United States Supreme Court rules against Medicare providers in cost reimbursement case. Shalala v. Guernsey Memorial Hospital

In the long run, the impact of Guernsey will depend on the interpretation and application of the decision by HCFA, the Provider Reimbursement Review Board, and the courts. If HCFA interprets the decision as a signal that the Supreme Court is willing to grant federal agencies broad latitude to avoid the rulemaking requirements of the APA, providers may have fewer opportunities for formal input into payment policy issues under the Medicare program. The impact of the case may well go beyond cost-based reimbursement issues and affect all aspects of the Medicare program.     

Pegram v. Herdrich: On peritonitis, preemption, and the elusive goal of managed care accountability

Managed care presents the paradox of organizations having real power over people's lives without there being clear or consistent means of ensuring accountability. In Pegram v. Herdrich, the United States Supreme Court struggled with whether "fiduciary duties" under the federal Employee Retirement Income Security Act (ERISA) could be used to counterbalance the incentives that HMOs have to deny necessary care. Given press coverage of the case, however, it was easy to get the impression that the managed care industry itself was on trial in Pegram. This report examines the political and legal forces underlying the dispute and analyzes the Supreme Court's unanimous rejection of the notion of federally imposed duties for HMOs. In the absence of ERISA fiduciary obligations, attention must now shift to developments in state tort law, the scope of federal ERISA preemption, and the prospect of legislative reform. The report concludes with an exploration of how the elusive goal of managed care accountability might be pursued in the wake of Pegram.     

The Delta Dental case: "Fair procedure" comes to managed care. Delta Dental Plan of California v. Banasky

All providers contemplating managed care contracts, both individual and institutional, should carefully review the health plans' internal administrative review and dispute resolution procedures before making their decisions, especially if the contracts will represent significant income for the provider. While there may be judicial recourse in California and in other states that adopt the holding in Delta Dental, in other states providers may well be held to the health plans' internal administrative decisions as a matter of contractual agreement. Health plans should also review their own policies and procedures for adequacy under applicable state law. The health care community will not know the full extent of Delta Dental's implications until later cases area decided, but for now it seems certain that another wave of change in this area is just beginning.     

The political management of managed care: explaining variations in state health maintenance organization regulations

In the 1990s, strong incentives for managed care organizations to control costs, once regarded as a fortuitous confluence of interests, came to be seen as antithetical to consumers' interests in quality of care. In response to this change in political climate, many states have greatly increased their regulatory control of managed care organizations since the mid-1990s. This activity is surprising in an era when public policy on health care issues is usually described as frozen, gridlocked, and/or stalemated as a result of intense activity on the part of organized interests. We take advantage of the variation in state regulations of health maintenance organizations (HMOs) to discover why some governments are able to address policy problems that are often perceived as intractable in a political if not in a true policy sense. From the history of HMOs, the backlash against managed care, and state responses to that backlash, we first extract a number of hypotheses about state regulatory activity. We then test these hypotheses with data on regulatory adoptions by states during the late 1990s and the early 2000s. Last, we discuss the findings with special attention to the role of politics in health care.     

Medicare program; modifications to managed care rules. Final rule

This final rule responds to comments that we received on a proposed rule that was published in the Federal Register on October 25, 2002. It implements certain provisions relating to the Medicare+Choice (M+C) program that were enacted in the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection (BIPA) Act of 2000. It also addresses comments on, and makes revisions to, regulations that were discussed in the October 2002 proposed rule that were based on M+C program experience and feedback from M+C organizations.