In an effort to make HMOs more accountable to the public, the Maryland legislature has unanimously approved a compromise bill that allows the state to censure HMO medical directors for inappropriately denying health-care coverage.
MD legislature gives insurance chief power to censure HMO.
April 30, 1998
Maryland legislature gives insurance chief power to censure HMO medical directors
In an effort to make HMOs more accountable to the public, the Maryland legislature has unanimously approved a compromise bill that allows the state to censure HMO medical directors for inappropriately denying health-care coverage.The law also gives the insurance commissioner authority to make an independent review of disputes between consumers and their health plans and carriers. The governor is expected to sign the compromise legislation.
Medical directors, assistant directors and associate directors in Maryland HMOs will now have to be certified by the state insurance commissioner. The commissioner may suspend or revoke the certificates if the HMO directors inappropriately deny or withhold coverage.
The certification process was developed as a compromise after the managed care industry vehemently opposed giving the state's medical board the authority to discipline medical directors or suspend their licenses to practice medicine.
Most medical boards, including Maryland's Board of Physician Quality Assurance, require that medical directors have a state license. Maryland's new legislation writes the license requirement into law. However, the authority of most boardsto discipline medical directors remains unclear, despite a court case in Arizona, because HMOs argue that the directors are acting as administrators, not as physicians practicing medicine.
Arizona's state Supreme Court ended a four-year court battle in January 1998 when it let stand a lower-court decision that the state board of medical examiners may discipline a health plan medical director for inappropriately withholding care.
The Federation of State Medical Boards supports giving authority to medical boards. "HMO medical directors are often asked to make a medical judgment that differs with the patient's physician. In these cases, we believe the directors are practicing medicine," said Dale Austin, deputy executive director of the Federation of State Medical Boards.
Maryland's legislation requires HMOs and other carriers to develop an internal grievance process for consumers and pay stiff fines for violations. This process must include an expedited procedure for emergency cases, to be defined by the insurance commissioner. Decisions on emergency cases will have to be made in 24 hours.
Consumers may appeal a plan's decision but they must first exhaust the internal grievance process before filing a complaint with the insurance commissioner unless they can show a "compelling reason" to go directly to the commissioner.
The commissioner may seek advice from an independent review organization or medical expert. The state has placed the burden of proof on the health plan.
Robert Enten, lobbyist for the Maryland Association of HMOs, countered that the bill is unnecessary because HMOs could develop internal appeals process to effectively handle consumer complaints.
An end to fierce battle
The unanimous votes in Maryland's General Assembly and Senate brought to an end a fierce legislative battle over how to hold HMO medical directors accountable. The Maryland Senate last month passed a stricter bill, SB 654, but then reversed itself after the Maryland Association of HMOs strongly protested. The bill would have authorized the state's Board of Physician Quality Assurance to suspend or revoke a HMO medical director's license to practice medicine. The Senate and House passed less stringent measures, SB 401 and a companion bill, HB 3. The governor is expected to sign the compromise legislation into law.
Under the final bill, the Maryland insurance commissioner, Steven Larsen, in consultation with the state Department of Health and Mental Hygiene, must establish and adopt regulations for the certification of medical directors, the renewal, suspension and revocation of a certificate, and the issuance of a temporary certificate.
Four criteria
To be certified as a medical director, an applicant must submit an application to the commissioner and pay an application fee of no more than $100. The application must include a description of the applicant's professional qualifications, including medical education information and, if appropriate, board certifications and license status, and the HMO's utilization management procedures and policies.
The medical director applicant must certify that these procedures and policies meet the following four criteria: they are objective, clinically valid, compatible with established principles of health care, and flexible enough to allow deviations from the norms on a case-by-case basis.
The Maryland insurance commissioner could suspend, revoke or refuse to review the certification of a medical director if the commissioner found a pattern of utilization management and policies used by the medical director that did not meet these criteria.
The extent of a medical board's authority over HMO medical directors will almost certainly be addressed again both by other legislatures and by the courts.
Barry Gold, chairman of the Health Law Sector of the New York State Bar Association, which favors holding the directors accountable for their coverage decisions, said that the Arizona court decision has national implications because it is the first time a court has addressed the accountability of a HMO medical director. The case could influence other state court decisions, he said.
Arizona case
In the Arizona case, John F. Murphy, M.D. and Blue Cross and Blue Shield of Arizona v. the Board of Medical Examiners of the State of Arizona, the state court of appeals ruled that a decision made by Dr. Murphy, the Blue's medical director, to deny coverage for a patient who needed gall bladder surgery was a medical decision and therefore, the board had the power to review the decision.
The Texas Board of Medical Examiners recently passed a rule requiring that a medical director be a licensed physician and defined the job of medical director as the practice of medicine.
Contact Mr. Austin at 817-868-4060 or Mr. Enten at 410-269-8007.
In an effort to make HMOs more accountable to the public, the Maryland legislature has unanimously approved a compromise bill that allows the state to censure HMO medical directors for inappropriately denying health-care coverage.
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