July 10, 2008

Crist signs managed care reform
Legislation sponsored by Senator Don Gaetz
curbs abuses by insurance companies

Tallahassee, Florida/ Governor Charlie Crist has signed into law what supporters call the most significant reform of managed care in more than a decade. The proposal ran a long gauntlet of legislative committees and overcame intense lobbying by the state’s largest insurance companies on its way to the governor’s desk.

“It was a tough pull up the hard side of the mountain,” said Senator Don Gaetz, sponsor of the legislation. The new law addresses problems which have long vexed both patients and health care providers, especially physicians.

Managed care companies typically recruit doctors, hospitals, emergency medical services, home health agencies, hospices, pharmacies and other providers by promising large numbers of patients in return for negotiated rates and prompt payment of bills.

Patients and their employers, on the other hand, are assured access to qualified, willing health care providers who are “in the network.”

“When the playing field is level,” Gaetz explained, “managed care can work for patients, providers, insurers and employers. But when the insurance industry is allowed to make the rules and own the referees, then there are abuses like those we’ve seen in Florida.”

Gaetz worked closely with the Florida Medical Association to craft the bill that the Governor signed.


INSURERS NO LONGER ABLE TO REOPEN
CLAIMS SETTLED YEARS BEFORE

In Florida, physicians and other professionals have six months after providing a service to submit claims for payment to managed care companies. During that time, patients, providers and insurers sort out eligibility issues, appropriateness of services and responsibility for portions of bills. Then the claim is paid and considered settled.

However, for years, insurers in this state have been able to re-open patient records for 30 months after a claim has been settled. During this two and a half year “look back period” managed care companies could second guess already-approved treatment decisions and try to collect back money previously paid on behalf of a patient. Medical groups testified that hundreds of hours and thousands of dollars were often expended trying to re-justify a diagnostic test or hospitalization which, in any case, had been approved by the managed care company in advance of treatment. If the physician objected, the insurance company could withhold payments for services being rendered to current patients.

“It would be as if someone today hauled out the game films from the 2005 Super Bowl, overruled the officials who were on the field then, overruled the NFL commissioner, called back a play and awarded the win to the Eagles instead of the Patriots,” Senator Gaetz said.

At two and a half years, Florida has had one of the longest look back periods in the country. The new law restricts insurers to a twelve month period for reopening settled claims, a change that is more in line with practices elsewhere.


PATIENTS’ RIGHT TO ASSIGN
BENEFITS IS PROTECTED

The way managed care companies make money is by pocketing the difference between what patients and their employers pay in premiums and what the companies pay providers for health care services. The way to make additional money is to get care professionals to shave even more off their bills but not lower premiums.

According to the Florida Medical Association, one way that providers are pressured to re-negotiate rates downward is when insurers don’t pay the doctor for services rendered but send the check to the patient, instead. This can occur despite an “assignment of benefits” which the patient has already voluntarily signed, instructing the insurance company to pay the doctor or hospital or EMS service.

This practice forces the provider to try to collect from the patient. Sometimes the patient has moved away or died or spent the money, thinking it was an insurance refund. The inconvenience and extra collection cost can be enough to make the doctor agree to a contract more favorable to the managed care organization.

“The most cynical abuse has been in drug and alcohol treatment,” the Senator explained. “Instead of following the explicit written instructions of the patient and family to pay the providers directly, some companies have sent insurance reimbursement checks to addicts just out of treatment. The results have been predictable – found money fed addictions instead of paying medical bills.”

Gaetz’s legislation requires insurers to honor patients’ instructions to pay physicians and other providers directly, so long as the provider is a member of the patient’s managed care network.


‘SILENT PPO’S’ STOPPED FROM
BEING FRONTS FOR OTHER NETWORKS

Under long-standing law in Florida, preferred provider organizations could negotiate contracts with health care professionals and then assign those contracts to other managed care networks.

Called “silent PPO’s,” these groups would promise that, in return for lower-than-usual rates, the PPO would deliver thousands or tens of thousands of patients. Health providers typically evaluate the advantages of such arrangements, including whether to associate with particular organizations based on their ethics, reputation, and whether they pay their bills. But, once agreements were made, the law allowed PPO organizers to sell, lease, or rent their networks to other operators without either notifying providers or getting their permission.

“What could occur,” Gaetz said, “is that a physician might find himself ‘rented out’ on unfavorable terms to a network he would never have joined voluntarily or even one that he had sued for not paying its bills.”

The new managed care reform law makes that practice illegal. In the future, a provider must be notified and give his approval before his good name and services are assigned from one PPO to others.


“SLOGGING THROUGH” EIGHT COMMITTEES
AND BEATING BACK “MASSIVE LOBBYING”

Senator Gaetz and Representative Bill Galvano, the House sponsor, faced what some observers thought and opponents hoped were insurmountable odds in getting managed care reform through the legislative process.

In the House of Representatives the bill had to pass through three committees before it could come to the floor. However, the Senate posed even greater obstacles for supporters.

Initially, the managed care reform bill was assigned to four committees in the upper chamber, a signal that the proposal was controversial and widely opposed by influential interests. A negative vote by any committee meant sudden death. Before each committee stop insurance companies lobbied senators and at each meeting the lobbyists lined up to attack the bill.

The debate was fierce but Senate Bill 1012 made it through three committees. With time running out to get on the fourth committee agenda, a fifth committee reference was added.

Blue Cross/Blue Shield, Florida’s largest managed care company, led a massive lobbying campaign against the legislation. At one point, Blue Cross claimed the bill would cost the state an extra $70 million for its own employee health plan. In a historically tight budget year when mere mention of “extra costs” could kill a bill, Blue Cross used its position as the state’s insurer to provide what they called authoritative proof of cost consequences.

Supporters countered with evidence from a dozen states that had enacted reforms similar to the bill introduced by Gaetz. In no case did costs go up because the playing field was leveled between insurers, on the one hand, and patients and providers, on the other. A Department of Management Services independent study debunked the Blue Cross claims and confirmed the reforms would cost patients and taxpayers nothing.

Gaetz credits Senators Mike Haridopolos, Jeff Atwater, J.D. Alexander and Mike Fasano for helping to shepherd the bill through the legislative process and break logjams in committees. After “slogging through” five committees, the legislation was cleared for floor action by Senate President Ken Pruitt and was passed in the last hours of the session.

“Thanks to President Pruitt and because of four great senators who stood with us in the face of enormous pressure, we passed what I’m told is the most significant managed care reform in a decade,” Gaetz said. “It was a tough pull up the hard side of the mountain for a freshman senator. There’s no way the bill would have gotten even half way without strong support from Senators Haridopolos, Atwater, Alexander and Fasano.”

“I’m deeply grateful to Governor Crist for signing this important legislation into law,” Senator Gaetz said. “Managed care companies can still make money, but now patients and their employers as well as physicians and other providers will be treated much more fairly.”

For more information about this or any other issue, please respond to Senator Don Gaetz, bye-mail at gaetz.don.web@flsenate.gov, by letter,217 Miracle Strip Parkway, SE, Ft. Walton Beach, FL 32548or call 1-866-450-4DON toll-free from anywhere in Florida.