More MS news articles for Jan 2002

Supreme Court considers HMO reviews

01/16/2002 - Updated 08:32 PM ET
By Joan Biskupic, USA TODAY

WASHINGTON In one of the most important health care cases in years, the U.S. Supreme Court heard arguments Wednesday over whether states can require an independent physician review when HMOs deny patients medical coverage.

As health maintenance organizations have proliferated as a tool to curtail escalating medical costs, so have patient complaints about the denial of benefits and broader concerns that attention is being paid more to the bottom line than to health care.

Forty states have laws that require outside review of HMO decisions, and proposed "patients' rights" legislation in Congress would provide uniform independent evaluations for HMOs nationwide.

With the congressional legislation bogged down, the court dispute over the validity of state HMO rules has become more vital.

But the justices' questions during the hourlong arguments did little to reveal how they might decide whether states can require binding review in disputes between a patient and HMO over what treatment is medically necessary. Insurance companies argue that states are pre-empted by a 1974 federal law designed to provide uniform regulation of employee benefits.

Wednesday's case centered on Debra Moran, 31, a speech therapist from suburban Chicago, who suffered for two years with a nerve condition that caused pain, numbness and loss of movement in her right shoulder and arm.

After conventional treatments from local physicians, Moran went to a surgeon in Virginia in 1998 who performed a microneurological procedure that ended her pain and made her arm function again. The surgery took nearly 14 hours and cost $95,000.

Two surgeons affiliated with Rush Prudential HMO, which provided coverage to Moran through her husband's employer, had recommended a less expensive surgery. So Moran paid for the surgery herself.

When Moran sought independent review of her case under the Illinois HMO law, Rush refused to participate, claiming that the Illinois statute conflicted with the federal Employee Retirement Income Security Act, known as ERISA.

After an initial state court hearing, Rush was ordered to submit to review. The independent reviewer deemed Moran's surgery medically necessary.

Rush continued to refuse to pay, the dispute ended up in federal court, and in 2000, the U.S. Court of Appeals for the 7th Circuit ruled for Moran.

The appeals court said the Illinois statute does not conflict with ERISA because the state law "regulates insurance" and is shielded from the pre-emption rule. The court said the state simply added another means of resolving disputes to an existing HMO contract.

In Rush's appeal, lawyer John Roberts told the justices that Illinois is providing a new remedy not permitted by Congress in the employee-benefits act.

Roberts said the state law "changes dramatically what the plan is going to provide."

Moran's lawyer, Daniel Albers, backed by a Justice Department lawyer, countered that HMO independent review laws fall squarely into a category involving insurance that is exempt from the ERISA pre-emption rules.

Albers said outside review is needed because insurers have an inherent self-interest in denying special coverage because any procedures approved cost them more money. He said the procedure Moran underwent "saved her right arm."

The justices' queries focused on the technicalities of ERISA.

Some questioned how to reconcile the decision favoring Moran with prior high court rulings that forbid alternative remedies in employee-benefit cases and that set a strict test for whether a state law is directed toward the insurance industry and not subject to ERISA pre-emption.

A ruling in the case of Rush Prudential HMO vs. Moran is likely by July.
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