December 2001 Bulletin

In Brief

The U.S. Supreme Court let stand a California state Supreme Court ruling that allows California Medicare recipients to sue their HMOs in state court. The case involves a man who argued that he was not told of the potential treatments for his liver disease, including a liver transplant. He died in 1999, after suing PacifiCare of California, Inc. for allegedly trying to avoid the costly treatment. PacificCare argued that more HMOs would pull out of the Medicare system if companies face unlimited state litigation.

A little known lawsuit in an Illinois court could have significant impact for several hundred thousand physicians who have contracts with CIGNA. The litigation, filed in Madison County, Ill. was certified as class action suit. The suit alleges the health plan bundled and downcoded CPT codes. The contracts the physicians signed don’t address bundling or downcoding. Consequently, CIGNA breached their contract, the suit claims. The insurer filed a suit in the U.S. District Court for the Northern District of Illinois Eastern Division saying the suit should not go forward as a class action because of arbitration clauses in contracts that require physicians and others to work out their problems with the health plan first.

New York
Eliot Spitzer, New York Attorney General, announced that patients of six large health plans must receive specific information when their claims are denied. Spitzer said the companies would often offer a generic phrase such as "not medically necessary" or "care could have been provided in an alternative setting" to consumers when justifying denials. The HMOs are required to make their decisions based on a specific examination of the medical file of the consumer. The health plans are Aetna/U.S. HealthCare/Prudential Health Plan of Hartford, Conn.; Excellus Health Plans Inc. of Rochester; Group Health Inc. of Manhattan; HIP Health Plan of Greater NY, Inc.; Oxford Health Plans of Trumbull, Conn.; and Vytra Health Plans of Long Island, Inc.

North Carolina
North Carolina Gov. Mike Easley signed a bill that will enable patients to sue health care insurers that deny them necessary medical coverage. The bill allows patients to ask for an independent panel to review the case and make rulings that are binding on insurers. Appeals would have to be exhausted before a lawsuit could be filed in state court seeking damages.

Under the new law, "if a doctor believes a particular drug is needed by a patient, he has the ability to prescribe it" even if it’s not on the formulary, says Alan Hirsch, policy director for Gov. Easley.

North Carolina is the 46th state to enact a patients’ bill of rights law; California was the first in 1994. To date:

States are concerned about what will happen to laws already on the books, since some congressional proposals will weaken state mandates.

"The federal patients bill of rights is weaker than most of what the states have, and federal lawmakers don’t want to invalidate some of the really good stuff states have done," says Rachel Morgan of the National Conference of State Legislatures.

The median verdict for medical malpractice cases tried in Philadelphia was $972,909, while median in those cases from the rest of the state was $410,000, according to Jury Verdict Research data from January 1994 through August 2001. The Pennsylvania Medical Association Society reported that same data indicates that 50 percent of all medical malpractice awards in Philadelphia are more than $1 million, while only 26 percent of medical malpractice cases tried outside of Philadelphia result in awards greater than $1 million.

South Carolina
State health care providers will see smaller Medicare reimbursements after the State Budget and Control Board approved a four percent cut to state agencies in the weakening economy. Medicaid faces $66 million in cuts as the State Health and Human Services Department deals with the midyear cut to its budget. The cuts will lower rates paid to pharmacists, nursing homes and other health agencies. The state’s Medicaid program provides health care for one-third of South Carolinians, including 50 percent of all babies, 43 percent of all children and 75 percent of the population of the state’s nursing homes.

Texas Attorney General John Cronyn said he is investigating complaints that HMOs are breaking state laws covering payments to doctors and hospitals. Providers accuse HMOs of denying payment for previously approved hospital stays; grouping separate services together for one, lower reimbursement amount; and reimbursing providers at a lower rate than agreed upon in contracts. Some doctors and hospitals have stopped accepting certain health insurance plans because of the alleged actions. Cronyn said the "payment problems may affect patients’ access to doctors of their choice and ultimately affect patient care." The Texas Association of Health Plans said the HMOs have done nothing wrong and are simply trying to keep costs down by preventing fraud.

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