The Challenge of Managed Care Regulation: Making Markets Work?

August 1, 2001

For some time, states have regulated managed care organizations to ensure their financial solvency, including their ability to cover the risk of enrollees. Over the past decade, the nature of states’ regulation of the managed care industry has shifted to focus on preserving quality and patient and provider satisfaction. For example, states have passed legislation or established regulations to ensure that adequate provider networks are maintained and patients have adequate access to specialists through referrals. More recently, the last three years have seen feverish debate in the Congress over a Patients’ Bill of Rights, designed to give consumers recourse when care is denied by their health plan. Earlier this summer, the Senate passed S. 1052, sponsoredby Senators John McCain (R-AZ), Edward Kennedy (D-MA), and John Edwards (D-NC). Under the bill, individuals could sue insurers in state court for medical decisions, or in federal court for administrative decisions. The House has now passed a companion bill, H.R. 526, wth a more limited right for individuals to sue their health plan. If federal legislation is to finally become law, there must be House-Senate negotiations resulting in a bill President Bush is willing to sign.