Health plan liability and ERISA: the expanding scope of state legislation

The federal Employee Retirement Income Security Act of 1974 (ERISA) supersedes state laws as they relate to employer-based health care plans. Thus, cases brought under ERISA are heard in federal courts. We examined the intent, scope, and impact of recent laws passed in 10 states attempting to expand the legal rights of health plan enrollees to sue their plans. In June 2004, the US Supreme Court ruled that state-law causes of action brought under the Texas Health Care Liability Act involving coverage decisions by Aetna Health Inc and CIGNA Health Care of Texas were preempted by ERISA. The full implications of this decision are not evident at present.     

'MetLife V. Glenn': the Court addresses a conflict over conflicts in ERISA benefit administration

In its June 2008 decision in MetLife v. Glenn, the Supreme Court held that federal courts reviewing claim denials by Employee Retirement Income Security Act (ERISA) employee benefit plan administrators should take into account the fact that plan administrators (insurers or self-insured plans) face a conflict of interest because they pay claims out of their own pockets and arguably stand to profit by denying claims. This paper analyzes the history of the conflict in the courts over this issue; the Supreme Court's resolution of it in MetLife; and the implications of this decision for plans, beneficiaries, and health policy.     

Physician Financial Incentives in Managed Care

Patients with health insurance do not make the most cost conscious healthcare decisions since they bear only a fraction of the total cost of medical care. Managed care advocates point to financial incentives as a way to reduce wasteful resource use. However, physicians with managed care contracts feel financial pressures designed to reduce waste may also limit medically necessary services and adversely impact the quality of patient care. In light of a growing public and professional distrust of the motives behind offering financial incentives, the economic theory of agency is used to illustrate how financial contracts designed to reduce wasteful resource use influence physician behavior.A review of the literature was conducted to determine the effects of financial incentives on resource use, cost and the quality of medical care. The method used to undertake this literature review followed the approach set forth in the Cochrane Collaboration handbook. This review revealed that much of the empirical evidence on the effect of managed care on physician behavior compared the experiences of traditional indemnity plan enrollees with health maintenance organization enrollees.Published studies are outdated and are influenced by statistical problems including both patient and physician selection bias. With respect to the newer types of managed care organizations, there is a paucity of information on the effects of financial incentives on physician behavior. Despite the lack of empirical evidence, the perception remains that managed care financial incentives are perverse in that they induce physicians to take actions that compromise quality of care. To evaluate the legitimacy of these concerns, research on how physician contractual arrangements influence the cost and quality of care in the newer types of plans is needed. In the absence of such research, political rhetoric bent by anecdotal evidence will continue to influence public policy and undermine managed care.     

Calendar of Meeting

Growing public interest in the operations of managed care plans has fueled a variety of activities to collect and analyze their performance. These activities include studies of financial performance, analysis of enrollment decisions, and, more recently, the development of systems for measuring healthcare quality to improve accountability to consumers. In this study, the authors focus on the activities of managed care plans that may frustrate patients and providers and, subsequently, motivate patients to file complaints. Using data from three sources, they evaluate the relationships between complaints against managed care plans and two metrics of performance: (a) the financial performance of the plan, and (b) the quality of care provided. Their findings indicate that complaints against health maintenance organizations are significantly related to the plans' levels of quality and to actions that may impede access to care.     

Health maintenance organization (HMO) performance and consumer complaints: an empirical study of frustrating HMO activities

Growing public interest in the operations of managed care plans has fueled a variety of activities to collect and analyze their performance. These activities include studies of financial performance, analysis of enrollment decisions, and, more recently, the development of systems for measuring healthcare quality to improve accountability to consumers. In this study, the authors focus on the activities of managed care plans that may frustrate patients and providers and, subsequently, motivate patients to file complaints. Using data from three sources, they evaluate the relationships between complaints against managed care plans and two metrics of performance: (a) the financial performance of the plan, and (b) the quality of care provided. Their findings indicate that complaints against health maintenance organizations are significantly related to the plans' levels of quality and to actions that may impede access to care.     

Managed care plans and the organizational arrangements with group practices

This article addresses the variety of structural and legal arrangements between group practices and health plans. The continuum of relationships will be discussed, including long-term arrangements whereby in exchange for long-term commitments to provide physician capacity, providers are given a capital contribution from managed care plans; management services organizations whereby managed care plans create management companies that provide turnkey management services in exchange for capital, with a commitment by the group practices to provide physician services to the health plan over a long period of time; mixed equity relationships where physicians and managed care plans jointly own the group practice, which group practice also has an ownership interest in the managed care plan itself; and acquisition of the group practice by the managed care plan. Each of these structures will be described, along with the legal issues that may be considered in any of these relationships.     

Liability avenues increase for HMOs

Texas has enacted a first-of-its-kind law that grants patients a statutory right to sue health maintenance organizations, and other managed care entities, for medical malpractice if the organization's decision adversely affects a patient's health. This new legislation opens the door for increased liability against managed care organizations, which had remained relatively protected from liability in the past.     

Foster Higgins National Survey: trends in behavioral benefits

Most employer-sponsored health insurance plans provide some coverage for mental health and addiction treatment. However, analysis of over 3,000 employer benefit plans reveals wide variation in the level and scope of behavioral health benefits. Of all commercially insured employees and dependents, 77 percent are currently enrolled in health maintenance organizations (HMOs), preferred provider organizations (PPOs), or point-of-service (POS) managed care plans. This article documents the differences among behavioral health coverage packages in these three different types of managed care organizations (MCOs), and the lower levels of behavioral health coverage compared with coverage for other medical care. The author states that some employers are selecting single-specialty managed behavioral carve-out plans specifically to increase benefit levels and improve quality of care.     

The malpractice crisis in obstetrics and gynecology: is there a solution?

The malpractice ripoff began when the no-fault automobile accident law was passed. Many lawyers were in a panic at this time and turned to medical malpractice litigation to make a living. It became the conduit to quick wealth. The patient was the loser, the lawyer the winner, and the physician often devastated by the patient''s ingratitude. For a patient-plaintiff to maintain a successful lawsuit for medical negligence against a physician, four elements must be alleged and proved in a court of law: duty, breach of duty, causation, and damages. Each must be proved by a patient to prevail against a physician. Since this is very difficult to do, the lawyers have subtly brought in a new approach called maloccurrence. This is defined as a bad outcome unrelated to the quality of care provided. The lawyers need not prove the four elements to win a malpractice case; many are won on deceit and in violation of the law by introducing the concept of maloccurrence. Not only are tort reforms needed but out of court alternatives must be mandated by law or our health care delivery system will be destroyed. Government interference and the malpractice ripoff has had a devastating effect on the talent attracted to medical school, and the number of applicants is falling rapidly. The medical malpractice crisis could soon be translated into a health delivery service crisis. Concerned citizens must join together with the medical profession and leaders of the legal profession to halt this monstrous injustice. The litigation milieu has not only paralyzed the health care industry but it has had a devastating effect across the board on the way Americans live and do business. It must be solved now for justice delayed is justice denied.     

Revisiting employee benefits managers

This article presents a case study of health purchasing practices of a sample of Employee Benefits Managers (EBMs) in a medium-size metropolitan area who were interviewed in 1991 and again in 1998. Findings show that employers have become less paternalistic in their health benefits; shifted plan options from indemnity coverage to managed care; increased employee cost-sharing; and placed greater decision-making on employees. EBMs embrace choice in health plans, have influenced the provider networks of plans, and have specified requirements for plan performance, however, use of quality information is limited.     

Private sector approach to health care reform. Interview by Thomas G. Goodwin

The Healthcare Leadership Council (HLC) was formed in 1990 by 50 CEOs of hospitals, hospital systems, pharmaceutical companies, medical device manufacturers, Insurers and medical professionals. HLC is a coalition to develop the necessary consensus to realistically influence health care reforms. HLC urges that the "U.S. public policy goal should be to seek the best mechanism for balancing quality, access and affordability." As for access for the poor, the HLC would standardize eligibility for Medicaid at the federal poverty level, establishing a minimum basic benefit and payment plan with funding to come from specific taxes. For the employed uncovered, HLC would extend the exemption from state mandates to small employers; enact appropriate market reforms and provide income-related subsidies for those near the poverty line and for small employers; encourage employer-provided coverage for all employees on a voluntary basis.... HLC also backs state subsidized uninsurable risk pools for people whose conditions would make premiums too expensive. As for affordability of health care, HLC says consumers should become involved in cost-effective health care plans, appropriate employee cost sharing, lifestyle incentives/penalties, etc. Also, legislation should be overridden that inhibits innovation, creativity (state-mandated benefits, restrictions on selective contracting, CON requirements...), and medical malpractice tort reform measures also should be enacted. What follows is an in-depth interview with HLC Chairman G. Robert O'Brien, president of CIGNA Employee Benefits Companies.     

Measuring the "managedness" and covered benefits of health plans

STUDY AIMS: (1) To develop indexes measuring the degree of managedness and the covered benefits of health insurance plans, (2) to describe the variation in these indexes among plans in one health insurance market, (3) to assess the validity of the health plan indexes, and (4) to examine the association between patient characteristics and the health plan indexes. Measures of the "managedness" and covered benefits of health plans are requisite for studying the effects of managed care on clinical practice and health system performance, and they may improve people's understanding of our complex health care system. DATA SOURCES/STUDY SETTING: As part of our larger Physician Referral Study, we collected health insurance information for 189 insurance product lines and 755 products in the Seattle, Washington metropolitan area, which we linked with the study's data for 2,277 patients recruited in local primary care offices. STUDY DESIGN: Managed care and benefit variables were constructed through content analysis of health plan information. Principal component analysis of the variables produced a managedness index, an in-network benefits index, and an out-of-network benefits index. Bivariable analyses examined associations between patient characteristics and the three indexes. PRINCIPAL FINDINGS: From the managed care variables, we constructed three provider-oriented indexes for the financial, utilization management, and network domains of health plans. From these, we constructed a single managedness index, which correlated as expected with the individual measures, with the domain indexes, with plan type (FFS, PPO, POS, HMO), with independent assessments of local experts, and with patients' attitudes about their health insurance. For benefits, we constructed an in-network benefits index and an out-of-network benefits index, which were correlated with the managedness index. The personal characteristics of study patients were associated with the managed care and benefit indexes. Study patients in more managed plans reported somewhat better health than patients in less managed plans. CONCLUSIONS: Indexes of the managedness and benefits of health plans can be constructed from publicly available information. The managedness and benefit indexes are associated with the personal characteristics and health status of study patients. Potential uses of the managed care and benefits indexes are discussed.     

HMOs and Managed Care: Implications for Rural Physician Manpower Planning*

American health care is changing dramatically. Health maintenance organizations (HMOs) and other managed care plans are central to this change. Today, the majority of Americans living in metropolitan areas receive their care from these types of plans. The goal of this article is two-fold. First, it will discuss the potential implications of HMOs and managed care for physician needs and supply in rural regions. Second, it will derive insight into alternative approaches for meeting rural health manpower needs by analyzing HMO staffing patterns. As HMOs and other managed care plans expand, rural physicians, their practices, and their patients will almost certainly be affected. As described in this paper, most of these effects are likely to be positive. The staffing patterns used by HMOs provide an interesting point of comparison for those responsible for rural health manpower planning and resource development. HMOs appear to meet the needs of their enrollees with significantly fewer providers than are available nationally or suggested by the federal standards. Moreover, HMOs make greater use of nonphysician providers such as nurse practitioners and physician assistants.     

An analysis of managed care provided by charitable hospitals in Brazil

This article describes charitable hospitals in Brazil that provide managed care and the health management organizations themselves, considering the level of autonomy by the latter in relation to the hospitals and their degree of management development, based on a nationwide study. A random sample of individual hospitals was drawn from the hospital groups. After refusals and replacements, the final sample consisted of 112 individual hospitals and 10 hospital groups. The charitable hospitals' managed care plans do no operate precisely according to the overall Brazilian health plan market, in which most of the managed care is situated in insurance companies, group medicine, and medical cooperatives. Rather than operating as typical plans, they function "inside the organization or hospital itself", almost always with a limited management infrastructure and with little autonomy in relation to the organizations harboring them. Individual plans were more common than collective products, unlike the rest of the market, which may also result from the limited management capacity of these arrangements.     

HMOs and Managed Care: Implications for Rural Physician Manpower Planning*

ABSTRACT: American health care is changing dramatically. Health maintenance organizations (HMOs) and other managed care plans are central to this change. Today, the majority of Americans living in metropolitan areas receive their care from these types of plans. The goal of this article is two-fold. First, it will discuss the potential implications of HMOs and managed care for physician needs and supply in rural regions. Second, it will derive insight into alternative approaches for meeting rural health manpower needs by analyzing HMO staffing patterns. As HMOs and other managed care plans expand, rural physicians, their practices, and their patients will almost certainly be affected. As described in this paper, most of these effects are likely to be positive. The staffing patterns used by HMOs provide an interesting point of comparison for those responsible for rural health manpower planning and resource development. HMOs appear to meet the needs of their enrollees with significantly fewer providers than are available nationally or suggested by the federal standards. Moreover, HMOs make greater use of nonphysician providers such as nurse practitioners and physician assistants.     

Use of preventive services by managed care enrollees: an updated perspective

We examined whether enrollees in managed care plans received more preventive services than enrollees in non-managed care plans did, by conducting an updated literature synthesis of studies published between 1990 and 1998. We found that 37 percent of comparisons indicated that managed care enrollees were significantly more likely to obtain preventive services; 3 percent indicated that they were significantly less likely to do so; and 60 percent found no difference. Enrollees in group/staff-model health maintenance organizations (HMOs) were more likely to receive preventive services, but there was little evidence, outside of Medicaid managed care, that managed care plans are worse at providing preventive services. However, most of the evidence is equivocal: Provision of preventive services was neither better nor worse in managed versus non-managed care plans. Because of the blurred distinctions among types of health plans, more research is needed to identify which plan characteristics are most likely to encourage appropriate utilization.     

The role of performance measures for improving quality in managed care organizations

OBJECTIVES: To understand how managed care plans use performance measures for quality improvement and to identify the strengths and weaknesses of currently used standardized performance measures such as the Health Plan Employer Data and Information Set (HEDIS) and the Consumer Assessment of Health Plans (CAHPS) survey. DATA SOURCES/STUDY SETTING: Representatives (chief executive officers, medical directors, and quality-improvement directors) from 24 health plans in four states were surveyed. The overall response rate was 58.3 percent, with a mean of 1.8 respondents per plan. STUDY DESIGN: This exploratory qualitative research used a purposive sample of respondents. Two study authors conducted separate one-hour tape-recorded telephone interviews with multiple respondents from each health plan. PRINCIPAL FINDINGS: All managed care organizations interviewed use performance measures for quality improvement but the degree and sophistication of use varies. Many of our respondent plans use performance measures to target quality-improvement initiatives, evaluate current performance, establish goals for quality improvement, identify the root cause of problems, and monitor performance. CONCLUSION: Performance measures are used for quality improvement in addition to informing external constituents, but additional research is needed to understand how the benefits of measurement can be maximized.     

Comparing employee health benefits in the public and private sectors, 1997

Data from the 1997 Robert Wood Johnson Foundation Employer Health Insurance Survey provide new information comparing public- and private-sector employee health benefits. The federal government is ahead of other employers in adopting managed competition principles using financial incentives and consumer information to promote choosing efficient plans. Federal employees experience a $200 annual compensation gap relative to those in the private sector, but it is partly explained by advantage in purchasing power. In contrast, state and local governments make higher payments toward health insurance than private-sector employers do. Their premiums are equivalent, but they pay a greater share of the total cost.     

Critical mandates: prevention and health promotion

Health maintenance organizations are supposed to maintain health, not just contain the cost of treating illness. Prevention and health promotion are critical mandates for managed care organizations, including managed behavioral health plans. More often than not, however, health plans have neglected to include prevention and behavioral health promotion services within their spectrum of covered benefits. In this article, the authors explain why there is a growing trend toward including coverage for prevention and promotion services in managed behavioral health plans, including the financial advantages and cost-containment opportunities that result. The article also illustrates several simple and straightforward models for structuring prevention benefits, managing the utilization and quality of prevention services, and including community-based preventive services organizations in provider networks.     

Managed Care, Access to Specialists, and Outcomes among Primary Care Patients with Pain

Objective. To determine whether managed care controls were associated with reduced access to specialists and worse outcomes among primary care patients with pain.
Data Sources/Study Setting. Patient, physician, and office manager questionnaires collected in the Seattle area in 1996–1997, plus data abstracted from patient records and health plans.
Study Design. A prospective cohort study of 2,275 adult patients with common pain problems recruited in the offices of 261 primary care physicians in Seattle.
Data Collection. Patients completed a waiting room questionnaire and follow-up surveys at the end of the first and sixth months to measure access to specialists and outcomes. Intensity of managed care controls measured by plan managed care index and benefit/cost-sharing indexes, office managed care index, physician compensation, financial incentives, and use of clinical guidelines.
Principal Findings. A financial withhold for referral was associated with a lower likelihood of referral to a physician specialist, a greater likelihood of seeing a specialist without referral, and a lower patient rating of care from the primary physician. Otherwise, patients in more managed offices and with greater out-of-network plan benefits had greater access to specialists. Patients with more versus less managed care had similar health outcomes, but patients in more managed offices had lower ratings of care provided by their primary physicians.
Conclusions. Increased managed care controls were generally not associated with reduced access to specialists and worse health outcomes for primary care patients with pain, but patients in more managed offices had lower ratings of care provided by their primary physicians.