American College of Physicians: Internal Medicine — Doctors for Adults ®

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How the new insurance legislation can benefit patients and doctors

From the September 1996 ACP Observer, copyright 1996 by the American College of Physicians.

By Deborah Gesensway

It might not amount to comprehensive health reform, but passage this summer of the Health Insurance Portability and Accountability Act of 1996 represents a dramatic step forward in the fight for universal access.

Despite its many limitations, College officials say the insurance reform bill (commonly referred to as the Kassebaum-Kennedy bill) gives internists something to cheer about, starting by benefiting patients with pre-existing conditions who might otherwise lose coverage when they change jobs or their employers change health insurance companies.

"From the physician's perspective," said ACP Regent John M. Eisenberg, MACP, chair of medicine at Georgetown University Medical Center, "it's disappointing that patients—in order to be able to pay you—sometimes have to stay in a job they don't like because they are afraid that if they take a chance and try to find another job, they might lose their health insurance." Without portability, he said, leaving one job for another "is not just a risk professionally, but also a risk in terms of health."

Portability may also assuage physicians' fears that accurately recording a diagnosis—or picking a billing code for treatment—will come back and haunt them someday when an insurance company uses that information to claim a pre-existing condition and drop the patient's coverage. The law's portability provisions, which will most benefit people with chronic illnesses, take effect June 30, 1997.

Waiting periods

The law prohibits an insurance company from imposing waiting periods for pre-existing conditions on employees who had at least 12 months of previous group coverage. For those who had previous coverage for less time, waiting periods are allowed, with month-for-month credit applied toward the maximum 12-month wait. This means that an employee who had group coverage for seven months would only have to wait five months to have that pre-existing condition covered. To qualify for this credit and the other portability provisions of the law, employees must have had previous coverage (through a group or COBRA) within the past 63 days.

The law also protects hard-to-insure individuals who no longer have access to group health insurance. It requires insurers to renew all individual policies, even for people with deteriorating health, and sets up a mechanism for individuals who have lost group coverage to purchase individual policies.

"This law won't affect that many people, because it is not about people who are currently uninsured," said College President Christine K. Cassel, FACP. "But it is important to address the problem of 'job lock.' This is a first step."

The law will help some, but clearly not all, of the tens of millions of Americans who lose employment-based insurance. Without community rating or any other method of keeping insurance affordable, a portion of those people will not be able to pay for insurance, even if the law ensures that it is available to them.

Moreover, the law only guarantees the availability and renewability of coverage in the group market and when moving from group coverage to individual coverage. It does not mean people must be able to stay with the same insurance company, health plan or doctor.

Nonetheless, Dr. Cassel said, passage of this legislation is important symbolically. "We as a nation have to believe that we can address some of the problems in access to health care, especially in light of the College's report on the growing numbers of uninsured people."

"Many people felt after the failure of the Clinton plan that health reform is hopeless. It has to be left to the marketplace," Dr. Cassel said. "What the College's survey of the uninsured shows us is that the marketplace is obviously not the whole answer. We have to look to government to regulate aspects of the private insurance industry. By passage of this bill, we realize we can regulate the insurance market."

Portability may be at its core, but the legislation also contains a number of provisions that could affect internists. By changing the tax law to make premiums and some benefits tax-deductible, for example, the legislation should encourage more Americans to buy long-term care insurance. Also, new fraud-and-abuse provisions, which were the focus of much medical community attention during debate on the bill, should help doctors steer clear of accidentally running afoul of anti-kickback and billing fraud laws. College officials say they are satisfied with the revisions.

The College was also pleased that the bill's final version sets up a system to help physicians engaging in integration activities avoid violating anti-kickback laws. The law also contains a provision that protects doctors who voluntarily provide health care services to the poor from malpractice suits.

Medical savings accounts

On the politically contentious issue of medical savings accounts (MSAs), the College awaits more information about how a limited, demonstration MSA program included in the final compromise version of the law will be run and the results of the trial evaluated.

"This was a reasonable compromise that limited the numbers of people who can be brought into the MSA trial demonstration, that limited the time [for the trial period to four years] and also required Congress to take affirmative action to extend it," said Howard Shapiro, PhD, the College's Director of Public Policy. In analyzing the pros and cons of MSAs in a position paper in the Aug. 15 issue of Annals of Internal Medicine, ACP calls for a limited program of MSAs similar to that authorized by Congress in this bill.

"I suspect the MSA experiment, if it is done carefully and rigorously, will provide us with information about how people choose insurance, how much they are willing to pay out of pocket, how much co-insurance affects their decision-making, how much a retirement fund affects their decision-making, what services people forgo, and are the services they forgo problematic to their health in the long run," Dr. Eisenberg said.

Questions still remain about how other parts of the legislation might affect doctors and patients. Some privacy advocates, for instance, are expressing concern that a directive to create a national computer information network for health insurers to exchange patient data could put at risk medical record confidentiality. The law calls for having a national information network operational before any privacy regulations are promulgated.

The College is also concerned about the bill's definition of "pre-existing conditions." They are defined as any conditions present before the enrollment date, as opposed to any conditions that were treated or diagnosed within six months prior to enrollment, which is similar to ACP's recommendation. College officials said they will seek to have this changed in future legislation.

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