Legislative Program Review and Investigations Committee

Regulation and Oversight of Managed Care
Introduction

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Regulation and Oversight of Managed Care
Introduction

 

The Legislative Program Review and Investigations Committee authorized a study in February 1996 to determine whether the regulatory structure in place is adequate to oversee the managed health care industry in Connecticut.  The focus of the study has been to evaluate the balance that exists between regulating the industry for quality of care and patient protection with the health plans= ability to implement cost containment measures.

Specifically, the scope called for an examination of what oversight and controls the regulatory structure provides in each of the following areas:

C                  consumer protection efforts;

C                  utilization review of health care services;

C                  medical protocols used for the utilization of health services;

C                  licensing process of managed care plans;

C                  provider protection issues; as well as

C                  a review of other regulatory models.

In conducting the study, staff visited sites at six health maintenance organizations (HMOs), interviewed staff from state agencies, employers, labor groups, hospitals, insurers, and trade associations representing various groups involved in managed care. In addition, committee staff held five different provider focus groups around the state and held four public hearings in various locations.

Staff also reviewed the managed care literature and examined files at the Department of Insurance (DOI) and the Office of Health Care Access (OHCA). In addition, staff analyzed material requested from the HMOs including protocols and utilization data.  Staff examined and compiled financial data from annual financial reports filed with the Connecticut Insurance Department and from A.M. Best=s Annual Reports on HMOs.

The committee found consumers need greater information to make health care decisions and increased consumer protections when they have a problem with their health plan.  To meet those goals, the report makes recommendations to improve utilization review, consumer complaints, protocol development and use, and provider contracting issues.

At both the federal and state level, there has been a public policy determination to use HMOs as a way of containing medical care costs.  It is logical then that government not place burdensome regulatory requirements that prevent HMOs from meeting that goal. The study concludes that dramatic change in managed care is premature when it appears to be improving affordability of health care overall, increasing coverage statistics for Connecticut residents, and receiving generally good satisfaction ratings from the public.

The report also cautions that dramatically increasing regulation might prompt more employers to self-fund their health plans, thereby legitimately escaping state regulation through federal Employment Retirement Income Security Act (ERISA) exemption.  Further, significantly expanding regulation might put the recent improvement the state has experienced in expanding coverage for small employers at risk.

The report contains six chapters. Chapter I provides a background to health care in Connecticut, including costs and coverage issues. Chapter II profiles Connecticut HMOs using several financial and utilization measures and compares them to other states.  Chapter III examines the current regulatory structure in Connecticut. Chapter IV makes findings and recommendations related to consumer protection efforts. Chapter V examines benefits, utilization review, and protocols.  Finally, Chapter VI focuses on provider issues including selection, contracting, and termination.

 

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