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The SPEAKER pro tempore (Mr. Simpson). Under the Speaker's announced policy of January 6, 1999, the gentleman from Iowa (Mr. Ganske) is recognized for 60 minutes.

Mr. GANSKE. Mr. Speaker, tonight I am going to talk about a very important issue before the House-Senate conference committee on HMO reform. I think it is important for the members of the conference to understand the issue of medical necessity. It is probably one of the two or three most important issues that they will have to deal with.

I think it would be useful for those members to know about testimony that occurred before the Committee on Commerce on May 30, 1996. We have been working on this for many years now. On that day, a small nervous woman testified before the House Committee on Commerce. Her testimony was buried in the fourth panel at the end of a very long day about the abuses of managed health care. The reporters had gone, the television cameras had packed up, most of the original crowd had dispersed.

Mr. Speaker, she should have been the first witness that day, not one of the last. She told about the choices that managed care companies and self-insured plans are making every day when they determine `medical necessity.' Her name was Linda Peno. She had been a claims reviewer for several HMOs. Here is her story.

`I wish to begin by making a public confession. In the spring of 1987, I caused the death of a man. Although this was known to many people, I have not been taken before any court of law or called to account for this in any professional or public forum. In fact, just the opposite occurred. I was rewarded for this. It brought me an improved reputation in my job and contributed to my advancement afterwards. Not only did I demonstrate that I could do what was asked, expected of me, I exemplified the good company employee. I saved a half a million dollars.'

Now, Mr. Speaker, as she spoke, a hush came over the room. The representatives of the trade associations who were still there averted their eyes. The audience shifted uncomfortably in their seats, both gripped by and alarmed by her story. Her voice became husky, and I could see tears in her eyes. Her anguish over harming patients as a managed care reviewer had caused this woman to come forth and to bear her soul. She continued:

`Since that day, I have lived with this act and many others eating into my heart and soul. The primary ethical norm is do no harm. I did worse, I caused death. Instead of using a clumsy bloody weapon, I used the simplest, cleanest of tools: my words. This man died because I denied him a necessary operation to save his heart.' She continued: `I felt little pain or remorse at the time. The man's faceless distance soothed my conscience. Like a skilled soldier, I was trained for the moment. When any moral qualms arose, I was to remember, `I am not denying care, I am only denying payment.'

Well, by this time, Mr. Speaker, the trade association representatives were staring at the floor. The Congressmen who had spoken on behalf of the HMOs were distinctly uncomfortable. And the staff, several of whom subsequently became representatives of HMO trade associations, were thanking God that this witness came at the end of the day when all the press had left.

Linda Peno's testimony continued: `At the time, this helped me avoid any sense of responsibility for my decision. Now I am no longer willing to accept the escapist reasoning that allowed me to rationalize that action. I accept my responsibility now for that man's death, as well as for the immeasurable pain and suffering many other decisions of mine caused.'

She then listed the many ways managed care plans deny care to patients, but she emphasized one particular issue, the right to decide what care is medically necessary. She said, `There is one last activity that I think deserves a special place on this list, and this is what I call the `smart bomb of cost containment,' and that is medical necessities denials. Even when medical criteria is used, it is rarely developed in any kind of standard, traditional, clinical process. It rarely is standardized across the field. The criteria is rarely available for prior review by the physicians or members of the plan.' She continued: `We have enough experience from history to demonstrate the consequences of secretive unregulated systems that go awry.'

Well, Mr. Speaker, after exposing her own transgressions, she closed by urging everyone in the room to examine their own conscience. `One can only wonder how much pain, suffering and death will we have before we have the courage to change our course. Personally, I have decided that even one death is too much for me.'

The room was stone quiet. The chairman mumbled thank you. Linda Peno could have rationalized her decisions, as so many do `Well, I was just working within guidelines'; or `I was just following orders'; or `We just have to save resources'; or `Well, this isn't about treatment, it's really just about benefits.' But this brave woman refused to continue that denial, and she will do penance for her sins for the rest of her life by exposing the dirty little secret of HMOs determining medical necessity.

My colleagues on the conference committee, please keep in mind the fact that no amount of procedural protection or schemes of external review can help patients if insurers are legislatively given broad powers to determine what standards will be used to make decisions about coverage. As this HMO reviewer so poignantly observed, `Insurers now make treatment decisions by determining what goods and services they will deliver, they will pay for.'

The difference between clinical decisions about medically necessary care and decisions about insurance coverage are especially blurred. Because all but the wealthy rely on insurance, the power of insurers to determine coverage gives them the power to dictate professional standards of care. And make no mistake, along with the question of health plan liability, the determination of who should decide when health care is medically necessary is the key issue in patient protection legislation.

Now, Mr. Speaker, contrary to the claims of HMOs that this is some new concept, for over 200 years most private insurers and third-party payers have viewed as medically necessary those products or services provided in accordance with what is called prevailing standards of medical practice. And the courts have been sensitive to the fact that insurers have a conflict of interest because they stand to gain financially from denying care. So the courts have used `clinically derived professional standards of care' to reverse insurers' attempts to deviate from those standards.

This is why it is so important that managed care reform legislation include an independent appeals panel with no financial interest in the outcome, a fair review process utilizing clinical standards of care guaranties that the decision of the review board is made without regard to the financial interest of either the HMO or the doctor. On the other hand, if the review board has to use the health plan's definition of medical necessity, there is no such guarantee.

In response to the growing body of case law, and their own need to demonstrate profitability to shareholders, insurers are now writing contracts that threaten even this minimal level of consumer protection. They are writing contracts in which standards of medical necessity are not only separated from standards of good practice but are also essentially not subject to review.

Let me give my colleagues one example out of many of a health plan's definition of medically necessary services. `Medical necessity means the shortest, least expensive or least intense level of treatment, care or service rendered or supply provided as determined by us.' Well, Mr. Speaker, contracts like this demonstrate that some health plans are manipulating the definition of medical necessity to deny appropriate patient care by arbitrarily linking it to saving money, not the patient's medical needs.

Now, on the surface some may say, well, what is wrong with the least expensive treatment? Well, let me show my colleagues just one example out of thousands I could cite. Before coming to Congress, I was a reconstructive surgeon. I treated children with cleft palates, like this baby. Clinical standards of care would determine that the best treatment is surgical correction. But under this HMO's definition of medical necessity, the shortest, least expensive and least intense level of treatment, that HMO could limit coverage for correction of this child's roof of his mouth to a piece of plastic to fill the hole.

After all, a piece of plastic would be cheaper. However, instead of condemning this child to a lifetime of using a messy prosthesis, the proper treatment, reconstruction using the child's own tissue, would give this child the best chance at normal speech and a normal life.

But now, Mr. Speaker, now the conference between the House bill, the Norwood-Dingell-Ganske bill, a good strong bill, and the Senate bill, which is a joke, could paradoxically give insurers legislative changes that displace even case law.

Last year, the patient protection legislation that passed the Senate would grant insurers the explicit power to define `medical necessity' without regard to current standards of medical practice. This would be accomplished by allowing insurers to classify as medically unnecessary any procedures not specifically found to be necessary by the insurer's own technical review panel.

The Senate bill would even give insurers the power to determine what evidence would be relevant in evaluating claims for coverage and would permit insurers to classify some coverage decisions as exempt from administrative review.

Now, I know that many of our colleagues in the Senate who supported that Senate bill had no idea about the implications of the `medical necessity' provisions in that bill.

Specifically, insurers now want to move away from clinical standards of care applied to particular patients to standard linking medical necessity to what are called population studies or to `guidelines' by companies like Milliman & Robertson.

Now, on the surface this may seem to be scientific and rational. However, as a former medical reviewer myself who worked with many insurers, large and small, let me explain why I think it is critical that we stick with `medical necessity' as defined by clinical standard of care and that we not bind the independent review panel to the plan's own guidelines.

In the version of patient protection that passed this House, if there is a dispute on a denial of coverage and it goes through internal review and then goes to external review and to that independent external review panel, unless there is a specific exclusion of coverage, that independent panel can use in its decision many things.

It can use medical literature, the patient's own history, recommendation of specialists, NIH statements. It can even use the plan's own guidelines. But, critically, it is not bound by the plan's own guidelines. That is the provision that we should have come out of conference.

Here are some reasons why we should not rely solely on what are called outcome studies or guidelines. First, sole reliance on broad standards from generalized evidence is not good medical practice. Second, there are practical limits to designing studies that can answer all clinical questions. And third, most of the studies are not of sufficient scientific quality to justify overruling clinical judgment.

Let me explain these points further. And for anyone who wants more depth on this discussion, I refer them to an article by Rosenbaum, et al., in the January 21, 1999, edition of the New England Journal of Medicine.

First, while it may sound counterintuitive, it is not good medicine to solely use outcomes-based studies or guidelines for `medical necessity,' even when the science is rigorous. Why? Because the choice of the outcome is inherently value laden.

The medical reviewer for the HMO is likely, as shown by the above-mentioned contract, to consider cost the essential value. But I would ask my colleagues, what about quality?

Now, as a surgeon, I treated many patients with broken fingers simply by reducing the fracture, putting the bones back in the right place, and splinting the finger. And for most patients, that would restore adequate function. But what about the musician, what about the piano player or the guitar player who needs a better range of motion? In that case, surgery might be necessary. So I would ask, which outcome should be the basis for the decision about insurance coverage, playing the piano or routine functioning?

My point is this: taking care of patients involves much variation. Definitions of `medical necessity' have to be flexible enough to take into account the needs of each patient. One-size-fits-all outcomes make irrelevant the doctor's knowledge of the individual patient; and that is bad medicine, period.

Second, there are practical limitations on basing medical necessity on `generalized evidence' or on `guidelines,' particularly as applied by HMOs.

Much of medicine is as a result of collective experience, and many basic medical treatments have not been studied rigorously. Furthermore, aside from a handful of procedures that are not explicitly covered, most care is not specifically defined in health plans because the numbers of procedures and the circumstances of their applications are infinite.

In addition, by their very nature, many controlled clinical trial study treatments are in isolation, whereas physicians need to know the benefits of one type of treatment over another in a particular patient.

Prospective randomized comparison studies, on the other hand, are expensive. Given the enormous number of procedures and individual circumstances, if coverage is limited to only those that have scientifically sound generalized outcomes, care could be denied for almost all conditions.

Mr. Speaker, come to think of it, maybe that is why HMOs are so keen to get away from prevailing standard of care.

Third, the validity of HMO guidelines and how they are used is open to question. Medical directors of HMOs were asked to rank the sources of information they used to make medical decisions. Industry guidelines, generated by trade associations, or printed by companies like Milliman & Robertson ranked ahead of information from national experts, government documents, NIH consensus conferences.

The most highly respected source, medical journals, was used in less than 60 percent of the time. Industry guidelines are frequently done, as I mentioned, by a company by the name of Milliman & Robertson. This company is a strategy shop for the HMO industry. This is the same firm that championed drive-through deliveries and outpatient mastectomies. Many times these practice guidelines are not grounded in science but are cookbook recipes derived by actuaries to reduce health care costs.

Here are two examples of the errors of their guidelines. Remember their drive-through deliveries? Remember their outpatient mastectomies? Well, the National Cancer Institute released in June a study that found that women receiving outpatient mastectomies face significantly higher risks of being rehospitalized and have a higher risk of surgery-related complications like infections or blood clots that could be life threatening.

A 1997 study published in the Journal of the American Medical Association showed that babies discharged within a day of birth faced increased risks of developing jaundice, dehydration, and dangerous infections. So much for those specific guidelines from Milliman & Robertson.

The objectivity of medical decision-making requires that the results of studies be open to peer review. Yet, much of the decision-making by HMOs is based on unpublished `proprietary' and unexamined methods and data. Such secrets and potentially biased guidelines simply cannot be called scientific.

Now, this is not to say that outcomes-based studies do not make up a part of how clinical standards of care are determined, because they do. But we are all familiar with the ephemeral nature of new `scientific,' quotes, studies such as those based on the dangers of Alar.

There has recently been a report in one of the medical journals about discharging patients from a hospital within a day or two of having a heart attack. There was also an editorial in that medical journal expressing severe reservations about that and expressly saying that HMOs and managed care companies should not use this article out of context as an excuse to send heart attack patients home within a day or two of being in the hospital.

Clinical standards of care do take into account valid and replicable studies in the peer-reviewed literature, as well as the results of professional consensus conferences, practice guidelines based on government funded studies, and even guidelines prepared by insurers that have been determined to be free of conflict of interest.

These are all things that can be considered by that independent review panel in the House bill. But they are not bound by any one of them. But most importantly, they also include the patient's individual health and medical information and the clinical judgment of the treating physician.

Well, Mr. Speaker, Congress should pass legislation defining the standard of medical necessity. Because first, the Employee Retirement Income Security Act, ERISA, shields plans from the consequences of most decisions about medical necessity. Second, under ERISA, patients generally can only recover the value of the benefits denied. And third, even this limited remedy is being eroded by insurance contracts that give insurers the authority to make decisions about medical necessity based on questionable evidence.

To ensure those protections, Congress should provide patients with a speedy external review of all coverage disputes, not merely those that insurers decide are subject to review. It is time for Congress to defuse what former HMO reviewer Linda Peno described as the smart bomb of HMOs.

Now, Mr. Speaker, for years Milliman & Robertson, the company that has created the practice guidelines of HMOs, has operated sort of in the background. I think it is time, Mr. Speaker, to shine a spotlight on Milleman & Robertson's role in setting HMO standards that are the smart bombs that this HMO reviewer described as giving her authority to kill a man.

The operating practices of this company are just becoming public because of fact-finding in a lawsuit that has been filed by two pediatricians, two pediatric doctors, Tom Cleary and Bill Riley, who charged that the company falsely credited them as coauthors of a book on pediatric utilization review.

These pediatricians are filing suit not just because they did not write the sections that Milliman & Robertson credits to them, but to get the book off the market because they consider the length-of-stay criteria in the book to be dangerous.

Dr. Cleary said, `Milliman & Robertson limits hospital stays for serious diseases such as meningitis, that is infection of the covering of the brain and the spinal cord, and endocarditis, infection of the heart, to just 3 days, when it should be more than a week.'

`I want Milliman & Robertson to get out of the business of writing pediatric guidelines,' says Dr. Cleary. But the company is not budging. It has not recalled thousands of copies of those pediatric guidelines or agreed to stop publishing so-called guidelines.

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