Chapter 9.D.2 (or 3.D.2) -- Health Insurance Coverage Disputes
Here are links for Medicare Guideance Documents, Coverage Manual, and Coverage Determinations:
The Stanford Center for Health Policy has produced a host of insightful research publications relating to medical necessity determinations. See also American Health Lawyers Association, Medical Necessity: Current Concerns and Future Challenges (2005).
Addressing the legal gap in procedural protections created by ERISA between insured and self-insured plans, the new reform law imposes a uniform set of internal and external appeal procedures for denied claims under any type of insurance. Timothy Jost, Implementing Health Reform: The Appeals Process (2010).
For more on Medicare's coverage of clinical research, see Sandra J. Carnahan, Medicare's coverage with study participation policy: clinical trials or tribulations? 7 Yale J. Health Pol'y L. & Ethics 229-272 (2007). Importantly, the new health reform law (sec. 10103(c)) requires private insurers to cover the routine clinical costs of treatments for cancer or other "life-threatening" conditions that are being tested in clinical trials that are federally-funded or FDA-approved.
The Supreme Court provided further refinement of the judicial standard of
review under ERISA in Metlife
v. Glenn, 554 U.S. ___ (2008), where it held that an insurer administering
a self-insured employer plan is under a conflict of interest, even though it
spends the employer's money, not its own, when approving claims -- but this is
only one of several factors to consider in how much deference is owed to the
insurer's decision. The court reframed the standard of review in the
trust law terms of “abuse of discretion” rather than the administrative law
terms of “arbitrary and capricious.”
This only reinforced insurers' contractual strategy to include clauses
that give themselves nearly complete discretion in deciding medical
appropriateness, so to counter that move, the National Association of
Insurance Commissioners adopted a model proposal to ban such clauses,
which several states have adopted. Courts have split on whether
ERISA allows this type of regulation. See Standard Insurance Co.
v. Morrison, 584 F.3d 837 (9th Cir. 2009).
It remains to be seen whether (and which way) these elaborations permutations might affect the actual outcomes of either appeals or of initial coverage determinations. See generally John H. Langbein, Trust Law as Regulatory Law: The UNUM/Provident Scandal and Judicial Review of Benefit Denials Under ERISA, 101 Nw. U. L. Rev. 1315 (2007); Timothy Jost, “MetLife v. Glenn”: The Court Addresses A Conflict Over Conflicts In ERISA Benefit Administration, 27(5) Health Aff. w430 (Sept. 2008); Roy Harmon & A.G. Harmon, Weighing Medical Judgments, 13 MSU J. Med. & L. 157 (2009).
For insightful theoretical and philosophical analyses of mechanisms
for making these decisions and resolving the ensuing disputes, see Nan
D. Hunter, Risk governance and deliberative democracy in health care,
97 Geo. L.J. 1-60 (2008); Meir Katz, Towards a New Moral Paradigm in
Health Care Delivery, 36 Am. J. L. & Med. 78 (2010).
For discussion of complaint review procedures at QIOs, see Diane Hoffman & Virginia Rowthorn, Achieve Quality and Responding to Consumers: The Medicare Beneficiary Complaint Process, 5 Ind. Health L. Rev. 9 (2008).
For private insurers that offer Medicare coverage (known as Medicare
Advantage), the Medicare dispute resolution process has a pre-emptive effect
similar to that of ERISA, barring beneficiaries from pursing their grievances
under state law. See Do Sung
Uhm v. Humana Health Plan Inc., 540 F.3d 980 (C.A. 9, 2008).
The following compelling narrative about how one medical director recalls making medical necessity decisions is excerpted from Congressional testimony given by Linda Peeno, M.D., May 30, 1996. She is an outspoken critic of managed care who testified regularly for plaintiffs:
I am a former
medical reviewer and medical director for three managed care organizations. . .
. I wish to begin by making a public confession: In the spring of 1987, as a
physician, I caused the death of a man. No person or group has held me
accountable for this--for this was a half million dollar savings to my
employer. In fact, this act secured my reputation as a "good" company
doctor, and insured my advancement in the health care industry--in little more
than a year I went from making a few hundred dollars a week to an annual
six-figure income. In all my work, I had one primary duty: to use my
medical expertise for the financial benefit of the organization. According to
the managed care industry, it is not an ethical issue to sacrifice a human being
for a "savings." I was told repeatedly that I was not denying care, I
was only denying payment. . . .
I am here today to tell you about the dirty work of managed care. . . .
There is one last activity, though, which
deserves a special place in this list. This what I call the "smart
bomb" of cost-containment: "medical necessity"
denials. Let me take you to the heart of managed care. Even if a plan
denies using all of the above to control members and physicians, it is
impossible to deny their use of the practice vital to managed care: making
medical decisions about access, availability, and use. Even when medical
criteria is used, it is rarely developed through traditional clinical
processes, and it never standardized across the field. The criteria is
never available for prior review by physicians or members. So, even if a
plan has a clear benefit package, a few perks like free eye exams,
screening tests for cancer, or other marketing ploys, the member's
physician will NEVER be the final authority on what his or her patient will
get. This might go unnoticed with the simple needs -- the yearly visit,
the flu and simple surgery, but when something unexpected and expensive
happens, e.g. trauma out of network; a major medical or surgical condition;
cancer; conditions needing extensive services, like rehabilitation or
technology; something experimental or rare, then--like a bucolic pasture
turn battlefield, the landmines start exploding everywhere.
Somewhere in every coverage booklet for every managed care plan is a claim that establishes the plan as the final authority for determination of medical necessity. What that means is that there is some physician making that decision, someone like who:
What kind of system have we created when a physician can receive lucrative income for adding to the suffering of patients? I became a physician to care for, not bring harm to, my patients. Since leaving my last job, I live with the pain of what I have done. I am haunted by the thousand of pieces of paper on which I have written that deadly word: DENIED. Those papers -- including at least one death sentence I know about -- are the evidence that managed care is inherently unethical.
Problem: Appealing Adverse Coverage Decisions by HMOs
This problem is adapted from a real case history developed by the Center for Health Care Rights in California. What procedural remedies does the patient likely have under private insurance and under Medicare or Medicaid? Are they adequate?
Mr. H. was a diabetic and had severe ulcers on his feet. He was a member of an HMO, and his primary care physician had prescribed a treatment regimen that was proving ineffective. In response, the primary care physician offered Mr. H. an amputation below the knee as his only option. Mr. H. went out-of-plan to a local wound care center that specialized in diabetic wound treatment where he was advised that vein by-pass surgery would likely take care of his problem. The HMO denied such surgery because Mr. H. referred himself to the specialist without permission. The HMO advised Mr. H.'s family that its utilization review department was reviewing the case, but that it would take at least a month to review. Subsequently, the HMO agreed to approve such surgery, but only if done by Mr. H.'s current medical group, which did not have any physician who had ever performed vein by-pass surgery. Mr. H.'s family asked for him to be transferred to a primary care physician at the medical group which staffs the wound care center. The HMO responded that although they sometimes approve such requests, they would not do so in Mr. H.'s case and that they had already granted enough of his requests. They gave as their reason a provision in the plan documents that prevent referrals outside the plan's network when the network's physicians have the capability to perform the required procedure.
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