Mc-Chpt 69 State Regulation Of Managed Care (Pp. 1322-1341)

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Kong 69
State Regulation of Managed Care (pp. 1322-1341)

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THE STATE REGULATORY PROCESS
MCO Activities regulated by the State:

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Licensing
Information for Enrollees (Disclosure)
Access to Medical Services
Provider Issues
Annual Reports / Premium Rate Filings
Quality Assurance (QA) and Utilization Review (UR)
Grievance Procedures
External Appeals allowed on denial of coverage
Solvency Standards; Insolvency Protections
Financial Audits & Site Visits by regulators
Utilization Review Organizations (URO’s) are regulated.

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Licensing

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Company must submit:
 sample contracts (with providers, with er groups)
 financial statements
 sound financial plan
 description of the service area
 patient grievance procedure
 corporate by-laws

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Information for Enrollees (Disclosure)

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 Eligibility reqs
 benefits
 out-of-pocket expenses
 limitations and exclusions
 grievance procedures
 right to continue/convert
 The “Evidence Of Coverage” document (describes essential features)

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Access to Medical Services

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 during reasonable hours
 Emergency care 24 hours.

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Provider Issues

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 credentialing
 provider incentives — not too much incentive to deny care
 “Hold Harmless Clause”

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Annual Reports / Premium Rate Filings

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 premiums not excessive or inadequate
 community rating

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Quality Assurance (QA) and Utilization Review (UR)

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 written procedures of how they’re done
 including peer review and clinical evidence

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Grievance Procedures

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 written procedures req’d
 two-level system, including face-to-face hearing.

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External Appeals allowed on denial of coverage

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Solvency Standards; Insolvency Protections

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 Reserve requirements
 RBC requirements, reflecting:
 affiliate risk
 asset risk
 underwriting risk
 credit risk
 business risk
 Minimum net worth of $1.5 million
 Reinsurance req’d
 insolvency protection req’d

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HIPAA - requires:

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 Access for indivs / small groups
 Portability
 renewability
 limits on pre-ex condition exclusions
 nondiscrimination

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POS and PPO offerings

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 MCO must cover POS costs through external ins cpy (wrap-around)
 Or, not have >20% of costs from out-of-network.
 Must measure in-network vs. o-o-n.

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OTHER LAWS GOVERNING MANAGED CARE

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 “Any Willing Provider”
 Access to specialty care
 “Direct Access” (especially for OB/GYNS)
 “Flexible Gatekeeper”
 Drug Formularies — must be disclosed
 Physician Antitrust exemptions — phys’s can jointly negotiate
 State-mandated benefits

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PROBLEMS WITH RIGOROUS STATE REGULATIONS

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 Vulnerability to malpractice lawsuits
 MCO’s and providers will order “defensive utilization.”
 unnecessary testing. Increases costs.

 Solution: limit malpractice liability.