TOMMY THOMPSON: DEPARTMENT OF HEALTH AND HUMAN SERVICES

Testimony

Good evening Chairman Jeffords, Senator Kennedy, and members of the Committee. I am honored to appear before you today to discuss the President's perspective on the Bipartisan Patient Protection Act of 2001. As the Secretary of the Department of Health and Human Services, I am honored to be involved with an agency that has the unparalleled opportunity to make a difference in people's lives and improve the quality of the life that they lead.

We stand today at the forefront of implementing greatly needed changes in the way managed health care is run in the United States, and I take great pride in the fact that this Department will play a major role in carrying out these changes. I commend the efforts of members of this Congress, both Republican and Democrat, to establish a framework for the discussion of patients' rights and particularly the conditions under which a patient will be allowed to sue their health plans.

The Administration is strongly concerned about the matter of patients' rights, and the President has outlined his principles for managed care reform. As are many of you, he is deeply committed to getting a patients' bill of rights done and enacted into law this year. However, I would be less than candid if I did not acknowledge the vast scope of challenges that lie ahead of us, but I am confident that we will be able to work together in a bipartisan fashion to successfully meet them.

I am therefore delighted to be a part of this important discussion. I wish to share with you the principles President Bush believes, and with which I strongly concur, should be the core of managed care reform.

Principles for Establishing Managed Care Reform

The President will sign a strong patients' bill of rights that provides patient protections without driving up the cost of health care and without making employers drop health care coverage. Meaningful remedies must be coupled with responsible tort reform, and we want to work with members of Congress to reach a bipartisan compromise on that issue.

Patients Should Have a Rapid Medical Review Process for Denials of Care

Patients should have the right to an independent medical review of a health plan's decision to deny care. We applaud the Bipartisan Patient Protection Act of 2001 for including provisions for both an internal review and an external appeals process.

The Review Process Should Ensure that Doctors Are Allowed to Make Medical Decisions and Patients Receive Care in a Timely Manner

We must strive to create a health care delivery system that protects patients and allow doctors to follow through on decisions that they conclude would be in the patient's best interest. Slow and costly litigation should be a last resort. We agree that patients must always exhaust an internal and external appeals process before going to court, and we hope that this appeals process will become the primary means of answering patient complaints. In this way, patients have an alternative to suing, and health providers are allowed to hear what an objective outsider has to say before deciding whether or not it is worth defending their position in court.

However, I would like to express concern over the practical applications of the legislation if it is passed in its current form. As presently worded, patients must exhaust internal and external appeals before going to court except when death or irreparable injury has already occurred prior to completion of the appeals process. This language leaves the term "irreparable injury" open to broad interpretation, and it is my worry that lawyers will take advantage of this ambiguity to bypass the essential appeals process. What we may have then, is the unwanted possibility of numerous frivolous lawsuits brought on by individuals seeking undeserved compensation without the protection and screening afforded by the appeals process.

Federal Remedies Should Be Expanded to Hold Health Plans Accountable

We agree with statements expressed in a recent letter by Democratic leaders to President Bush that for these protections to be real, they must be enforceable. We believe it is important to allow people to sue their HMO if they do not receive the care to which they are entitled, and this rights needs to be exercised in a fair and responsible way. I would like to emphasize that it is extremely important to develop legislation is a patients' bill of rights, and not a lawyer's right to bill.

Patient Protection Legislation Should Encourage, Not Discourage, Employers to Offer Health Care

Expensive litigation and the resulting rise in health care costs will only make it more difficult for Americans, and especially employers who pay the bulk of health insurance premium, to afford health care coverage in the first place. We believe that the legislation, as currently worded, does not prevent the health care system from turning into another system in which lawyers can simply sue to make money outside of what are reasonable needs of people in the health care community.

We propose the following modification: lawsuits should be heard only in the federal courts. This structure would protect employers from the high costs of being subject to multiple cases as lawyers jump between state and federal courts, trying to find where they can win the largest monetary award. Patients will still be able to have their issues heard and decided upon by a court of law, but the same medical decision need not be unnecessarily heard and decided upon twice as the current proposed bill allows.

Furthermore, we believe that there should be a reasonable cap on damages. I believe it is very helpful that this patients' bill of rights includes a cap on damages awarded at the federal level. We are willing to work in a bipartisan manner to establish a cap that will realize one of the key goals of managed care reform, namely of balancing cost containment with due compensation for medical injuries.

Importance of Litigation Controls

There has been commentary predicting that the threat of immobilizing lawsuits will not materialize. However, we must remain wary. For instance, in the three years that Texas has allowed the right-to-sue, only 15 suits have been filed, and the record is similarly low in other states that have enacted right-to-sue legislation mainly because the appeals process settles most cases before they go to court. However, state experiences are not a completely accurate predictor of the future. A federal law would throw in a new element, namely employer liability. Currently, state laws do not cover many of the country's 26 million public-sector workers nor the 55 million or so employees who work at large corporations due to a clause in the federal Employee Retirement Income Security Act of 1974. A priority of the President is to cover all Americans who are enrolled in health maintenance organizations, and we applaud the effort to enact federal managed care reform. This bill, however, will provide the right-to-sue to many more individuals than currently covered by state laws, and we must therefore be prepared for the possibility of many more suits being filed than predicted by current state experiences.

Working Together to Improve Health Care Delivery in America

Mr. Chairman, the principles that I have discussed with you today regarding the patient right-to-sue differ in some of the particulars with the bill currently in consideration. However, we share the same goal of ensuring that all patients receive the medical care they need.

Please allow me to use a quote, which I have drawn on before: Senator Everett Dirksen once said of the legislative process that, "You start from the broad premise that all of us have a common duty to the country to perform. Legislation is always the art of the possible. You could, of course, follow a course of solid opposition, of stalemate, but that is not of the interest of the country." To get a patients' bill of rights enacted into law is going to require a consensus. It is going to require people coming together, and this is the year it will get done. I am prepared to work with each of you to develop a bill that serves the national interest. I would be happy to address any questions you may have.