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Legislative Memo

518..465.7511

BILL:

A.5048-A (Colman) / S.2744-A (Stafford)

Support

SUBJECT:

Definition of Medical Necessity

 

DATE:

June 4, 2002

 

The Business Council opposes A.5048-A (Colman) / S.2744-A (Stafford), a bill that would fundamentally change the health insurance system in New York State, resulting in increased costs and raising serious questions about the efficacy of care that individuals may receive.

During the late 80's and 1990's states all around the country made public policy decisions to change course from the runaway indemnity health insurance system to one that had as its central tenet the coordination of an individual's care. The indemnity system encouraged over-utilization resulting in an inflationary health care system. Equally troubling was the lack of any meaningful quality measurements in the fee-for-service system.

For those reasons, New York State began to seek a system that would better contain cost increases and do a better job of measuring the outcomes of the system. Managed care was promoted for the state workforce, for the State's Medicaid system and as a partial answer to the rising costs of the workers' compensation system.

As managed care grew, the state also recognized the need for a delicate balance between the costs of care and the needs of patients. Enacted were landmark laws setting the ground rules between insurers and patients, including the 1996 HMO Bill of Rights, the 1998 External Review Act and the changes to how experimental treatments are handled.

A.5048 / S.2744 would upset the balance that was created by the above-referenced laws, setting up a "pre-managed care" system where providers unilaterally decide the type of treatment and the frequency of visits that patients receive. Medicaid costs will rise; employer health-care costs will rise; the costs to provide coverage for the state workforce will rise; and workers' compensation costs will rise.

In particular, this legislation would upend New York's External Appeal Law which is a process designed to settle the very issue this legislation seeks to address — the question of the medical necessity of a particular service. We would prefer the Appeal Law to a new, broader and more vague statutory definition of medical necessity.

The bill would also encourage a range of alternative treatments that are of questionable value even if they have not yet shown "evidence" that they are "unsafe". This is a broad and vague standard to apply when considering the explosion in the types of alternative treatments that are made available in our country.

The sponsors of this legislation should be proud of what has been accomplished in New York State over the past few years to protect patients. Working together, more can be accomplished. This particular bill, while well-intentioned, would be a giant step backwards for New York's health-care system and we would ask that it not be passed.