Testimony of Senator Angela Monson,
Oklahoma State Senate
Vice-President, NCSL
On Behalf of the National Conference of State Legislatures Regarding: "A Smarter Health Care Partnership for American Families: Making Federal and State Roles in Managed Care Regulation and Liability Work for Accountable and Affordable Health Care Coverage"
Before the Subcommittee on Health
Committee on Energy and Commerce
U.S. House of Representatives
March 15, 2001
Chairman Bilirakis and distinguished members of the subcommittee: 
My name is Angela Monson. I am a state senator in Oklahoma where I chair the Senate Finance Committee. I am also the Vice-President of the National Conference of State Legislatures (NCSL). It is a pleasure to be here today on behalf of NCSL to talk about moving forward on a national effort to enact a Patients' Bill of Rights.
NCSL supports the establishment of consumer protections for individuals receiving care through managed care entities. We also support the development of public and private purchasing cooperatives and other innovative ventures that permit individuals and groups to obtain access to affordable health coverage.
States have taken the lead in providing needed regulation of managed care entities and these state initiatives have enjoyed bi-partisan support and have been successfully implemented. Individuals who receive their health care through federally regulated ERISA plans have not benefited from the state laws enacted to provide needed protections for individuals who receive care through managed care entities. It is appropriate and necessary for the Congress to address the needs of these individuals. Individuals and families who receive health care benefits through federally regulated plans should enjoy the same protections as their neighbors who receive care through entities subject to state regulation. NCSL strongly supports the efforts here in Washington to establish a federal floor that sets a national level of protection for everyone who receives care in a managed care environment.
As we move toward this goal, it is important to preserve the traditional role of states as insurance regulators. NCSL strongly opposes preemption of state insurance laws and efforts to expand the ERISA preemption.
We believe federal legislation should:
- ensure that individuals in federally-regulated plans enjoy protections similar to those already available in most states;
- establish a floor of protections that all individuals who receive care through managed care entities should enjoy;
- preserve state laws that provide patient protections that are equal to, substantially equivalent to, or more protective than those established in federal law; and
- provide adequate resources for monitoring and enforcing federally-regulated provisions.
The Bi-Partisan Patient Protection Act of 2001 (H.R. 526)_
This bi-partisan bill is moving in the right direction. Most of the patient and provider protections included in the bill are similar to those that many of the states have already enacted. The bill would preserve state laws with patient and provider protections that are "substantially equivalent to" provisions in the bill. This is a very important issue for NCSL and state legislators across the country. The concept of "substantial equivalence" is one we have been pursuing for some time. The inclusion of this provision will go far to facilitate a more immediate implementation of the protections that we all believe are important. 
As you know, federal law supercedes state law unless there is legislation that clearly preserves state law. State insurance commissioners can only enforce state law. Without the inclusion of the substantial equivalence standard, state law that would provide essentially the same protections provided for in the federal law would be preempted. State legislatures would then have the option of enacting state laws that mirror the federal statute or handing over the enforcement of those provisions to the U.S. Department of Labor and the Health Care Financing Administration.
There are three issues regarding substantial equivalence that I would like to emphasize during my short time with you today. NCSL urges you to:
- apply the substantial equivalence standard to all of the provisions of Title I, including those related to grievances and internal and external appeals.
- provide adequate transition time to permit state implementation.
- establish a clear process for enforcement should a state opt not to enact state law to facilitate state enforcement.
- Apply the substantial equivalence standard to all of the provisions of Title I, including those related to grievances and internal and external appeals
.
There are currently conflicting court decisions on whether or not the ERISA preemption applies to state laws regarding internal and external appeals. We would like to work with the members of this subcommittee to craft language that would clarify that for the purposes of implementing patient protections for individuals receiving care through managed care networks, that state laws establishing internal and external appeals processes would not be preempted by ERISA.
The establishment of effective internal and external appeals processes is critical to the implementation and effectiveness of patient protections. We believe that these functions are best provided at the state and local level. NCSL urges you to explore options that would permit federally-regulated plans to participate in appeals processes established in the states where they are located. This could be done through cooperative agreements between the states and the Department of Labor.
- Provide adequate time for state legislatures to take necessary actions to implement the federal law.
State legislatures are often out of session when major federal legislation is enacted. In cases where state legislative action is desired or required, that action is delayed until the legislature reconvenes for its next regular session. We believe it is helpful to recognize this reality and to make accommodations for it in federal legislation. NCSL recommends that states should have at least one regular session of the legislature to make changes in state law and regulation related to this legislation that may be required to maintain state enforcement.
- Establish a clear procedure for the establishment of federal enforcement of some or all provisions of the Act in cases where a state opts for federal enforcement of any of the provisions of the Act.
In the event that sufficient transition time is not provided for or that a state opts to have federal enforcement of some of the provisions of this legislation, NCSL recommends the Act establish a mechanism for notifying patients regarding what enforcement authority is responsible for enforcing the various patient protections.
HMO Liability
NCSL has not taken a position on the inclusion of HMO liability provisions in Patients' Bill of Rights legislation. I am from one of the seven states (Arizona, California, Georgia, Maine, Oklahoma, Texas and Washington) that have laws that specifically permit HMO enrollees to sue for malpractice. Our law in Oklahoma became effective July 1, 2000. These laws are all relatively new. The Texas law that became effective September 1, 1997 is the oldest and the Washington law does not become effective until July 1, 2001. Of the seven states, two (Georgia and Maine) do not allow the plaintiff to collect punitive damages.
In Conclusion
NCSL looks forward to working with this committee and your colleagues in both the House and the Senate to enact Patients' Bill of Rights legislation this year. I believe it can be achieved and achieved in a way that preserves the traditional role of states in regulating insurance and at the same time provides needed protections for all HMO enrollees.
I thank you for this opportunity to discuss these important issues with you today and would be happy to answer questions.
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