In a 5-to-4 decision, the United States Supreme Court recently upheld an Illinois statute that mandates an independent medical review whenever a primary care physician and an H.M.O. disagree on whether a requested treatment is “medically necessary.” The ruling, Rush Prudential H.M.O. v. Moran, has widespread implications, because 42 states and the District of Columbia have enacted legislation granting some form of outside review when H.M.O. coverage is denied. These statutory requirements are designed to challenge the provision built into most H.M.O. contracts, including those of Rush Prudential H.M.O., that delegates to H.M.O.’s “the broadest possible discretion” to interpret the terms of the plan and to determine which benefits the participants are entitled to receive. Services deemed not medically necessary by the H.M.O. are not covered. More important for the purposes of this case, the Rush H.M.O. plan restricts what is medically necessary to those procedures authorized both by the primary care physician and Rush’s medical director. Thus the plan itself, even over the objections of its own affiliated primary care physician, can decline to provide or pay for a recommended medical service.
The ability of H.M.O.’s to determine what is or is not medically necessary is crucial to controlling health care costs. It is the reining in of those costs that was the rationale for the Nixon administration’s encouragement of H.M.O.’s in the early 1970’s. It is also why Congress, through the Employee Retirement Income Security Act of 1974 (Erisa), specifically mandated that federal regulation of employee health care benefits pre-empts state statutes. Erisa was designed to be a mechanism both to establish uniform benefits and to control employers’ health care costs.
One attempt to achieve that goal was the restriction of H.M.O. coverage to interventions considered medically necessary. A plan-approved physician had to certify the medical need of the requested procedure and also assure that the treatment fell within “the prevailing opinion of the appropriate specialty that the service is safe and effective.” Further, the physician had to certify that the omission of the treatment would adversely affect the person’s medical condition. Prescription medication to prevent baldness, for example, or liposuction or a tummy tuck—let alone the latest cure shilled on the Internet for the common cold—would not qualify.
But in an age in which consumer choice and patient autonomy have become almost absolute values, physician authority is under constant assault. Patients see and want the latest expensive drug that is relentlessly advertised on television. They come to their physicians with coupons clipped from the newspapers good for a free sample of prescription drugs like Viagra, drugs that are now hawked in the media as shamelessly as cigarettes were once passed out free on street corners. Both practices have the same goal: hook the public into using the product, and you have them for life.
Today the advertising pressure generated for medical products has created consumer demands that extend from Claritin for “all-day relief from allergies” to $1,000, full-body M.R.I. scans to detect a “potentially life-threatening” cardiac condition. Patients then press their physician to declare a medical need to justify insurance payment for the desired product.
The willingness of a sizable minority of physicians to do just that is seen in a recent report by the American Medical Association’s Institute of Ethics (Journal of the American Medical Association, 4/12/00). The report found, in a random national survey of practicing physicians, that over 39 percent of those polled stated that within the last year they had exaggerated the severity of patients’ conditions, changed a patient’s billing diagnosis or reported symptoms that patients did not have to help secure coverage for a desired treatment. Frustration with H.M.O. bureaucratic requirements and H.M.O. second-guessing of physicians’ medical decisions led to this willingness on the part of physicians to exaggerate some patients’ medical status.The Case
Against this background of H.M.O. denial of coverage and physician attempts to obtain desired services for their patients, the Supreme Court heard the case of Debra C. Moran, a woman who in 1996 began experiencing pain, numbness, loss of function and decreased mobility in her right shoulder. Her Rush-approved primary care physician, Arthur LaMorne, treated her with physiotherapy and other conservative treatments, none of which relieved her symptoms.
While she was undergoing these conservative therapies, Ms. Moran learned of a Dr. Julia Terzis, a surgeon in Virginia who specializes in microconstructive surgery. Though the record does not reveal how Ms. Moran came to learn of a surgeon practicing a thousand miles from her home, Internet connections now provide instant access to and networking of patients and those who offer solutions to their problems. As noted in an earlier essay on “Ethical Issues in Cybermedicine” (America, 2/12/01), the Internet has radically transformed patient access to health care information. Medical listings, advocacy groups and chat rooms are available for every conceivable ailment. You need but do a Google search to find a solution to your every problem.
After Rush H.M.O. denied Ms. Moran’s request for an out-of-network referral, she traveled on her own to Virginia to be examined by Dr. Terzis, who diagnosed her condition as brachial plexopathy and thoracic outlet syndrome (“TOS”). This nerve-compression syndrome is generally mild and responds well to conservative physiotherapy. If these fail, the standard treatment is surgical decompression by way of rib resection. Dr. Terzis proposed a much more extensive and complicated microneurolysis surgery, a procedure that involves removal under microscopic magnification of scar tissue surrounding the injured nerves. She indicated to the patient that she had successfully undertaken the procedure on other patients with a similar condition.
Two Rush-affiliated thoracic surgeons reviewed the proposed surgery and recommended that the patient undergo the standard TOS procedure. Ms. Moran, however, “was not impressed” by the prognosis offered by these doctors. Her primary care physician then asked Rush to approve the more extensive surgery as, in his opinion, “Ms. Moran would be ‘best served’ by having Dr. Terzis’ procedure performed.” The two consulting surgeons again reviewed the medical records and the primary care physician’s recommendation. They again reached the same conclusion: the extensive microneurolysis procedure was unnecessary. Rush H.M.O. denied coverage for the procedure. Ms. Moran then made a final appeal to Rush’s Memberships Advisory Committee. The membership committee upheld the denial.
Ms. Moran elected to undergo the microneurolysis surgery. The procedure took nearly 14 hours and, with post-operative care, cost $94,841.27. Ms. Moran paid for the surgery herself. She later submitted the bill and medical records on the surgery to Rush H.M.O. for reimbursement.
Rush, unlike many H.M.O.’s that deny reimbursement claims for non pre-approved surgery, treated this submission as a renewed benefit claim and opened another investigation as to whether the now completed surgery should be covered. The opinion of two new Rush affiliated surgeons was sought on the claim. They were skeptical of the need for the extensive surgery, but admitted a lack of expertise on the procedure. Rush H.M.O. then asked the chief of plastic and reconstructive surgery at the Washington University School of Medicine in St. Louis to review the claim. That surgeon also concluded that Dr. Terzis’ extensive microneurolysis procedure was unnecessary. Thus a total of five surgeons who reviewed the case for Rush H.M.O. found the procedure unnecessary.
In the month prior to undergoing the surgery, Ms. Moran filed a claim in state court demanding that Rush H.M.O. comply with Sec. 4-10 of the Illinois H.M.O. Act, a newly enacted state regulation that requires H.M.O.’s to provide a review by an independent physician when the patient’s primary care physician and the H.M.O. disagree about the medical necessity of a proposed treatment. That statute mandates that the H.M.O. must provide the proposed treatment in the event that the reviewing physician determines that it is medically necessary. This independent physician acts, as it were, as the final arbiter in any dispute in which the primary care physician and the H.M.O. disagree on the medical necessity of a proposed treatment.
It should be noted that under the Illinois act, there is no requirement that the primary care physician be qualified to assess the need or appropriateness of the proposed procedure. In this case the primary care physician conceded that he was not “an expert in this or any other area of surgery.” Nonetheless, he recommended to the H.M.O. that Ms. Moran would be best served by having Dr. Terzis’ procedure performed. That recommendation was not a finding of “medically necessary.” Nor was it an evaluation of the comparative merits of the conventional TOS surgery versus the more complicated and extensive microneurolysis procedure. It is, at best, a statement that the patient’s subjective interests would be met if Rush H.M.O. paid for the treatment the patient wanted.
When Rush H.M.O. failed to act on Ms. Moran’s request to invoke the Illinois H.M.O. Act provisions, she brought suit in state court to compel Rush H.M.O. to do so. Because the case involved federal Erisa questions, it was transferred to a federal court. Upon remand to an Illinois court on a complicated issue of insurance coverage, the state court ordered Rush H.M.O. to submit the case to an independent review.
Rush H.M.O. and Ms. Moran agreed that A. Lee Dellon, M.D., an expert in plastic and reconstructive surgery at Johns Hopkins, should undertake that review. Dr. Dellon concluded that the surgery, including the microneurolysis, was medically necessary, but he believed that Dr. Terzis should have used a less extensive procedure. On review of the entire case, Rush H.M.O. concluded that the procedure actually performed by Dr. Terzis was not medically necessary. Rush again declined to pay for the surgery. Ms. Moran then sued for reimbursement in a case that eventually made its way to the United States Supreme Court as Rush Prudential H.M.O. v. Moran.
Supreme Court Opinion
Justice David Sauter, writing for the majority, began his opinion by lamenting that the “unhelpful” drafting of the Erisa legislation resulted in seemingly contradictory demands. The legislation pre-empted state legislation regarding employee-provided health care benefits, while at the same time a “saving clause” in the federal statute provides that states retained regulatory control over insurance. This conflicting role with regard to state regulation of H.M.O.’s resulted in differing interpretations of the Erisa preemption by various federal courts. The Court of Appeals for the Fifth Circuit, in Texas, ruled that federal pre-emption prevented any state regulation of Erisa health care benefits. The Seventh Circuit Court, which governed the Illinois case, took the position that the “saving clause” granted the states a continuing supervisory role over insurance coverage for health plans and thus the right to regulate H.M.O.’s. The Supreme Court accepted an appeal of that decision to resolve the conflicting circuit court rulings.
By the narrowest of margins and over the bitter opposition of the minority, the Supreme Court determined that the murky Erisa language carved out a role for state regulation of insurance and thus allowed Illinois to mandate independent review of insurance-covered health benefit claims. The court here seemed to be responding to the widespread distrust of H.M.O.’s and to the nearly universal attempts of the various states to provide some outside appeal mechanism when H.M.O.’s deny coverage. It was the broad philosophical concern that patients not be denied necessary medical care, rather than a close reading of the facts in the particular case, that concerned the court.
The minority and the court’s critics believe that the resolution of disputes over health benefits covered by Erisa is best left to the Congress. They would have let Congress, through the proposed Patients’ Bill of Rights, determine the mechanism for resolving disputes between patients and H.M.O.’s. Instead, the court ruled that the Erisa legislation allowed the various states to have that role.
Under the court’s decision, individuals working for the same company and sharing a common H.M.O. plan now have different appeal rights and different statutes governing their coverage. Their benefit claims now depend not on nationally promulgated regulations, but on the legislation of the particular state in which they reside. The Illinois H.M.O. act, for example, directs that when there is a dispute between the recommendation of the primary care physician and the H.M.O.’s on coverage, the independent review mechanism comes into play. If so, the carefully crafted internal review mechanisms—now part of most H.M.O. contract provisions, such as membership committees to review denial of a regulated procedure—are bypassed. Currently treatment decisions—at least in Illinois—are the exclusive domain of the outside independent reviewer.
The court’s ruling in Rush Prudential H.M.O. v. Moran appears to be a victory for the consumer against the H.M.O.’s. The outcome certainly appeals, as the minority noted, to people who are “naturally sympathetic to those suffering from illness, who seek further options.” The remaining issue, however, is at what price was this victory achieved? Disparate state laws and inconsistent external review requirements on applicability, procedures, standards and deadlines will now prevail. The review mechanism can be, as in Illinois, an independent physician agreed to by the patient and the H.M.O., or it could be, as some states have determined, a committee chosen by the H.M.O. or even an elected group of H.M.O. members. There is no uniformity and no national standard.
If in the future patients refuse the standard treatment for an ailment in favor of a promising but unproven and as yet unaccepted therapy, as did Ms. Moran, and manage to get an independent reviewer to declare it medically necessary, the present attempts to control spiraling health care costs by restricting covered treatments to therapies that have proven safe and effective will be thwarted. Whether or not this might drive some employers to drop health care benefits altogether, as the minority opinion warns, remains to be seen.