Supreme Court To Hear Case on Independent Review of HMOs
The Supreme Court will hear a case on Wednesday that could either "upset statutes enacted in many states" to reform managed care practices or "undercut" the 1974 Employee Retirement Income Security Act, which has "shielded" many health plans from state regulations, the Hartford Courant reports (MacDonald, Hartford Courant, 1/11). The case, Rush Prudential HMO Inc. v. Debra C. Moran and State of Illinois, centers on whether state laws giving patients the right to outside reviews of insurers' treatment decisions are "valid" in light of ERISA (Agovino, AP/Nando Times, 1/10). The federal statute prohibits patient lawsuits against HMOs in state courts and "limits damages in federal lawsuits to the cost of treatment that was denied." In the case, Illinois resident Moran demanded an independent review in a dispute with Rush over a denial of care. In 1998, a Virginia surgeon diagnosed Moran with thoracic outlet syndrome, a compression of nerves in the neck, and her primary care physician recommended surgery performed by a doctor outside the health plan's network. Rush refused to cover the $98,000 operation and offered a different treatment performed by a specialist within the health plan's network. Moran demanded an independent review of the decision, and an outside medical expert agreed that the "surgery was necessary" (AP/Nando Times, 1/10).
However, Rush still refused to cover the cost of the surgery, claiming that "its benefit offerings were protected by ERISA." Moran paid for the surgery -- which she says was successful in treating the condition -- and sued the health plan for the cost under the Illinois HMO Act, which "mandates a mechanism for review by an independent physician when the patient's primary care doctor and the HMO disagree about what is medically necessary." A federal court ruled in favor of Rush, but the 7th U.S. Court of Appeals in Chicago in October 2000 overturned the decision, ruling that the health plan "agreed to state insurance regulations and therefore had to abide by the HMO Act." In March 2000, WellPoint Health Networks Inc. purchased Rush and decided to appeal the case to the Supreme Court (AP/Nando Times, 1/10). Meanwhile, the 5th U.S. Court of Appeals in Texas ruled in favor of a health plan in a similar case, which prompted the Supreme Court to accept the Illinois case.
The Hartford Courant reports that the Supreme Court's decision in the Illinois case may "settle both disputes and could affect other states with outside review laws." Thirty-eight states and the District of Columbia have laws that allow patients to demand an independent review in disputes with their health plans over denials of care (Hartford Courant, 1/11). The Illinois case also "highlights the tension" between patient advocates and doctors -- who "want insurance companies removed from medical decisions" -- and health plan officials, who "say the system needs limits to keep costs from getting out of control." In addition, the case may "prod" Congress to pass legislation (AP/Nando Times, 1/10). Although the House and Senate last year both passed patients' rights bills that included a provision for independent review, lawmakers could not resolve differences over other issues. A federal law would override the Supreme Court's decision and apply nationwide, regardless of state laws (Hartford Courant, 1/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.