Kumar Barve



By Terry M. Neal March 2, 1997
The elation that Osama Farrag felt over the birth of his first child in November was tempered by a double dose of bad news.

First, doctors discovered the boy had a rare disease that caused blood to clot in his veins. Then Farrag's health maintenance organization said it wouldn't cover the $75-a-day blood transfusions that would save the child's life.

Farrag, of Gaithersburg, complained to his state delegate, who in turn introduced a bill that would require HMOs to pay for blood work and products, which many managed-care groups exclude from coverage.

It's just one of many measures pending in the Maryland General Assembly that would force HMOs to provide broader care or benefits in a state that already is one of the most heavily regulated HMO markets. HMOs are fighting back fiercely, saying the bills would undermine the very purpose of managed care, which seeks to provide affordable health care by carefully controlling costs.

But some say the pendulum is swinging toward controlling costs rather than providing quality health care. HMOs have managed to defeat most measures aimed at them in recent years in the General Assembly, but this year the anti-HMO sentiment seems unusually strong, according to lobbyists on both sides of the debate. The reason, they say, is that people are flooding lawmakers with unhappy tales of their experiences with such companies, which provide health care to more than 2 million Maryland residents, more than one-third of the state's population.

They complain that HMOs are rushing members out of hospitals, denying referrals to specialist doctors and refusing to pay for certain treatments.

"There's been an explosion of anger" against HMOs, said Del. Kumar Barve (D-Montgomery), who filed the blood products bill after Farrag contacted him last year. Barve said the pressure to cut costs has turned many managed-care companies, including HMOs, into "pure managed profit shops only concerned with the bottom line. That, I think, is an abdication of their civic responsibility." More than two dozen bills have been filed to try to mandate specific coverages or require certain practices by HMOs. Among them are proposals that would:

* Require insurers to pay for a minimum two-day hospital stay for women who have had mastectomies.

* Force HMOs to pay for a minimum one-day hospital stay after the insertion of a catheter in a patient.

* Prohibit health plans from requiring women to get approval from a primary care physician before seeing an obstetrician-gynecologist for routine care.

* Require companies to cover the costs of certain diagnostic tests for prostate cancer.

* Make HMOs liable for civil damages for failing to approve a covered service or benefit that has been recommended by a doctor.

The state's managed-care companies consider such measures a direct assault that could eat into profits and increase premiums for millions of people. Maryland has more mandates, 41, than any other state, according to the Maryland Association of Health Maintenance Organizations. The group says such legislative mandates have increased customers' costs by about 20 percent.

According to the Maryland Association of HMOs, the regulations have helped Maryland become one of the more expensive health cost states in the region. In 1995, Maryland employers' health benefit payments to traditional insurers, HMOs and other managed care providers amounted to 18 percent of total payrolls, compared with 15 percent in Pennsylvania and 10 percent in Virginia. The national average is 9 percent.

Maryland HMO officials especially revile a bill introduced by Del. Rose Mary Hatem Bonsack (D-Harford), one of two medical doctors in the legislature. Her bill would require HMOs to allow patients to see the doctor of their choice -- even if the physician isn't in the HMO network -- as long as that doctor is willing to accept the group's fee schedule. A similar proposal two years ago was rejected by the legislature after an intense battle of special interests.

The bill also would give doctors the final say on an array of care issues now determined by HMO administrators.

"The legislature should not be legislating medical coverage," Bonsack said. "The HMO must not interfere with care of the patient that the doctor sees as medically necessary."

More than half of the House's 141 members have co-sponsored Bonsack's bill. But several members said last week that they will remove their names because they weren't aware of how far the bill went. House Majority Leader John A. Hurson (D-Montgomery), an original co-sponsor, said he expected the measure to fail.

Nonetheless, Bonsack's bill has infuriated managed-care representatives.

"It guts managed care," said Gerard E. Evans, who lobbies for NYLCare Health Plans of the Mid-Atlantic Inc. "Basically, it says anything a doctor says goes. So if plastic surgery is not covered and you need a chin implant, we've got to pay for it if the doctor says so."

Jeff D. Emerson, president and chief executive officer of NYLCare, said, "The state of Maryland legislature has absolutely no idea what it's doing." Bonsack's bill, he said, "betrays her intelligence on this matter."

NYLCare is Farrag's HMO insurer. Farrag, an engineer, testified last week before the House Economic Matters Committee that he was told by an NYLCare caseworker that his child would need fresh plasma infusions every day until he was 4 or 5 years old. The cost could reach $300 a day.

Farrag said the caseworker told him that NYLCare, like many HMOs, does not pay for blood products and processing. He said the caseworker suggested that he might pay the costs himself and then qualify for Medicaid, but "only after your life savings are exhausted."

However, NYLCare is paying for Farrag's son's treatment while Farrag is disputing the denial of coverage. Emerson said the company's policy is not to stop coverage if treatment is potentially lifesaving. Furthermore, he said, his company is reviewing its policy of not covering blood products.

Emerson said he sympathizes with Farrag. But Emerson and other industry officials derisively characterize what's going on in Annapolis as "legislation by anecdote" or "legislation by body part." A lawmaker hears a constituent's horror story and introduces a bill aimed at helping that one person, they say.

Only about a half-dozen people in North America were diagnosed last year with the disease that ails Farrag's son, protein C deficiency, Emerson said. But Barve's bill could affect many other situations, driving up the cost of belonging to the HMO, he said.

Emerson said that about two-thirds of the company's in-state subscribers had the option to reenroll this year and that 97 percent did so.

"That doesn't say to me that there is a problem in the state of Maryland," Emerson said. "It says to me that they are happy."

Nonetheless, he said, because of intensive regional competition, all the regulation is making Maryland one of the most difficult states for health plans to operate in. Emerson said his company made a 2.5 percent pretax profit on $600 million in revenues last year. Just a few years ago, he said, the profit margin was 8 percent.

Since 1990, Maryland approved 11 mandates for managed care. One of them requires a minimum 48-hour hospital stay after a woman delivers a child. In the 1980s, the General Assembly required coverage of in vitro fertilization, which many industry insiders consider the most onerous of mandates.

Mandates are an issue nationwide. President Clinton has called for a ban on outpatient or "drive-by" mastectomies. He also denounced so-called gag rules, in which doctors are forbidden to discuss some forms of expensive treatments with patients.

Maryland Del. Michael E. Busch (D-Anne Arundel), who chairs the Economic Matters Committee, where many of the mandate bills are being heard, said managed-care companies have put the legislature in a difficult position.

In the early 1990s, many HMOs stopped covering reconstructive breast surgery after mastectomies, calling it a cosmetic rather than medical treatment. Last year, the legislature rightly required that companies cover the procedure, Busch said.

Nevertheless, he said, piecemeal mandating is not the solution. He praised a plan to establish a legislative panel to determine and limit the costs of new mandates.

"I don't think we fully understand the real fiscal impact of some of these decisions we're making," said Del. Michael A. Crumlin (D-Prince George's), co-sponsor of the review committee proposal. "Every time we pass one of these mandates, we add to the costs."