Chapter 9.D.2 (or 3.D.2) -- Health Insurance Coverage Disputes

Here are links for Medicare Guideance Documents, Coverage Manual, and Coverage Determinations:
http://www.cms.hhs.gov/center/coverage.asp
http://www.cms.hhs.gov/Manuals/IOM/
http://www.cms.hhs.gov/mcd/index_list.asp?list_type=ncd

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).

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).

Additional discussion about coverage of ABMT breast cancer treatment can be found in Peter Jacobson, et al., Litigating the Science of Breast Cancer Treatment, 32 J. Health Pol. Pol'y L. 785 (2007), which is excerpted from Richard Rettig, et al., False Hope: Bone Marrow Transplantation for Breast Cancer (2007).

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.” It remains to be seen whether (and which way) these elaborations might affect the 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).

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. . . .

• I turned pre-existing exclusions into a game, as I tried to connect almost any  medical complaint or visit into a reason to deny payment for some requested  surgery or service based on "pre-existing" conditions; for example, I commonly  used this to deny gynecologic surgery . . .
• I was only as "good" as the doctors in my network, for it was their numbers  that I needed to prove I was doing my job. That means that I did whatever it  took to "control" them -- intimidation, hassling, humiliation -- I have done it  all. I have used inaccurate data to create reports to get doctors to make their   "numbers" better (i.e. lower their usage). I have used "economic credentialing"   to select the least expensive physicians, rarely correlating these figures with   corresponding assessments about clinical practice. I have helped design contract  provisions to ensure our payment and monitoring schemes got the results we  wanted at the plan. I have threatened deselection to those who were especially  "difficult," or costly.

    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:

• was not practicing, but sitting behind a desk making decisions about a patient  I would not see or touch, completely removed from the consequences of my  decisions
• was getting paid by someone to make decisions for the benefit of a plan, not  for the benefit of its members; had a job defined by how much I saved the  company (or how many denials I made); in one job I had to meet a certain denial quota, in another, no number was ever high enough
• had no code of ethics  for my hybrid role between executive and physician
• had no one challenging my  medical decisions or my authority, especially when they involved denials.

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.

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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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