The HMO industry succeeded yesterday in defeating legislation that would have given the state authority to revoke the medical licenses of administrators who made coverage decisions that harmed patients.
After intense industry lobbying -- and objections from Maryland's insurance commissioner -- the Senate voted 24-22 to kill the bill, which it had tentatively endorsed two days earlier.
Several senators said they preferred to protect patients in health maintenance organizations by creating a new system to appeal coverage denials to the insurance commissioner.
That legislation, supported by the HMOs, has cleared the House and passed unanimously yesterday in the Senate.
"We should first give it a chance to work," said Sen. Thomas L. Bromwell, a Baltimore County Democrat.
The appeals legislation, which is expected to win final General Assembly passage, spells out grievance rights for patients whose HMOs have refused to cover procedures recommended by their physicians.
In Maryland and elsewhere, pressure for reform is building because of the public's frustration with managed health care that is widely seen as insensitive and preoccupied with holding down costs.
By one lobbyist's count, more than 40 bills affecting managed care are before the Maryland legislature this year.
The industry backed the grievance and arbitration proposal in hopes of fending off regulation it considers more burdensome.
Most worrisome to HMOs was the notion of subjecting their medical directors, who make coverage decisions, to oversight by the state board that has the power to revoke medical licenses.
All medical directors in Maryland are licensed doctors.
Sen. Paula C. Hollinger, a Baltimore County Democrat who sponsored the bill, said she was surprised when six of her colleagues switched their votes and opposed it yesterday.
Only one senator changed to vote in her favor.
Hollinger vowed to try again next year, saying people who work for companies with self-insured health plans will not qualify for the proposed appeals system.
"It was a tough battle," she said. "I took on the big boys. How often is it that you get so many people lobbying against a bill?"
Some HMO lobbyists said yesterday they feared there would be an attempt to revive the proposal even during the current legislative session.
Chamber also opposes bill
The Maryland Chamber of Commerce and some unions joined the HMOs in opposing the bill, saying it would drive up the cost of health coverage for both businesses and employees.
Several of the six senators who helped kill the proposal said they were more persuaded by the insurance commissioner's concerns.
In a three-page letter to the Senate, Commissioner Steven B. Larsen said the Hollinger and appeals bills would create a dual system that would be at odds and confuse consumers with coverage complaints.
Under the appeals bill, the insurance commissioner would gain new powers to regulate HMOs and their medical directors.
The commissioner would certify the medical directors and could strip their certification -- though not their medical licenses -- for wrongful denials.
If it had been approved along with Hollinger's bill -- requiring oversight by the Board of Physician Quality Assurance -- the Senate would "create the potential for duplication of effort, confusion and even conflicting regulatory oversight," Larsen warned.
While he did not specifically oppose Hollinger's bill, he urged the Senate to reconcile or eliminate the "conflicting provisions."
Sen. C. Edward Middlebrooks, an Anne Arundel County Republican, said the letter persuaded him to change his vote and support only the appeals bill.
"Clearly, everyone recognizes we have a problem," he said. "But I think it makes sense to pull everything under one regulatory system."
Not far enough
But Sen. John C. Astle, an Anne Arundel Democrat, maintained that the proposed system will not go far enough.
Astle said he believes medical directors should be subject to the same review as doctors.
He dismissed arguments by some senators and HMO lobbyists that Hollinger's bill would have driven away qualified administrators because they would fear losing their licenses.
Pub Date: 3/27/98