Health plan on trial: Decisions bring responsibility

A New York lawsuit presents a major test of how health plans can be held accountable for their treatment decisions.

Editorial. April 1, 2002.

"Mixed eligibility and treatment decisions" is a rather bland and bureaucratic combination of words that may nevertheless hold the key to much greater accountability by managed care plans for their meddling in patient care. The outcome of an appeal before the 2nd U.S. Circuit Court of Appeals in New York is expected to signal just how powerful those words might be.

The case is Cicio v. Vytra Healthcare and it involves the defendant health plan's denial of a peripheral blood stem cell transplant to cancer patient Carmine Cicio. By the time Vytra got around to offering its alternative, a single stem cell transplant, Cicio was already too ill and he soon died.

From the health plan's perspective it was a classic benefits eligibility decision -- not a medical one. It is an interpretation that conveniently shields the plan from liability in state court, thanks to the managed care industry's favorite law -- the Employee Retirement Income Security Act. The patient's widow disagreed, felt that plan medical decision-making played a role in her husband's death and filed suit.

That is where those five crucial words come into play. They are from the U.S. Supreme Court's 2000 ruling in Herdrich v. Pegram. The Herdrich case, fought over the issue of financial incentives in managed care, was at the time seen as a major victory for health plans. However, in one key passage, justices also noted that so-called "mixed eligibility and treatment decisions" -- plan actions in which medical and coverage decision-making are intertwined -- fell under state jurisdiction (read: no ERISA preemption). [...]