Supreme Court may rule on expanding patient protection rights

The high court asks the new administration for its views on the increasingly popular state independent medical review laws.

By Tanya Albert, amednews staff. Jan. 29, 2001.

Physicians will soon get a glimpse of how George W. Bush's administration views expanding patients' rights against health insurers.

The U.S. Supreme Court asked the Justice Dept. earlier this month for its views on whether states can require independent medical reviews when health plans and patients disagree on medical necessity.

Independent review
Cases at a glance

The Supreme Court hasn't accepted the case -- which challenges a Texas law allowing a review. But the request for the government's opinion indicates that justices may be interested in taking up an issue that recently has been at the top of state and federal agendas.

A ruling from the high court could affect nearly 40 states and the District of Columbia, which have passed independent or external review laws. More than a dozen of those states adopted laws in the past year.

"This is certainly a major issue on the state level, and many states are taking action," said Richard Cauchi, senior policy specialist with the National Conference of State Legislatures. "Part of this whole question is, "What can a patient or a consumer do?' "

When it comes to independent review, there are conflicting federal court answers to that question.

The U.S. Court of Appeals for the 5th Circuit last summer struck down a Texas 1997 independent review law. The court, whose jurisdiction covers Louisiana, Mississippi and Texas, said the law conflicted with the federal Employee Retirement Income Security Act of 1974 that has its own review process. The ruling affects only employee-sponsored health plans that are protected by ERISA.

But the 7th U.S. Circuit Court of Appeals upheld a similar independent review law in Illinois. That court, with jurisdiction over Illinois, Indiana and Wisconsin, said it didn't see a conflict between the Illinois independent review law and ERISA. The ruling applied to insured HMOs, which are those in which the HMO itself rather than the employer contracting with it is responsible for paying patient claims.

The HMO involved in the Illinois case, Rush Prudential HMO Inc., asked in late December 2000 that the U.S. Supreme Court strike down the Illinois independent review law and similar laws in other states.

The appellate court opinion in the Illinois case is an example of recent court opinions that have increasingly chipped away at some of the protection ERISA gave insurers.

"You are seeing more traditional and conservative opinions in traditional state rights," said Daniel Albers, the attorney with Chicago-based Barnes & Thornburg who represented the patient in the Illinois case. "[Court opinions] have been truer to what Congress intended the law to be."

As conflicting court opinions and debate on a national patients' bill of rights show, it's still unclear just how far the laws should go.

But some who favor patient protection rights are optimistic about the new administration. President Bush was the Texas governor when the state legislature passed the independent medical review law that is being appealed to the Supreme Court.

System working

A study released last year by the Kaiser Family Foundation and Consumer Reports found that most HMO members in the 33 states that have laws don't realize they have the right to an external review or were confused about where to go for help if they did have a problem.

Texas was an exception, according to the study. People there were more knowledgeable about the law and were using the independent review organizations. And despite court conflicts, doctors and insurers there have said that state independent and external review laws have worked.

Anecdotally, Texas physicians have said that they are seeing more reasonable compromises upfront because insurers know that the case can go to an independent review organization, said Texas Medical Assn. General Counsel Rocky Wilcox.

"If you can put a fair process in place, then you encourage fair practice earlier on," he said.

About 1,000 cases have gone to independent review organizations since the Texas law was passed in 1997, and the insurer's decision was reversed about 50% of the time, according to the Texas Dept. of Insurance.

And reviews have continued since the appeal court struck down the Texas law.

Aetna U.S. Healthcare, which brought suit against the Texas law, did not want to comment on the Supreme Court's decision to ask for the government's view on independent review. But in the past, Aetna has told AMNews that it challenged the Texas independent review law only to strengthen its case against a liability provision in the Texas law. Company executives have said they support the voluntary review system.

More than a dozen states have passed external or independent medical review laws since the Texas law passed. In many cases, the law was part of a larger patients' bill of rights package, Cauchi said.

And a brief from the Justice Dept. and perhaps a Supreme Court decision could continue to shape the evolving laws.

"The federal court system in Texas raised questions on how a state can do this," Cauchi said. "States that have passed these laws since the district court and appeals court ruled have tried to be careful in the drafting of the legislation. But it remains an open-ended question."

ADDITIONAL INFORMATION:

Independent review

About a dozen states added laws in 2000 to let patients ask for independent or external review if their insurer says it won't pay for a treatment. Currently, nearly 40 states and the District of Columbia have independent or external review laws:

Alaska, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, Washington and Wisconsin.

Source: National Conference of State Legislatures

Cases at a glance

Corporate Health Insurance Inc. v. Texas Dept. of Insurance

Venue: U.S. Supreme Court.
At issue: The 5th U.S. Circuit Court of Appeals last summer struck down the Texas independent review law, saying it is preempted by a review system set up under the Employee Retirement Income Security Act of 1974.
Latest action: The U.S. Supreme Court this month asked the Justice Dept. to write a brief on its views on the issue. It's an indication that the court could be interested in the case.

Debra C. Moran and the State of Illinois v. Rush Prudential HMO Inc.

Venue: 7th U.S. Circuit Court of Appeals in Illinois.
At issue: Last fall the appeals court upheld Illinois' independent review law, saying the law doesn't conflict with ERISA.
Latest action: In a petition for review, Rush Prudential asked the U.S. Supreme Court to strike down the Illinois law.
Potential impact: The 5th and 7th U.S. Circuit Courts of Appeals disagree on whether states can require self-insured health plans to use an independent review process if the plan and the member's doctor disagree on what is medically necessary. If the U.S. Supreme Court takes either of the cases, its decision could affect similar laws in nearly 40 states.