There is a consensus among the diverse interest groups claiming interest in health care reform that reforms are, in fact, needed. However, the consensus ends there. The Talking Heads and Spin Doctors of the current administration seem ready to tell the camera, "We can do better," and engage in other equally substantive analyses of the problem, such as they perceive it. In response the insurance industry, apparently feeling like a grenade has been tossed into its board rooms, quickly introduced the viewing public to "Dick and Jane," who purport to clarify all the issues, in nationally televised 45-second spots. Add to this "debate" the well-balanced reporting of Rush Limbaugh, and it should be no surprise there is confusion about what need reform.
From the viewpoint of this health care lawyer, one needed reform is the abolishment of ERISA preemption of state insurance laws. Our State Insurance Code and Texas Administrative Code are intended to protect patients and physicians from misleading representations that a patient's bill will be paid, only to find out later due to some "technicality" the bill won't be paid. Too frequently physicians pay for the mistakes/misrepresentations of the insurance companies. Abolishment of ERISA preemption would reduce the cost of health care and place the responsibility for fraud and misrepresentation on the guilty parties -not innocent physicians who receive false promises of payment.
Physicians and the insurance industry have developed a business custom commonly known as "verification of coverage." By engaging in thorough verification processes, physicians can determine, up front, whether the physician's services will be covered or whether they must look to an individual for payment. Physicians can then make their business decisions accordingly.
A problem, almost universally experienced by my clients, occurs when the insurance company verifies that certain coverage exists; but when the physician bills for the service, the claim is denied because, according to the new version of the story, there was no coverage or some technical "exclusion." Whoops! Another physician is stuck with an unpaid bill.
In a series of hard-fought and precedent-setting cases we brought on behalf of several Houston-area hospitals, the courts established protection for medical providers. The courts' rationale in these cases correctly recognized the necessary role of the verification process, and equitably placed the risk of loss (i.e., when a misverification is made to a physician) on the party making the mistake (i.e., the insurance company, plan or employer). So you ask, "What's the problem? Nothing we read so far sounds like it needs reforming." Remember the oxymoron, "We're from the federal government, and we're here to help?" The federal government did help -- but not the physicians and not the patients. Let me explain.
The Employer Retirement Income Security Act of 1974 ("ERISA") is a federal law enacted to regulate employee health benefit plans. As nearly 80 percent of all health benefit coverage is provided through employment, ERISA has a significant impact on the health benefit system. Perhaps the most important provision of ERISA is the preemption provision. The preemption provision provides that all state laws which directly or indirectly "relate to" the health benefit plan are preempted. Unfortunately, while the courts have been holding that federal law preempts state regulation in this area, federal law provides only a toothless regulatory scheme in the place of the state's laws. If an insurance company is protected by the preemption provisions of ERISA, they can commit fraud and misrepresentations to physicians (e.g., about payment or the existence of coverage), without concern about being held liable to the physician who relied upon the misverifications. As many of the readers of this article have experienced, when insurance companies realized that they did not have a financial incentive (i.e., civil liability) for verification of accurate information, misverifications of coverage increased. Consequently, the cost of all medical care increases for those who do pay. Children who are never punished for naughty behavior eventually become bullies, or worse. Many physicians feel bullied by insurance companies who seek protection, unjustifiably in many cases, by ERISA pre-emption; thus, I am a proponent of alleviating this cloak of naughty insurance companies.
The next time you are asked about health care reform, tell them how it really is, and how it ought to be. Reform ERISA preemption out of the law. Let the states regulate the behavior of insurance companies and benefit plans, and put responsibility back into the system.
Published in the Greater Houston Edition of M.D. News, October 1994
The information provided in this article is not legal advice to any reader. Neither the transmission nor the receipt of this article creates an attorney-client relationship. The opinions expressed in this article may not be those of the firm.