Patients' rights: Supreme reality check

A careful reading of the Herdrich opinion reveals messages that somewhat deflate this managed care coup.

Editorial. July 10/17, 2000.

The federal legislative and judicial branches have in recent weeks produced a trio of reality checks on efforts to make powerful health plans more responsive to the needs of patients and physicians.

In late May, the Campbell bill, which would have allowed independent physicians to collectively negotiate with plans, was once again delayed in the House. In early June, on the Senate side, Democrats failed in their attempt to secure adoption of a strong, already House-approved patients' bill of rights. Shortly thereafter, the Supreme Court issued a unanimous ruling on managed care that appeared, especially on first blush, to embrace HMO-style rationing.

Of the three, the Supreme Court's decision created the biggest shock wave. In Cynthia Herdrich v. Lori Pegram, MD, Carle Clinic Assn. and Health Alliance Medical Plans, the high court ruled that patients cannot file suit under the federal Employee Retirement Income Security Act of 1974 over health plan financial incentives to deny care. Typical of news reports was USA Today's Page One story that began: "The Supreme Court handed managed health care a big victory."

However, a careful reading of the Herdrich opinion reveals messages that somewhat deflate this managed care coup. The court acknowledged that in some states HMOs could be sued for malpractice -- a central issue in the patients' rights movement. Even more pointedly, in separate rulings just a week after the Herdrich decision, the high court booted two HMO liability suits back to courts in Pennsylvania and New Jersey. Also, in an intriguing footnote to its opinion, the court hinted that failure to disclose incentives that limit care could be the basis for ERISA lawsuits.

Perhaps the most important reality check from the Supreme Court opinion is the court's observation that the current state of managed care is largely a creature of Congress and more than a quarter century of legislative history. The justices' message appears clearly to be not to look to the high court to resolve the problems with managed care.

In light of that, the House's stalled vote on Campbell and the near miss on a patients' bill of rights in the Senate are timely and disquieting reminders that Congress -- especially the leadership of both chambers -- often needs to be reminded to get moving on doing the right thing. The Campbell bill is a particularly striking example, blocked from a floor vote even though the measure lists more than half the House as co-sponsors. Bill author Rep. Tom Campbell (R, Calif.) was blunt in denouncing fellow House members who he said admitted to him that they wanted the vote delayed so they could take donations from both the insurance industry and medical community. (Sadly, the Campbell bill warrants its own reality check: No Senate sponsor has come forward. That appears to doom the measure for this fast-fading session of Congress, although a vote -- one was supposedly nearing as this editorial went to press -- getting House members on the record as supporting the bill is important if it is to have a future.)

Meanwhile, much of the hang-up on patients' rights in the Senate has to do with ERISA, the same law at issue in Herdrich. An effective patients' bill of rights would lower the ERISA shield that, in practice, protects most managed care plans from care-related patient lawsuits in state court -- a critical distinction from the federal lawsuit issue decided in Herdrich. It is among the key issues that for months has bogged down the House-Senate conference committee that is supposed to come up with compromise, prompting the Democrat gambit to force a vote on the lawsuit-enabling House version of the bill. Four Republican senators -- Chafee, Fitzgerald, McCain and Specter -- put patients before politics and voted with the Democrats, but the measure failed in a 51-48 vote. There is still time -- although precious little in this recess-heavy election year -- to turn this sorry situation around.

One thing appears certain: Absent action by Congress, health plans will be free to continue to deliver their own reality check to patients and physicians alike -- if you don't like the decisions we make, there's not much you can do about it.