July 9, 2001

Dear Representative:

Consumers Union urges you to oppose H.R. 2315, the "Patients Bill of Rights Act of 2001," the managed care bill sponsored by Rep. Ernie Fletcher, R-KY. This legislation falls far short of providing meaningful protections so desperately needed in our health care system. The legislation: (1) fails to ensure that the law applies to all patients enrolled in private health insurance; (2) does not provide consumers with a timely and effective external appeals process; (3) would prevent patients from holding a plan fully accountable if they are harmed by an improper denial of care; and (4) includes access provisions that may be harmful to consumers. Our specific concerns are detailed below.

Scope:

We believe that any patient protections enacted on the Federal level should apply to everyone covered by private health insurance. The Fletcher bill, instead of ensuring patient protections to all enrollees, would enable individual states to skirt the bill's intent by passing legislation that is less comprehensive.

External Appeals:

Consumers need access to an effective external appeals process if care is denied by a managed care plan. Today, many consumers are trapped within their health plan, which is totally in control of treatment decisions. Any independent external appeals process must act as a safety valve by enabling consumers to have the issue reviewed in a timely manner by an effective third party when a plan wrongly denies care. The Fletcher legislation proposes a system that is inadequate. Below are examples illustrating our concerns:

· The Fletcher bill allows unacceptably long review times for appeals decisions;

· Although it provides plans with guidelines for review times, this legislation would not require a plan to make its decisions in accordance with the exigencies of the individual case;

· The bill provides a meager 90 days during which a patient can appeal a decision made by a plan to an external appeals board;

· The legislation would allow plans to charge patients seeking external review an excessive $50 administrative fee;

· The bill would not require plans to provide the external review entity with requested information necessary for a decision (it merely requires the plan to provide the entity with access to the information);

· The proposed law would allow the external review entity to affirm or deny - but not modify - the plan's decision. This ties the hands of the reviewers, who cannot simply modify the decision if the plan was partially right or wrong.

· The bill allows plans to have multiple "designated decisionmakers" for liability, each of whom would need to be pursued by a patient who has been denied care. Pursuit of the wrong decisionmaker would leave the patient empty-handed;

· The provisions deny patients access to court to appeal the decision of an external appeals entity upholding the HMOs denial of care; and

· The legislation would not enable a beneficiary to hold a managed care plan accountable in court if the patient discovers an injury caused by the plan's improper denial after the administrative deadlines have expired.

Liability:

The purpose of any patient's bill of rights legislation should be to provide important protections for consumers with private health insurance. People purchase health insurance seeking peace of mind - they seek to ensure that if they or their loved ones fall ill, they can receive the care they need, when they need it. The external appeals process established in H.R. 2315, while already inadequate, could be rendered meaningless for many injured patients because a plan cannot be held fully accountable for any and all damages it causes a beneficiary when it unreasonably denies care.

The Fletcher bill totally denies access to the courts to those individuals whose independent reviewer finds in favor of the HMO. In addition, the plans covered by this legislation are in the business of providing insurance - and most are operated for profit. The ability to hold a plan accountable is the only way to counterbalance the incentive to under-provide care. The Fletcher bill would also place artificial limits on the amount of non-economic damages that could be recovered by an injured patient. These limitations makes the threat of liability a much less powerful deterrent to HMOs, who may cut corners at the patient's expense.

CU believes in broad availability of quality health insurance. There is no evidence to support the allegation that holding HMOs accountable will result in an explosion in litigation - or a marked decrease in the availability of employer sponsored plans. States that have experience with HMO accountability such as Texas and California have not had a large number of cases or cutbacks in coverage. Instead, we expect that the mere threat of potential litigation will encourage plans to make more appropriate and accurate decisions regarding care.

"Access" Provisions

This legislation contains "access" provisions (medical savings accounts and association health plans) that do more harm than good. Although promoted as a way to give people greater access to health care, they are actually based upon a misguided premise.

One provision of the Fletcher bill expands medical savings accounts (MSAs), which mainly help the healthy who can afford largely to self-insure, and withdraw from the broader insurance pool. Their withdrawal has the effect of adding to the costs of the less healthy left behind. Expanded MSAs likely will erode traditional low-deductible coverage.

The bill also creates federally-certified association health plans (AHPs). AHPs would lead to skimpy coverage for some consumers. They will drive up premiums for the sick, and undermine state efforts to spread health care costs fairly across the population. Ironically, the most severe impact will be in the very states that have attempted to make health insurance more affordable to people with pre-existing conditions.

For these reasons, we strongly urge you to vote against this legislation, and support H.R.526, the "Bipartisan Patient Protection Act of 2001," sponsored by Representatives Greg Ganske (R-IA), John Dingell (D-MI), and Charles Norwood (R-GA).

Sincerely,