STATE LEGISLATIVE UPDATE

August, 2002 STATE LEGISLATIVE UPDATE

A new report, The Continuing Legacy of September 11 for Americans' Health Priorities, indicates that since September 11, 2001 health issues have decreased in importance to U.S. voters. Voters ranked health care below jobs and the economy, war and defense, and terrorism on a list of priorities for the country. However, 60% of respondents were either "not at all satisfied" or "not very satisfied" with health care availability and affordability.

When asked what is the most important health care issue, respondents stated "health care for seniors and Medicare" most often (23%) followed by the uninsured/underinsured (22%), prescription drug costs (14%), health care costs (12%) and funding for research (5%).

As of the end of the month, the following state legislatures were in regular session or in recess: CA, MA, MI, NC, NJ, NY, OH, and PA. Through August there have been 94,700 new bills introduced in the states (this does not include carry-over bills from last year) and 25,542 have become law.

Some of the bills the Department of Health Policy is tracking are outlined below. If you have any questions please give Jay Fisher a call at 800-346-2267, x4336.

TORT REFORM

A bill was signed into law in New Jersey during August requiring medical liability insurers to report to the state information on physicians, podiatrists or nurses whose premium renewals, on or after January 1, 2002, increased by 30% or more.

The insurer must report:

(1) the number of years in practice; (2) the number of years in practice in New Jersey; (3) the location of the physician's professional office practice site or sites; (4) the physician's, area of professional specialty or practice; (5) the number of medical malpractice court judgments and all medical malpractice arbitration awards in which a payment has been awarded to the complaining party within the most recent five years; (6) the number of settlements of medical malpractice claims in which a payment has been made to the complaining party within the most recent five years; (7) the dollar amount of all medical malpractice court judgments, medical malpractice arbitration awards and settlements of medical malpractice claims; and (8) the amount and percentage of the increase in the physician's premium, and the reason for the increase in the premium.

The information will be distributed to the legislature for their use in crafting legislation. The act expires on December 31, 2002. Governor Musgrove of Mississippi called a special session of the legislature for early September to address the growing professional liability insurance crisis in the state. The Governor has proposed the creation of non-profit insurers to help with the availability crisis. He is also advocating requiring malpractice cases be tried in the county where the act occurred, modifying joint and several liability, and instituting a non-binding medical review board to review claims. The Governor's bill includes a $250,000 cap on non-economic damages (except in cases of gross negligence or if the judge determines that exceptional circumstances require violating the cap (the new Nevada law)). To qualify for the cap the physician must agree to treat Medicaid, Medicare and CHIP patients. The bill also includes a $250,000 cap on economic damages with excess economic damages to be paid out of a state fund that will be funded by voluntary physician surcharges (if the physician does not pay, then the $250,000 caps do not apply).

If the physician does not agree to all of the requirements to be a "participating provider," non-economic damages are capped at $500,000. All caps will be adjusted for inflation.

REIMBURSEMENT

Both houses in California passed a bill to create the "Health Care Providers Bill of Rights." Under the bill provider contracts cannot be materially altered without negotiation and agreement between the plan and the provider nor can providers be forced to accept more patients if it would endanger access or continuity of care. Plans must give providers 15 days notice before asking for compliance with quality improvement or utilization management programs.

A bill passed during a special session in Connecticut requiring the state to provide "within Medicaid appropriations" reimbursement increases to physicians who provide services to dual eligible patients. In Illinois Governor Ryan vetoed legislation to create the Medicaid Hospital and Physician Payment Task Force to consider Medicaid payment rates to physicians and hospitals.

The Hawaii Medical Association (HMA) continued the trend of state medical societies filing suit against payers for unlawful and deceptive trade practices for underpaying physician claims. The HMA sued Hawaii Medical Services Association, a managed care provider. The complaint alleges failure to timely pay claims, unsupported overruling of physician medical necessity decisions, and illegal downcoding and bundling of claims. HMA's lawyers also represent medical associations in lawsuits in Connecticut, New Jersey, New York, South Carolina and Tennessee.

The United States Court of Appeals ruled in August that a Texas orthopaedic surgeon did not have standing to sue managed care organizations over alleged false advertising to prospective members. BNA reports that "the lawsuit alleged the HMOs misled prospective members who enrolled in their plans and that the scheme allowed the HMOs to gain increased market power and reduce their payments to contract physicians."

A federal court on multi-district litigation against health insurers recently announced that discovery could proceed in the RICO case that physicians filed against several managed care organizations. The court is still considering whether to grant the plaintiffs' request to make the cases class actions.