MEDICARE HMOs: Appeals Court Orders Patient Protections
A three-judge panel of the 9th U.S. Circuit Court of Appeals yesterday ruled that the "federal government must protect Medicare patients from HMOs that deny coverage," Capitol Media Services/Arizona Daily Star reports. The ruling stems from a 1993 suit "filed by five Tucson women" who charged that the Department of Health and Human Services "disregarded federal laws and its own rules for ensuring proper notification and appeal procedures when a Medicare HMO refused to provide a member with care" (Fischer/Erikson, 8/13). Yesterday's decision "advanc[es] the rights of an estimated 5.7 million people over 65" and "comes amid an unprecedented federal effort to push elderly people into managed care and ambitious efforts by the HMOs to cut their Medicare service costs," the Sacramento Bee reports (Cooper, 8/13). The "ruling requires Medicare HMOs to adequately inform patients when they refuse to provide care," and "requires Medicare to conduct expedited hearings when denying care in critical cases." In addition, "it blocks the government from contracting with HMOs that do not comply with these requirements."
The First Go-Around
Capitol Media Services/Arizona Daily Star notes that the plaintiffs in the suit were all covered by a "Medicare HMO operated by FHP Health Plan," which has since been acquired by PacifiCare (8/13). The plaintiffs "did not ask for monetary damages," instead only "ask[ing] for due process when coverage is denied -- notification of reasons for the denial and adequate hearings and appeal procedures" (Sacramento Bee, 8/13). In October 1996, a federal district judge found that "appeal notices" sent out by FHP to the plaintiffs "were often illegible, failed to specify the reason for the denial and did not explain the patient's right to present additional information."
Yesterday's ruling came in response to the federal government's appeal of that decision. Writing for the appellate court, Judge Charles Wiggins ruled, "An HMO's denial of coverage is an initial refusal to provide any medical services. The mere fact that the enrollee may be able to go elsewhere and pay for the services herself is of little comfort to an elderly, poor patient -- particularly one who is ill and whose skilled nursing care has been terminated without a specific reason or description of how to appeal." Wiggins also "rejected another government argument that [HHS] could not be sued because the individual HMOs, not the agency, were at fault." Disagreeing with this argument, Wiggins wrote, "We find that HMOs and the federal government are essentially engaged as joint participants to provide Medicare services such that the actions of HMOs in denying medical services to Medicare beneficiaries and in failing to provide adequate notice may fairly be attributed to the federal government." Wiggins further denied a government argument "that because Medicare is not a needs-based program the recipients don't have the same rights to benefits as, say, a welfare recipient" (Capitol Media Services/Arizona Daily Star, 8/13). Sally Hart, "who argued the case on behalf of the Center for Medicare Advocacy," said the decision "recognizes that elderly people are not at their HMOs' mercy but have constitutional rights." According to the Sacramento Bee, HHS Secretary Donna Shalala "could seek further review by the 9th Circuit or ask the U.S. Supreme Court to consider an appeal" (8/13).