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104th Congress Rept. 104-865
HOUSE OF REPRESENTATIVES
2d Session Part 1
PATIENT RIGHT TO KNOW ACT OF 1996
September 28, 1996.--Ordered to be printed
Mr. Bliley, from the Committee on Commerce, submitted the following
R E P O R T
[To accompany H.R. 2976]
[Including cost estimate of the Congressional Budget Office]
The Committee on Commerce, to whom was referred the bill
(H.R. 2976) to prohibit health plans from interfering with
health care provider communications with their patients, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
The Amendment.................................................... 2
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Committee Consideration.......................................... 4
Rollcall Votes................................................... 4
Committee Oversight Findings..................................... 5
Committee on Government Reform and Oversight..................... 5
New Budget Authority and Tax Expenditures........................ 5
Committee Cost Estimate.......................................... 5
Congressional Budget Office Estimate............................. 5
Inflationary Impact Statement.................................... 9
Advisory Committee Statement..................................... 9
Section-by-Section Analysis of the Legislation................... 9
Changes in Existing Law Made by the Bill, as Reported............ 10
Additional Views................................................. 11
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE; FINDINGS.
(a) Short Title.--This Act may be cited as the ``Patient Right To
Know Act of 1996''.
(b) Findings.--Congress finds the following:
(1) Patients cannot make appropriate health care decisions
without access to all relevant information relating to those
(2) Restrictions on the ability of physicians and other
health care providers to provide full disclosure of all
relevant information to patients making health care decisions
violate the principles of informed consent and the ethical
standards of the health care professions. Contractual clauses
and other policies that interfere with communications between
health care providers and patients can impact the quality of
care received by those patients.
(3) The offering and operation of health plans affects
commerce among the States, health care providers located in one
State serve patients who reside in other States as well as that
State, and, in order to provide for uniform treatment of health
care providers and patients among the States, it is necessary
to cover health plans operating in one State as well as those
operating among the several States.
SEC. 2. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL
(a) In General.--
(1) Prohibition of certain provisions.--Subject to subsection
(f), an entity offering a health plan (as defined in subsection
(d)(2)) may not include any provision that prohibits or
restricts any medical communication (as defined in subsection
(b)) as part of--
(A) a written contract or agreement with a health
(B) a written statement to such a provider, or
(C) an oral communication to such a provider.
(2) Nullification.--Any provision described in paragraph (1)
is null and void.
(b) Medical Communication Defined.--In this section, the term
``medical communication'' means a communication made by a health care
provider with a patient of the provider (or the guardian or legal
representative of such patient) with respect to the patient's physical
or mental condition or treatment options.
(c) Enforcement Through Imposition of Civil Money Penalty.--
(1) In general.--Any entity that violates paragraph (1) of
subsection (a) shall be subject to a civil money penalty of up
to $25,000 for each violation. No such penalty shall be imposed
solely on the basis of an oral communication unless the
communication is part of a pattern of such communications or
the violation is demonstrated by a preponderance of the
(2) Procedures.--The provisions of subsections (c) through
(l) of section 1128A of the Social Security Act (42 U.S.C.
1320a-7a) shall apply to civil money penalties under paragraph
(1) in the same manner as they apply to a penalty or proceeding
under section 1128A(a) of such Act.
(d) Definitions.--For purposes of this section:
(1) Health care provider.--The term ``health care provider''
means anyone licensed under State law to provide health care
(2) Health plan.--The term ``health plan'' means any public
or private health plan or arrangement (including an employee
welfare benefit plan) which provides, or pays the cost of,
health benefits, and includes an organization of health care
providers that furnishes health services under a contract or
agreement with such a plan.
(3) Coverage of third party administrators.--In the case of a
health plan that is an employee welfare benefit plan (as
defined in section 3(1) of the Employee Retirement Income
Security Act of 1974), any third party administrator or other
person with responsibility for contracts with health care
providers under the plan shall be considered, for purposes of
this section, to be an entity offering such health plan.
(e) Non-Preemption of State Law.--A State may establish or enforce
requirements with respect to the subject matter of this section, but
only if such requirements are more protective of medical communications
than the requirements established under this section.
(f) Construction.--Nothing in this section shall be construed as
preventing an entity from--
(1) acting on information relating to the provision of (or
failure to provide) treatment to a patient; or
(2) restricting a medical communication that recommends one
health plan over another health plan if the the sole purpose of
the communication is to secure financial gain for the health
(g) Effective Date.--Subsection (a) shall take effect 90 days after
the date of the enactment of this Act and shall apply to medical
communications made on or after such date.
Purpose and Summary
The purpose of H.R. 2976, the Patient Right to Know Act of
1996, is to prevent health plans from interfering in medical
communications between patients and their health care
providers. The bill provides that a health plan may not include
in a written contract with a provider, a written statement to a
provider, or an oral communication with a provider, a provision
that prohibits or restricts any medical communication. The bill
declares such provisions null and void.
Background and Need for Legislation
As health care costs have risen and the need for more cost-
conscious health care has grown, health insurers and employers
have increasingly adopted principles of managed care.
Currently, approximately 135 million Americans are enrolled in
some form of managed care. This represents approximately 50.7
percent of the insured population. Managed care has been
defined as any type of intervention in the provision of health
care services or reimbursement of health care providers that is
intended to provide health care services in the most efficient
manner. Managed care is a broad concept that encompasses
several different types of entities, such as: (1) Health
Maintenance Organizations (HMOs); (2) Independent Practice
Associations (IPAs); (3) Point of Service plans (POSs); and (4)
Preferred Provider Networks (PPNs). Fee-for-service plans are
also employing many of the same cost-saving mechanisms. Managed
care represents an important component of the market and in
many cases promotes good health and results in lower overall
health care expenditures.
Recently, a number of reports from both patients and
providers have expressed concern that some health plans may
have pursued too vigorously cost-saving mechanisms by taking
steps to limit doctor-patient communications. This is troubling
because open communications are critical to quality care.
Patients need all relevant information about their physical and
mental conditions and their treatment options to make
intelligent choices about their care. Any effort to constrain
patients from receiving the necessary facts makes it very
difficult for them to give informed consent.
During the Subcommittee on Health and Environment hearing,
the Subcommittee heard from several witnesses who outlined ways
in which some health plans have attempted to interfere in
medical communications between patients and their health care
providers. Testimony came from doctors who were threatened with
retaliatory action for providing their patients with certain
treatment information. The Subcommittee also heard from two
widowers who alleged that plan interference led to delays in
receiving critical information which led to their wives'
deaths. These physicians and patients whole-heartedly supported
The Subcommittee also heard from several managed care plans
which all stated that they expect free and open communication
between physicians and patients. They also pointed out that
managed care requires accountability, coordination, and
communication. While these witnesses were supportive of the
goals of H.R. 2976, they expressed several concerns about the
specifics of the legislation.
The bill, as reported by the Committee, represents an
attempt to find a compromise that addresses the concerns of
consumers and providers without imposing unacceptable burdens
on health insurers.
The Subcommittee on Health and Environment held a hearing
on Contract Issues and Quality Standards for Managed Care on
May 30, 1996. Testimony was received from the following
witnesses: Dr. Michael Haugh, Tulsa, Oklahoma; Dr. Steve Buie,
Kansas City, Missouri; Dr. John M. Ludden, Senior Vice
President for Medical Affairs, Harvard Pilgrim Health Care; Dr.
William J. Osheroff, Medical Director, Western Region,
PacifiCare of California; Dr. Robert E. McAfee, Immediate Past
President, American Medical Association; Ms. Karen Ignagni,
President and CEO, American Association of Health Plans; Mr.
David Ching, Fremont, California; Ms. Diane Martello, North
Tarrytown, New York; Mr. Alan Charles deMeurers, Keizer,
Oregon; Mr. Alfred Couture, Worcester, Massachusetts; Dr.
Raymond Scalettar, Consultant, Joint Commission on
Accreditation of Health Care Organizations; Dr. Spencer Falcon,
Senior Vice President, National Services and Managed Care, Blue
Cross and Blue Shield of Michigan; Dr. William S. Ten Pas,
President, American Dental Association; Ms. Lauren Hirsch,
Wantagh, New York; Dr. Linda Peeno, founder, The CARE
Foundation; Mr. Mark Cloutier, MPH, MPP, Vice President,
Bioethics Consultation Group; Ms. Heather Fraser, representing
the Cystic Fibrosis Foundation; and Mr. Val D. Bias,
representing the Patient Access to Specialty Care Coalition.
Although the hearing addressed many issues, the focus of
the hearing was the issue of ``gag rules'' in managed care
plans and whether legislation was necessary to address the
On June 27, 1996, the Subcommittee on Health and
Environment met in open markup session and approved H.R. 2976,
the Patient Right to Know Act of 1996, for Full Committee
consideration, as amended, by a rollcall vote of 22 yeas to 0
On July 24, 1996, the Full Committee met in open markup
session and ordered H.R. 2976 reported to the House, as
amended, by a voice vote.
Clause 2(l)(2)(B) of rule XI of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report legislation and amendments
thereto. There were no recorded votes taken in connection with
ordering H.R. 2976 reported. A motion by Mr. Bilirakis to order
H.R. 2976 reported to the House, as amended, was agreed to by a
voice vote, a quorum being present.
Committee Oversight Findings
Pursuant to clause 2(l)(3)(A) of rule XI of the Rules of
the House of Representatives, the Committee held an oversight
hearing and made findings that are reflected in this report.
Committee on Government Reform and Oversight
Pursuant to clause 2(l)(3)(D) of rule XI of the Rules of
the House of Representatives, no oversight findings have been
submitted to the Committee by the Committee on Government
Reform and Oversight.
New Budget Authority and Tax Expenditures
In compliance with clause 2(l)(3)(B) of rule XI of the
Rules of the House of Representatives, the Committee states
that H.R. 2976 would result in no new or increased budget
authority or tax expenditures or revenues.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 403 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 2(l)(3)(C) of rule XI of the Rules of
the House of Representatives, the following is the cost
estimate provided by the Congressional Budget Office pursuant
to section 403 of the Congressional Budget Act of 1974:
Congressional Budget Office,
Washington, DC, August 1, 1996.
Hon. Thomas J. Bliley, Jr.,
Chairman, Committee on Commerce,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office (CBO)
has reviewed H.R. 2976, the Patient Right to Know Act of 1996,
as ordered reported by the House Committee on Commerce on July
24, 1996. Enclosed are CBO's federal cost estimate and
estimates of the costs of intergovernmental and private-sector
Enactment of the bill would direct spending and thus would
be subject to pay-as-you-go procedures under Section 252 of the
Balanced Budget and Emergency Deficit Control Act of 1985.
If you wish further details on these estimates, we will be
pleased to provide them. The CBO staff contacts are identified
in the separate estimates.
June E. O'Neill, Director.
congressional budget office federal cost estimate
1. Bill number: H.R. 2976
2. Bill title: Patient Right to Know Act of 1996
3. Bill status: As ordered reported by the House Committee
on Commerce on July 24, 1996.
4. Bill purpose: H.R. 2976 would require health plans to
refrain from any activity that restricted or prohibited
providers' communications with patients concerning their health
conditions or treatment options.
5. Estimated cost to the Federal Government: CBO and the
Joint Committee on Taxation (JCT) estimate that H.R. 2976 would
increase the federal deficit by about $90 million between 1997
and 2002 (see attached table). As a result of increases in
employer-paid health premiums, federal income and payroll tax
revenues would fall by about $70 million over that period.
Federal outlays for Medicaid would increase by $13 million, and
mandatory outlays for federal employees' health benefits would
increase by $8 million over the period. Discretionary spending
for benefits of active federal workers would rise by another $8
million, and the Secretary of Health and Human Services would
be required to undertake enforcement actions that would imply
additional costs, assuming appropriation of the necessary
6. Basis of the estimate:
Gag rules.--H.R. 2976 would prohibit certain types of so-
called gag rules, under which health plans restrict providers
from discussing certain, presumably expensive, treatments with
patients. The elimination of such restrictions could enable
some health care providers to discuss treatment options with
their patients more freely than at present, thereby allowing
those patients to make more informed choices. By limiting one
of the mechanisms by which health plans may control
expenditures, H.R. 2976 would raise the cost of some of those
plans. Their costs would rise if, as a result of more open
communications between providers and patients about treatment
options, the providers in their network performed more high-
cost procedures or referrals.
For several reasons, however, the cost increases incurred
by plans from the elimination of gag rules would be small:
CBO assumes that rules restricting communications
about medical treatment options are not commonly used
by health plans.
Some states have enacted anti-gag-rule legislation
and others have such legislation under consideration.
(Self-insured plans, however, would not be covered by
state laws but would be covered under H.R. 2976.)
H.R. 2976 would not require health plans to provide
more services than they do now.
The financial incentives for physicians and other
providers in health plans would be unchanged.
Protocols, guidelines, and quality control.--Although the
bill would not explicitly impose new restrictions on
utilization review procedures or on other actions that plans
could take to limit the use of high cost procedures, the
prohibition on the restriction of medical communications is
sufficiently broad that the bill might prevent health plans
from imposing any requirements on medical communications.
Depending on how courts interpreted the bill and on the level
of enforcement performed by the Secretary of Health and Human
Services, this limitation could be more important--and costly--
than the prohibition of gag rules alone.
Although H.R. 2976 does not directly address protocols and
treatment guidelines, CBO assumes that the bill would make
plans more cautions about implementing them. Such protocols
would be seen as indirectly restricting provider-patient
communications concerning treatment options by recommending
certain treatments to the exclusion of others. The Blue Cross
and Blues Shield Association has argued that H.R. 2976 could
disrupt some standard quality control functions of plans,
including, for example, the ability of plans to restrict
certain providers from making referrals or to enforce
limitations on the scope of practice of certain providers.
Effect on Federal revenues.--Any law that imposes
additional requirements on health plans will tend to increase
the costs of those plans. Because H.R. 2976 could potentially
disrupt some quality control efforts and inhibit the
development of treatment protocols. CBO assumes that enactment
of the bill would initially result in a slight increase in
private health insurance premiums--about 0.025 percent. This
figure is highly uncertain; the actual increase would depend on
the method and intensity of the Secretary's enforcement efforts
and on the interpretations of the law in the courts. Because
the bill is broadly worded, it has the potential to affect
plans' ability to control their costs in unintended and
Employers and employees would offset part of the premium
increase by reducing coverage, or by dropping benefits for
other services. Because of these reactions, we assume that
employer contributions for health insurance would rise by only
0.01 percent. Most of that increase would be passed back to
employees in lower wages. The lower wages, in turn, would
reduce federal income and payroll tax revenues, JCT estimates
that revenues would fall by about $70 million between 1997 and
Effect on Federal outlays.--CBO estimates that the federal
share of increased Medicaid costs implied by H.R. 2976 would
total about $13 million over the period. Although the bill's
requirements would not necessarily apply to Medicaid as a
direct payer, plans contracting to provide care to Medicaid
recipients would be affected.
Federal costs for federal employees' health benefits would
also increase slightly. Direct spending for annuitants'
benefits would rise by about $8 million over the period, and
discretionary spending for active workers would rise by another
$8 million, assuming the necessary amounts were appropriated.
Several federal agencies--including the Departments of
Health and Human Services, Labor, and Justice--would incur the
costs of enforcing this bill. CBO cannot estimate the magnitude
of these costs.
7. Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act of 1985 sets up pay-as-you go
procedures for legislation affecting direct spending or
receipts through 1998. The bill would have the following pay-
[By fiscal year, in millions of dollars]
1996 1997 1998
Change in Outlays............................ 0 2 3
Change in Revenues........................... 0 -7 -11
8. Estimated impact on State, local, and tribal
Intergovernmental mandates.--H.R. 2976 would impose an
intergovernmental mandate, as defined in the Unfunded Mandates
Reform Act of 1995 (Public Law 104-4), because state and local
governments, as sponsors of health plans for their employees,
would be prohibited from using a particular mechanism to
control costs. CBO estimates that the bill would increase the
cost of health insurance for employees of state and local
government by $10 million annually, a 0.025 percent increase.
The cost would be borne primarily by the employees
themselves and not by state and local taxpayers. Economists
generally believe, and CBO's cost estimates have long assumed,
that workers as a group bear most of the cost of employers'
health insurance premiums. The primary reason for this
conclusion is that the supply of labor is relatively
insensitive to changes in take-home wages. Because most workers
continue to work even if their take-home pay declines,
employers have little trouble shifting most the cost of
additional health insurance to workers' wages or other fringe
benefits. The amount of total compensation paid by state and
local governments would thus remain unchanged in the long run.
However, during a transition period of about two years, state
and local governments would have to spend between $1 million
and $2 million annually because about 40 percent of their
employees are covered by collective bargaining agreements that,
on average, last for two years. Such agreements would prevent
state and local governments from changing other elements of
these employees' compensation packages until the collective
bargaining agreements expire.
Other impacts.--The bill would also increase state Medicaid
costs by $1 million to $2 million annually. Even though the
bill's requirements would not necessarily apply to Medicaid as
a direct payer, plans contracting to provide care to Medicaid
recipients would be affected. The increase in cutting back on
optional services and beneficiaries. Under Public Law 104-4, an
increase in program costs for a large entitlement, such as
Medicaid, is not a mandate if states have such flexibility to
reduce their own financial or programmatic costs.
9. Estimated impact on the private sector: H.R. 2976 would
impose a mandate on health plans in the private sector by
prohibiting them from restraining certain types of
communications between providers and patients. Under the bill,
plans could not restrict providers' communications with
patients concerning their physical or mental conditions or
their treatment options. Health plans that violated this
requirement would face civil money penalties.
By limiting one of the mechanisms through which managed
care plans may control expenditures, H.R. 2976 would raise the
costs of some of those plans. Their costs would rise if, as a
result of more open communications between providers and
patients about treatment options, the providers in their
network performed more high-cost procedures or made more
referrals. For reasons given above, however, CBO assumes that
the direct costs on the private sector would be small and would
not exceed the $100 million annual threshold.
10. Previous CBO estimate: None.
11. Estimate prepared by: Jeff Lemieux (private insurance
and federal employees' health benefits) and Jean Hearne
(Medicaid); Linda Bilheimer (private sector) and John Patterson
(state and local government).
12. Estimate approved by: Paul N. Van de Water, Assistant
Director for Budget Analysis.
H.R. 2976, THE PATIENT RIGHT TO KNOW ACT OF 1996
[By fiscal year, in millions of dollars]
1997 1998 1999 2000 2001 2002 1997-2002
DIRECT SPENDING AND RECEIPTS
Medicaid................................... 2 2 2 2 2 3 13
Federal Employees Health Benefits.......... 0 1 1 2 2 2 8
Total, Outlays........................... 2 3 3 4 4 5 21
Income and Payroll Taxes................... -7 -11 -11 -12 -14 -15 -70
Deficit.................................... 9 14 14 16 18 20 91
SPENDING SUBJECT TO APPROPRIATION
Federal Employees Health Benefits:
Budget Authority........................... 0 1 1 2 2 2 8
Outlays.................................... 0 1 1 2 2 2 8
Enforcement by Department of Health and Human
Services and other Agencies:
Budget Authority........................... (\1\) (\1\) (\1\) (\1\) (\1\) (\1\) (\1\)
Outlays.................................... (\1\) (\1\) (\1\) (\1\) (\1\) (\1\) (\1\)
\1\ Not estimated.
Sources: Congressional Budget Office, Joint Committee on Taxation.
Inflationary Impact Statement
Pursuant to clause 2(l)(4) of rule XI of the Rules of the
House of Representatives, the Committee finds that H.R. 2976
would have no inflationary impact.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act are created by this
Section-by-Section Analysis of the Legislation
Section 1. Short title; findings
Section 1 contains the short title which is the Patient
Right to Know Act of 1996. The section also contains findings
regarding the importance of communications between providers
and their patients.
Section 2. Prohibition of interference with certain medical
Section 2 provides that an entity offering a health plan
may not prohibit or restrict any medical communication as part
of: (a) a written contract or agreement with a health care
provider; (b) a written statement to such provider; or (c) an
oral communication to the provider. Section 2 provides that
such provisions are null and void. The section defines the term
``medical communication'' to mean a communication by a health
care provider with his or her patient with respect to the
patient's physical or mental condition or treatment options.
Section 2 also provides for an enforcement mechanism for a
violation of this section. The bill provides for civil money
penalties of up to $25,000 for violations. In addition, it
provides that no penalty shall be imposed solely on the basis
of an oral communication unless it is a part of a pattern of
such communications or the violation is demonstrated by a
preponderance of the evidence. This is intended to establish a
complaint-based system of enforcement, not one based on
mandatory prior review of provider contracts, Federal
participation in the contracting process, or ongoing monitoring
of plan operations and communications. Civil money penalties
are the only remedy provided by the bill.
A State is permitted to establish requirements regarding
the interference with medical communications that are more
protective of these communications. The bill also clarifies
that nothing shall be construed as preventing a plan from (a)
acting on information relating to the provision of (or failure
to provide) treatment or (b) restricting medical communications
that recommend one plan over another solely for the provider's
Nothing in this Act is intended to modify, alter, or amend
Section 514 of the Employee Retirement Income Security Act of
changes in existing law made by the bill, as reported
This legislation does not amend any existing Federal
During a lengthy hearing on May 30, 1996, we heard from
several witnesses who outlined the ways in which some health
plans have attempted to interfere in medical communications
between patients and their health care providers. Testimony
came from doctors who were threatened with retaliatory actions
for telling their patients information that the health plan did
not want them to know. We also heard from two widowers who
learned too late critical information about their wives' health
We have grave concerns that some--but certainly not all--
health plans are attempting to interfere in the doctor-patient
relationship. The trust between a patient and his or her health
care provider is at the core of the medical profession and is
central to the notion of informed consent. To make intelligent
decisions about their health care, consumers must be informed
of all of their treatment options--not just those that plan
wants them to know about or is willing to pay for.
At the same time, we recognize that the health care market
is undergoing rapid and often unpredictable changes. Managed
care represents an important component of the market and its
advocates believe that active case management can help promote
good health and thereby result in lower overall health care
expenditures. Such networks cannot thrive, however, if they are
unable to monitor and prevent unnecessary utilization of
services and to engage in active management of the care of
Based on the testimony at the hearing as well as other
reports, we agree that legislation is needed to prevent outside
interference in communications between patients and their
health care providers. At the same time, there was some
disagreement as to whether the original text of H.R. 2976 would
pose unacceptable burdens on health insurers.
In an effort to find a compromise that would address the
very real concerns of consumer groups and health care providers
without undermining the health care markets, we worked
diligently to find a compromise that would meet these two
important, but somewhat conflicting goals.
Shortly before the Health and Environment Subcommittee met
to consider the legislation, we drafted a substitute that made
a number of important changes to the base text. While we do not
believe the substitute is perfect (some of us would like to see
a stronger bill, others think it may unduly restrict legitimate
activities of health insurers), it represents a true compromise
which is a delicate balance of competing ideas and
The substitute was ordered reported to the Full Committee
by a 22-0 vote and was approved by voice vote by the Full
Commerce Committee a month later.
We think it is appropriate to discuss the major changes to
H.R. 2976 made by the substitute and the reasons for them:
1. First and foremost, the substitute is more narrowly
focussed on protecting provider-patient communications. The
base bill would have also placed restrictions on the ability of
health plans to regulate communications between providers and
the plan and between providers and state and federal
regulators. Significant questions were raised about possible
unintended consequences of these provisions, and the substitute
deletes them and focusses on protecting the ability of patients
to freely communicate with their health care providers.
2. The original bill contained a long definition of what is
included as a protected medical communication. While we agree
on what this should mean, there was some concern about the
wisdom of placing that definition in legislative language.
Instead, the substitute expressly states that a `` `medical
communication' means a communication made by a health care
provider with a patient of the provider (or the guardian or
legal representative of such patient) with respect to the
patient's physical or mental condition or treatment options.''
During the Subcommittee mark-up, Congressman Burr and
Congressman Ganske had an exchange in which they discussed how
broadly this term should be interpreted. The key elements of
that discussion are as follows:
Mr. Ganske: * * * it is my intention that the
substitute would cover any tests, consultations, and
treatment options; any risks or benefits associated
with them; and any variation in quality among health
care providers and any institutions providing such
services. Medical communications also covers general
descriptions of the standard used by plans to decide
whether to authorize health care services; the process
used by the plan to make those decisions; and a general
description of financial incentives or disincentives
provided by such an entity that may be based on service
Mr. Burr: I am concerned about the ability of plans
to safeguard proprietary data. While I do understand
the desire to provide patients with access to
information on utilization review procedures and
financial incentives, I would not support a provision
that forced plans to permit the disclosure of specific
Mr. Ganske: A patient has a right to know the general
way his policy works [and I] would be pleased to work
with you and with Chairman Bliley to craft report
language consistent with that need and also with the
ability of plans to compete in the marketplace.
We believe that this reading of the substitute is
appropriate. We met with several experts who were concerned
that the original bill would result in the disclosure of
confidential information and other trade secrets of health
plans. We recognize that the health care market is very
competitive and that plans have a legitimate interest in
protecting proprietary data such as payment schedules.
But that does not mean that plans should be able to prevent
providers from discussing the general nature of plan operations
with their patients. The subject of provider compensation most
squarely presents this issue. Health plans are paying their
providers in new and innovative ways. Some pay a straight
salary. Others pay a form of fee schedule, which pays providers
for each service delivered. Some plans capitate their
providers, meaning that they are paid a flat fee per patient
but may be personally financially liable for a certain amount
of care provided. Many plans use other, more innovative,
payment systems which tie a provider's pay to some performance
measurements--generally in the form of bonuses and withholds.
We do believe that patients ought to have access to
descriptive information about the way in which their provider
is paid. The testimony from David Ching demonstrates the
importance of this information. His wife complained of severe
abdominal pain and rectal bleeding. Her doctor repeatedly
refused her requests for additional tests and referrals to
specialists. After a delay of several months, she was finally
referred to a specialists who diagnosed her with the colon
cancer that had recently perforated her bowel wall and resulted
in her early death.
What Joyce and David Ching did not know is that her doctor
had a financial interest in providing her with less health
care. He was paid $27 per month to care for her, and was
personally responsible for the first $10,000 of care provided.
After her first visit and a barium enema, Joyce Ching had cost
her doctor his entire annual capitation. Further tests and
referrals would effectively come out of his pocket. David Ching
testified that had he known about that compensation
arrangement, he definitely would have sought a second opinion
for his wife out of his own pocket.
It is important to note that the compromise approved by the
Committee would not require plans to allow discussions of the
specific dollar amounts of financial arrangements. But Joyce
Ching's case points out the very real dangers created when
patients do not have complete access to information about their
health care needs.
While we believe that providers should be able to fully
inform patients as to their physical or mental condition and
treatment options, the utilization review procedures
established by health plans, and the general manner in which
providers are compensated, we also believe that health plans
should be able to establish utilization review procedures as
well as quality guidelines, and that plans are not required to
allow discussions of the specific dollar amounts of financial
While we believe that patients can make informed decisions
without knowing the specific dollar amounts involved in these
payment arrangements, knowing the general manner in which their
provider is compensated could be important. Accordingly, we do
not believe health plans should be able to prevent providers
from describing the general nature of these arrangements and
how they could create incentives or disincentives for the
delivery of additional care. For example, a provider could tell
a patient, ``I receive a flat fee per month from the plan and I
can also qualify for certain bonuses if the amount of care I
provide during the year falls below a certain level'' or
``Because of my compensation arrangement with the plan, my
salary decreases if I refer patients to too many specialists.''
Plans wishing to restrict the disclosure of specific dollar
amounts in these arrangements should be able to do so, but the
type of general information described above should not be
considered to be proprietary data or a trade secret.
3. The original bill listed a series of ``adverse actions''
that health plans would be prohibited from taking. This placed
the focus on whether the plan took any action against the
provider, not whether patients had access to all the
information they need. To keep the focus on preventing
restrictions on medical communications, the substitute deleted
the list of ``adverse actions.'' Plans that attempt to prohibit
or restrict free communications between providers and
patients--whether in written policies or expressed orally--
would be in violation of the law, even if they have taken no
For example, a plan could not tell providers not to discuss
the possibility of bone marrow transplants with patients and
threaten to terminate the contracts of those who disobey. The
action of making the attempt to restrict the medical
communication would be a violation of law, regardless of
whether the plan actually took any action against non-complying
providers. The substitute keeps the focus on whether the health
plan is trying to place a prohibition or restriction on medical
communications, not how the plan attempts to enforce those
4. The substitute limited the civil money penalties that
can be levied against health plans found in violation of the
plan. The substitute retained the fine of up to $25,000 per
violation but deleted a provision to create a $100,000 fine for
repeated violations. Both the base text and the substitute
declare restrictions on medical communications to be ``null and
5. The substitute includes a provision that makes clear
that providers may not use the protections in this bill solely
for the purpose of steering patients into a competing health
plan which pays them better. During the Subcommittee hearing,
some witnesses expressed the concern that health care providers
will use this legislation as a shield to encourage patients to
join health plans which provide them a higher reimbursement. To
prevent this, the substitute allows health plans to restrict a
medical communication that ``recommends one health plan over
another plan if the sole purpose of the communication is to
secure financial gain for the health care provider.''
6. The substitute moves the bill's effective date back from
30 days to 90 days after enactment. This was done in response
to concerns that 30 days was not enough time for health plans
to amend hundreds of contracts and policy bulletins.
The amended effective date provision also makes clear that
the enforcement provisions do not apply to medical
communications made before that date. The base text could have
been interpreted to create liability for restrictions on
medical communications made before the date of enactment. The
substitute clarifies this point.
7. We recognize that restrictions on medical communications
could take several forms. While public attention has focussed
on ``gag rules'' in plan contracts, restrictions also appear in
health plan policy bulletins and letters and have been orally
conveyed to providers.
We are concerned that the standard of proof be high enough
to ensure that health plans are not subjected to numerous
claims of oral gags that degenerate into ``he said-she said''
arguments. The standard of proof for oral communications should
be high enough to provide health plans with some degree of
assurance that they will not be found to have violated the bill
every time a provider makes an unsupported claim without any
support or corroboration.
To address this issue, the substitute requires that
allegations of a single instance of an oral restriction on
communications be proved by a ``preponderance of the
evidence.'' This is a higher standard than the ``substantial
evidence'' test and is designed to permit the Secretary of
Health and Human Services to more easily weed out baseless
John D. Dingell.
Henry A. Waxman.
ADDITIONAL VIEWS OF THE HONORABLE CHARLIE NORWOOD
As a cosponsor of H.R. 2976, the ``Patient Right to Know
Act,'' I want to applaud Messrs. Ganske and Markey for their
work on ensuring that health plan enrollees are protected in
this age of managed care.
As a former health care provider, I had an interest in
doing what was best for the patients with whose health I was
entrusted. I believe all health providers have that interest
and that mandate. That mandate includes guaranteeing that their
patients have access to all relevant information they need to
make informed medical decisions. That includes information
regarding treatment options and diagnoses and whether or not
they have access to that treatment. Patients also have a right
to know whether a provider has a financial incentive to limit
or deny care to their patients. No health provider who has
taken an oath to protect those they serve should be prevented
from giving their patients the most information available about
their medical condition or treatment options. To that extent, I
am pleased that the House Commerce Committee passed H.R. 2976.
At the same time, there are other, equally severe problems
that patients must confront when dealing with managed care
organizations. Part of what makes managed care so effective is
their use of contractual provisions to limit utilization of
health care. In the case of overutilization of unnecessary
health services, utilization reviews can be good. However, when
someone needs emergency health care or care from a specialist,
utilization reviews can be counterproductive. Even more, it
endangers those who rely on complete and adequate health care
from their plans.
It is my strong belief that Congress has an obligation to
ensure that those who rely on their health plans for needed and
adequate care should be protected from those companies with a
profit motive to limit access to needed health care treatments.
Controlling health care costs is necessary--controlling or
otherwise limiting needed care in unacceptable. That is why I
have introduced H.R. 2400, the Family Health Care Fairness Act,
to ensure that patients are guaranteed adequate health care
from their health plans.
Many states, including my own, have passed legislation to
ensure that the health and well being of patients in managed
care plans are protected. If this problem did not exist, we
would not see the proliferation of these and other measures at
the state and Federal level. Even more, the Commerce Health and
Environment Subcommittee would not have heard testimony
regarding the devastation that ``gag rules'' have wreaked on
families. Given that, I fully support measures insuring that
patients have access to the information they need to make
informed decisions. H.R. 2976 and H.R. 2400 move to that end.