Sometimes, the best argument for a proposition comes from the most unusual source. All year, the insurance industry battled mightily against a common-sense reform that would let patients sue their managed care company when its coverage decisions end in disaster. But an insurance company training seminar, caught on videotape, makes a powerful case for that very reform. The trouble started 24 years ago, when Congress passed the Employee Retirement Income Security Act (ERISA). Designed mainly to protect company pension plans from the vagaries of state laws, it had an unfortunate side effect: exempting company-sponsored health care plans from liability lawsuits. As a result, today's cost-conscious managed care plans are free to nip and tuck coverage for 122 million Americans insured through employers without worrying about punitive damages should they make health-impairing mistakes. The insurance industry says getting rid of the ERISA exemption wouldn't improve care: Market competition does that already, regardless of whether patients can sue. The industry won that argument in Congress. But it might have had a tougher time had an Aetna training tape surfaced sooner. The tape -- unearthed, ironically, in a lawsuit -- gives a rare inside peak at how a giant health care company makes coverage decisions. In this case, Aetna lawyers are teaching case managers how to handle disability claims. Throughout the seminar, the trainees repeatedly are told to handle the claims differently, depending on ERISA coverage. If the patient is in an ERISA plan and therefore can't sue, then his claims simply can be denied by a claims agent. It's up to the patient to challenge the denial. And Aetna decides when the appeals process is over. ''After we send the final letter, it doesn't matter what they send us any more,'' says one of the lawyers. If you can sue, then Aetna heaps extra attention onto your claim. A ''reasonable investigation'' and a review by a ''Specialty Review Team'' are needed before benefits are denied. No doubt these steps provide some extra protection against wrongful denials. And for good reason. The trainees are warned repeatedly by lawyers that slipshod denials for those in non-ERISA plans could land Aetna in court for bad-faith and punitive damages and cost ''many, many millions of dollars.'' Aetna says the differences arise because non-ERISA claims have to be checked against an encyclopedia of 50 different state laws. ERISA, in contrast, is a tidy, national law. Tidy yes, but one that creates a perverse set of economic incentives. For example, it lowers the cost of making a mistake by removing the risk of lawsuit. That, in turn, reduces the incentive to avoid those mistakes. With managed care plans increasingly in the health care driver's seat, their mistakes can wreak financial and medical havoc. That point isn't lost on Americans, which is why polls show two-thirds want to be able to take their health plans to court. They know what Aetna knows: The looming threat of litigation forces companies to rebalance their scales so the patient's welfare is on par with corporate profits. |
