On August 2, the House also passed a "Bipartisan Patient Protection Act" (H.R. 2563) by a vote of 226-203. H.R. 2563 is sponsored by Reps. Ganske (R-IA), Dingell (D-MI), Berry (D-AR), and Norwood (R-GA).
While both bills would create new rights for patients to sue health plans and employers, their liability provisions differ enough that most Democrats did not support the House-passed bill. H.R. 2563 included an amendment on liability by Rep. Norwood that represents a deal he struck with President Bush on August 1, which surprised and angered Democrats.
Both bills offer similar patient protection provisions, such as continuity of care and access to specialists. They also offer similar claims and appeals procedures that include the right to an independent external review by a panel of physicians.
On the issue of expanded liability, under S. 1052, lawsuits would be allowed in federal court for administrative decisions, such as whether a benefit is explicitly included or excluded under the express terms of the plan. Individuals could recover unlimited economic and non-economic damages and up to five million dollars in punitive damages. S. 1052 would also allow lawsuits in state court for medically reviewable decisions, which involve denials based on medical necessity. Economic, non-economic, and punitive damages could be recovered up to any applicable state law limits.
H.R. 2563 would allow employers and insurers to be sued in federal court for administrative. For medically reviewable decisions, employers could be sued in federal court, and insurers could be sued in state court but under federal law. Damages in both federal and state court would include unlimited economic damages, up to $1.5 million in non-economic damages, and up to $1.5 million in punitive damages only if the plan fails to follow the independent external review decision.
Under S. 1052, employers would be liable if they directly participated in the making of a decision or exercised control in the making of a decision, unless they designate a decision-maker solely responsible for all claims decisions. For insured plans, the insurer would be deemed the designated decision-maker. For self-insured plans, the employer could designate a third party to be the designated decision-maker. For administrative decisions in federal court, self-insured plans that are self-administered would be exempt from liability. H.R. 2563 contains a similar designated decision-maker provision, except that if an employer failed to designate a decision-maker, the employer would be liable for all claims. Also, H.R. 2563 contains no liability exemption for self-insured, self-administered plans.
Under both bills, claimants would be required to exhaust both internal and external review, and a claimant could go to federal court to get an injunction ordering the provision of care if they can show that exhaustion would cause irreparable harm. No damages would be allowed at this point. The Senate bill adds that if the external review panel fails to make a decision within the appropriate timeframe, a patient can file a lawsuit.
Both bills would restrict class action lawsuits under the "ERISA" law to one plan of one plan sponsor. The House bill would also restrict actions under the "RICO" law.
The House bill adds health care access provisions that are not included in the Senate bill. The access provisions would allow all employers to offer medical savings accounts (MSAs), and would allow small employers to join association health plans (AHPs).
A House-Senate conference committee was convened to negotiate a compromise on the differences between the House and Senate bills, but was unable to reach agreement before Congress adjourned at the end of 2001. In 2002, Sen. Kennedy and the White House are trying to negotiate a compromise agreement but discussions are reportedly moving slowly.
The precise impact on employers is still unclear, as the cost of paying for a designated decision-maker is still unknown. There has never been disagreement that the bills would raise employer and health care costs, but there is disagreement and uncertainty over exactly how much. Health plans are certain to have higher costs to pass through to employers and employees in the form of higher premiums. Added to these effects are a number of burdensome new administrative responsibilities and mandates.
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SOURCE: Hewitt Associates LLC