February 1999 Bulletin


External review programs favored by consumers, insurers

External review is the latest "motherhood and apple pie issue" in health care. Eighteen states have set up external review programs and Medicare has its own review program. In the next few months, 22 states are set to consider external review bills. Last month, Aetna said it would voluntarily allow its health plan members in 30 states to have outside reviews of decisions that deny them necessary or experimental care. Consumers regard external review programs as a check on the power of health plans; managed care companies seek them as an alternative to malpractice lawsuits and a way to regain the trust of the public.

Consolidation of insurers stirs growing concern

The consolidation in the health insurance industry is a growing concern to doctors and hospitals. Aetna's proposed acquisition of Prudential Health Care would give it nearly half the managed care members in Dallas and more than 30 percent in Atlanta, Philadelphia and the New York area. The American Medical Association has asked the Department of Justice to challenge the proposed merger, saying it would be anticompetitive and a threat to the freedom of patients and employers to choose their health care plans. Medical societies in many states are concerned. So are businessmen who see their choices of insurers diminishing. Insurers say they need size to be efficient and keep costs from getting out of control.

Court rules suit not barred by ERISA preemption

A quadriplegic's lawsuit against U.S. Healthcare Systems of Pennsylvania claiming that his paralysis is the result of a three-hour delay in treatment in 1991 is not barred by ERISA, the Pennsylvania Supreme Court has ruled. The court said that ERISA's preemptive power has been loosened by recent U.S. Supreme Court rulings and that Congress did not intend ERISA to override state laws that regulate the provision of safe medical care.

Doctors' location decisions shaped by HMO growth

The growth of health maintenance organizations is leading to a redistribution of new physicians, according to a RAND analysis. Generalists, capitalizing on the fact they are in high demand throughout the country, are seeking to avoid HMOs and the cost control pressures they impose on primary care physicians. Specialists, finding few practice opportunities within HMOs and their catchment areas, are locating elsewhere. The RAND analysis is based on physicians who completed their medical education between 1989 and 1994 and located in one of the 98 U.S. metropolitan areas with more than 500,000 population. RAND researchers said, "If our findings regarding HMO penetration are generalizable to other community sizes, continued HMO growth in large metropolitan areas may result in more new physicians locating in smaller cities or nonmetropolitan areas."

Administration may seek more funds for FDA

The Clinton administration has been listening to the problems of the Food and Drug Adminstration. The FDA says that it will be unable to meet its congressional mandate under the FDA Modernization Act of 1997 without more resources. The agency estimated that in fiscal year 1999, with current funding, it can accomplish only about one-half to three-quarters of the required duties for inspecting FDA-regulated industries. The administration is expected to seek funds for the agency.

Physicians warned about supplies for Medicare patients

Physicians are being urged to authorize only necessary services, equipment and supplies for Medicare beneficiaries. In a special fraud alert, June Gibbs Brown, Inspector General of the Department of Health and Human Services, said some physicians are inappropriately ordering home health care and durable medical equipment and supplies for Medicare patients. Physicians are warned not to prescribe services and items as a courtesy to a patient, service provider or medical equipment supplier without first making a determination of medical necessity.

HHS launches Internet site for practice guidelines

The Department of Health and Human Services has launched the National Guideline Clearinghouse at www.guideline.gov. The clearinghouse is a repository of evidence-based clinical practice guidelines developed by the Agency for Health care Policy and Research in partnership with the American Medical Association and the American Association of Health Plans. More than 500 clinical practice guidelines have been submitted by physician specialty groups, medical societies, managed care plans, state and federal organizations and others.

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