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HEALTH CARE READY FOR ANOTHER ROUND

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SAN DIEGO -- Although there was far more talk than action on health care this year by federal and state legislators, health care providers, institutions and plan sponsors can't assume the threat of change has passed.

For starters, many of the legislative provisions that failed this year likely will be introduced again in 1999, according to two attorneys addressing members of the American Society for Healthcare Risk Management earlier this month at ASHRM's annual conference in San Diego.

And while the pace of legislative change is slow, regulatory pressure is picking up, according to Mark A. Kadzielski, partner-in-charge in Los Angeles of the West Coast health law practice of Epstein Becker & Green P.C.

"The government investigators and regulators are here with a vengeance," Mr. Kadzielski said, and they'll be "swarming" over health care facilities like never before in the next 12 months.

"Because the regulatory pressure is coming and it's coming hot and heavy, it's all over the park," the attorney said.

At the same time, new attacks on the protection that employer-sponsored managed care plans enjoy from action in state courts under the Employee Retirement Income Security Act of 1974's pre-emption of state law are certain to emerge next year even though pre-emption survived various threats this year, said David E. Manoogian, a senior partner in the Washington, D.C., health department of Epstein Becker & Green.

"The word on the street is that, next session, the Republican House will try to abolish all employer-sponsored health care," Mr. Manoogian said. "How are they going to accomplish that? The rumor is they're going to do it through the tax code."

According to Mr. Manoogian, House Republicans will seek to abolish employers' tax advantages for providing employee health care benefits. "In exchange, they're going to try to get the employer to give the income directly to the employee, who will use it to buy their own insurance," he said.

"In my opinion, that would be a disaster," Mr. Manoogian said, noting that there's no guarantee that workers will use that extra income to purchase health insurance.

"The potential implication of this is it would abolish ERISA," Mr. Manoogian said. "This would be an absolute catastrophe. On a scale of one to 10 for us in this room, this would be a 10 catastrophe."

Mr. Manoogian noted that while this year's congressional session saw the introduction of various health care bills, some passing one house or the other, none came close to overall passage.

But within some of those bills, "there are direct threats to ERISA," Mr. Manoogian said. "At least two of these bills go right to the heart and would kill ERISA."

"We also see that in some of these bills there are indirect threats to ERISA," he said, such as federal care mandates that would compromise the ERISA pre-emption.

The most significant of this year's congressional bills, Mr. Manoogian suggested, is probably H.R. 4250, the House Republican leadership's Patient Protection Act of 1998 bill.

"This bill is significant because it actually passed the House of Representatives," Mr. Manoogian said. "What's noteworthy there is that it went from introduction to passage in just seven weeks, which is just stunning."

"The bill did not do significant harm to ERISA and, in that sense, was OK with us, except that it's not going to pass in the Senate," he said.

Also significant was the Patient Access to Responsible Care Act of 1997 bill, sponsored in the House as H.R. 1415 by Rep. Charlie Norwood, R-Ga., and in the Senate as S. 644 by Sen. Alfonse D'Amato, R-N.Y.

"This is another disaster. PARCA just kills ERISA," Mr. Manoogian said. "This bill is drastically different from the House Republican leadership bill."

The attorney said he thinks PARCA will be back before Congress in some form next year.

But, according to Mr. Kadzielski, "the bottom line is there's not a lot of action expected in Washington but a lot of posturing and a lot of rhetoric about what's not there."

"This, then, places the burden on regulatory agencies," he said, adding that he expects to see greater regulatory pressure from the Health Care Financing Administration with regard to the requirements hospitals must meet to participate in Medicare and Medicaid.

In particular, proposed HCFA revisions to the "Conditions of Participation" for hospitals participating in Medicare and Medicaid programs pose a particular risk management concern, Mr. Kadzielski said.

"We expect HCFA to adopt this regulation in final sometime in the next four to six months," he said.

The proposed rule includes 19 conditions, though the key concerns are posed in the four core conditions focusing on patient rights; patient admission, assessment and plan of care; patient care; and quality assessment and performance improvement.

"Take a close look at some of these things and be on alert for them, because the conditions of participation are going to create some real liability issues," Mr. Kadzielski said.

The federal government also is stepping up enforcement of its Emergency Medical Treatment and Active Labor Act regulations, infringements of which can result in fines of $50,000 per violation for hospitals with more than 100 beds or suspension of participation in the Medicare program.

"And when that happens, that's a 911 condition," Mr. Kadzielski said. "You need to get help fast."

The attorney noted that the managed care contracts of many institutions are predicated on their being Medicare providers, so suspension of their participation could put those contracts at risk.

On the state front, "legislation is all over the ballpark," Mr. Kadzielski said. This year, 10 states joined 17 from last year in passing comprehensive patient protection laws, he said.

Although they vary, those laws tend to ban physician gag clauses, expand patients' appeals rights and improve patient access to specialized care.

"The fact is that most of the states had lots of laws proposed, and most of the states defeated most of the laws proposed with regard to managed care reform," Mr. Kadzielski said.

But, he noted, the flurry of legislative interest in health care makes it necessary for risk managers with facilities in several states or managed care plans straddling state borders to remain current with developments in the laws in those various states.