April 1999 Bulletin

States debate insurer liability, external panels

Insurer liability and external grievance review are the hottest health care issues in 1999 for state legislatures, according to the National Conference of State Legislatures.

Thirty-one states are expected to consider HMO liability legislation-one of the most divisive issues of 1998-and 22 states will debate independent appeals following denials of care.

Proponents of health plan liability had difficulty advancing legislation in the states in 1998; bills were defeated in 30 legislatures. Texas remains the only state to have enacted HMO liability legislation.

External grievance review programs, however, are currently in place in 13 states. The survey also found that 15 states will consider any-willing provider laws.


Nineteen states are considering laws setting new safety standards for syringes to reduce the risk of accidental needle-sticks. Maryland is considering directing the state Occupational Safety and Health Advisory Board to develop rules by 2001 requiring safer needles. Maryland hospital association officials are concerned about the cost of the needles with safety features. Beckton Dickinson, & Co., which manufactures needles with safety devices, estimates it would cost a 300 bed-hospital an additional $75,000 a year to use the new needles.


After eliminating a controversial, Democrat-backed provision that would have allowed patients to sue their health insurers for malpractice, the Virginia General Assembly recently approved a "patients' bill of rights" that would give consumers greater control over what treatments they receive and which physicians they see. Business groups and the managed care industry lobbied heavily against the liability provision.


A tough fight is predicted in Ohio over legislation that would allow the state's 2.7 million HMO enrollees to sue their plan for medical malpractice. Under the Patient Protection Act, (H.B. 4) backed by the state's new governor, Robert Taft, HMOs would be liable for denying physician-recommended care. When the governor unveiled the act, the leaders of both legislative chambers indicated they were less than enthusiastic about the concept of allowing people to sue their HMOs. Representatives of both parties predict a tough fight on the issue, given the strong opposition from business and the managed care industry.

New York

A package of four health care reform bills was passed by the New York State Assembly, including a measure that would hold HMOs and other health insurers liable for wrongful denial or delay of treatment. The package of bills, which are backed by a broad coalition of health care and consumer advocacy groups, are intended to further regulate the managed care industry and improve enforcement of existing laws. The key bill in the package would hold health care organizations liable for wrongful denial of care, delay of care, or payment for care that they were contractually or legally obligated to provide or cover.

New Jersey

The New Jersey Senate gave final legislative approval of a bill that is designed to cut the administrative costs of delivering health care by encouraging providers and insurers to use electronic data interchange (EDI) technology to transfer information. The measure would bring claims processing on-line, require insurers to pay claims more quickly and offer the health care industry tax incentives to invest in EDI technology for medical records and billing. The study concluded that standardized forms and EDI technology hold the greatest potential for both short-term and long-term cost savings. The researchers determined that all but 15 percent of the 150 million health claims filed in New Jersey are currently processed on paper.


The U.S. Supreme Court has rejected the insurance industry's attempt to overturn a Washington state law that requires HMOs and health care service providers to provide access to all types of healthcare providers licensed or certified under state law. The "every-category" law, the first of its kind in the nation, requires insurers to cover services by all licensed categories of health care providers, including chiropractors, physicians, naturopaths and acupuncturists, physician assistants, registered nurses, podiatrists, and licensed massage therapists.

New Hampshire

New Hampshire Gov. Jeanne Shaheen proposed the "Health Maintenance Organization Accountability Act," which, among other things, would require managed care organizations to establish external appeals procedures. The bill would make HMO medical directors accountable to the state Board of Medicine for treatment decisions made under their supervision, establish a speedy external appeals process requiring review panels to issue written decisions within five days and prohibit financial arrangements with providers that include incentives to withhold medically necessary treatment.


The Georgia House and Senate approved a bill to allow patients to go outside their HMO network to see a doctor. However, to get the support, Gov. Roy Barnes, who campaigned on doctor choice in last year's gubernatorial campaign, had to increase the premiums patients pay to go outside the network. In some cases the premium more than doubles the 7.5% cap originally proposed; in other cases patients may have to pay 20% more in copayments. The Georgia House and Senate also approved a bill allowing patients to sue HMOs that deny or delay needed medical care, despite some last minute concerns about the definition of "medically necessary." The Senate bill requires patients to submit their claims to an independent review board of doctors before they could file a suit.

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