CAC continues leadership in health insurance reform

CAC continues leadership in health insurance reform

While many predict the upcoming legislative "short session" will be the quickest and most inconsequential in memory, at least a couple of major health reform initiatives will be pushed by CAC and the Indiana Task Force on Health Care Issues. We will work to require all health insurers in Indiana to provide policyholders with an external appeal process and to pass a statutory definition of medical necessity.

Legislation to require ALL health care payers to establish external appeal processes builds upon our success with this issue during the 1999 session. We passed HB 1309, which requires HMOs to provide their enrollees with an external appeal option. While this is a significant step forward for those Hoosiers enrolled in HMOs, it will not help the majority of insured Hoosiers, who are not enrolled in these kinds of plans. The majority of Hoosiers are enrolled in either traditional indemnity plans or Preferred Provider Organizations (PPOs). This would extend the external appeal process to cover ALL types of health insurers.

(A significant number of Hoosiers are covered by "self-insured" plans, which are only regulated at the federal level and exempt from state insurance laws. This is why federal legislation is also needed. )

A statutory definition of "medical necessity" is necessary because insurers are increasingly using narrow definitions of medical necessity to deny claims, going against the recommendations of the attending physician and the desires and needs of the patient. Currently, each insurer determines what is medically necessary, using its own definition. This can be especially problematic for people with chronic conditions. Due to the high cost of insurance, people tend to switch insurance carriers frequently, staying with a plan an average of only slightly over two years. If you have a chronic condition, such as high blood pressure, and switch from a plan with a broad definition of medical necessity to one with a more narrow definition, your entire course of treatment might change. This change would occur not because your medical condition has improved or declined, but because your new insurer uses a different yardstick to determine what is "medically necessary."

A primary fear patients have about managed care is that the plan’s desire to save money will become the overriding factor used to determine what kind of care they get. The following definition of medical necessity was offered as testimony before the Senate Committee on Health, Education, Labor and Pensions when it was considering the Patient’s Bill of Rights in Congress:

"Medically necessary care is the shortest, least expensive or least intense level of treatment as determined by the health plan."

CAC believes that at a minimum, plans should be forced to disclose their definition of medical necessity and how they go about making determination of medical necessity in the member handbook and on denial notices. If this were the case, few people would choose a plan with such a restrictive definition of medical necessity.

A statutory definition of medical necessity is especially important given the new law establishing a process for external appeals. Letting the health plan determine what is medically necessary undermines the appeals process.

It will be an uphill battle to get a statutory definition of medical necessity this session. The insurance industry will be united in their opposition, and we will not have much time to deal with this controversial issue during the short session.

WHAT YOU CAN DO: CAC members concerned about who makes decisions about access to health care can urge state legislators to support a statutory definition of medical necessity.

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