulating HMOs and insurance

  • McCarren-Ferguson Act of 1945

    • States given exclusive right to regulate health insurance plans

  • Employee Retirement Income Security Act of 1974 (ERISA)

    • Prohibits state laws “relating” to employee benefits, except for regulation of insurance


Effect of erisa

Effect of ERISA

Feds regulate employer sponsored benefits

States regulate insurance plans and HMOs

Employer buys plan for employees

Plan sells insurance or HMO product

Employer self-insures health benefits


State regulation

State regulation

  • General laws applying to insurance (Department or Commissioner of Insurance)

  • Special laws and licenses for HMOs (Department of Health)


Regulation and licensure of insurance traditional areas

Regulation and Licensure of Insurance(Traditional Areas)

  • Financial requirements (solvency, reserves)

  • Premium taxes, guaranty funds

  • Grievance procedures

  • Marketing and disclosure

  • Premiums

  • Administrative charges

  • Mandated benefits


State reforms of individual and small group insurance markets

State Reforms of Individual and Small Group Insurance Markets

  • Guaranteed issue

  • Guaranteed renewal

  • Restrictions on exclusions of pre-existing conditions

  • Restrictions on rating factors (such as health status)

  • Community rating or modified community rating


State regulation and licensure of hmos

State Regulation and Licensure of HMOs

  • Financial requirements (solvency, reserves)

  • Adequacy of provider networks

  • Member rights, information, marketing

  • Grievances and appeals

  • Provider contracting

    • “Any willing provider”

    • Prohibition on “gag clauses”

  • Report on finances and operations to state


Erisa protections are weaker

ERISA protections are weaker

  • Administered by US Dept of Labor

  • Plan description for employees

  • Fiduciary responsibility to operate in interests of employees

  • No financial standards for health benefits

  • No formal provision for individual complaints

  • Legal remedies limited to cost of benefits denied (no other economic or punitive damages)


Effect of erisa1

Effect of ERISA

Feds regulate employer sponsored benefits

States regulate insurance plans and HMOs

Employer buys plan for employees

Plan sells insurance or HMO product

Employer self-insures health benefits


Health insurance portability and accountability act of 1996 hipaa

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

  • Introduced federal regulation of health plans for the first time

  • New role for the Health Care Financing Administration (the Medicare-Medicaid Agency)

  • Some provisions apply to insured and self-insured plans

  • States generally allowed to go beyond HIPAA’s minimum requirements


Key provisions of hipaa

Key Provisions of HIPAA

  • Limits exclusions for pre-existing conditions (portability)

  • Guaranteed issue in small group market (2-50 employees)

  • Guaranteed renewal in individual and small-group market

  • Guarantee conversion from group to individual coverage if

    • At least 18 months of continuous group coverage

    • Exhausted all other sources of coverage

  • No restrictions on premiums


Consumer bill of rights and responsibilities

Consumer Bill of Rights and Responsibilities

  • Issued by President Clinton’s Advisory Commission on Consumer Protection and Quality in the Health Care Industry (1997)

  • Adopted by all federal health programs by executive order

  • Basis for Democratic bill introduced in 105th Congress (elected in 1996)

    • “Patient Bill of Rights Act (PBOR)”

  • Bipartisan House bill and Republican Senate bill in 106th Congress (elected in 1998)


Similarities house and senate bills 106 th congress elected 1998

Similarities - House and Senate Bills106th Congress (elected 1998)

  • Prudent layperson standard for emergency care

  • POS option if no choice of provider networks

  • ObGyn as primary care provider, access without referral

  • Transitional care when patient or provider leaves plan

  • Network physicians involved in developing drug formulary

  • Must cover participation in clinical trials


Similarities house and senate bills 106 th congress elected 19981

Similarities - House and Senate Bills106th Congress (elected 1998)

  • Timely response to pre-authorization requests

  • Formal Grievance procedures

  • Internal appeals

  • External appeal to independent review


Right to sue employer sponsored health plans in state courts for economic damages

Right to sue employer-sponsored health plans in state courts for economic damages

  • House bill only

    • Limiting current ERISA preemption

    • Not if plan in compliance with external review decision

    • Employers only liable if exercised “discretionary authority” over denial


Population covered

Population covered

  • House bill applies to all group health plans

    • 161 million people

  • Senate bill applies only to self-insured group plans

    • Plans exempted from state regulation by ERISA

    • 48 million people


Pbor effect on premiums

PBOR effect on premiums

  • Congressional Budget Office estimates of average increase in premiums

    • Total: +4%

    • Right to sue: +1.2%

    • Grievance process:+0.3%


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