U.S. Supreme Court upholds HMO patient's right to seek an independent second opinion - In the News - Rush Prudential HMO, Inc. v. Moran et al., No. 00-1021 - health maintenance organization - Brief Article - Statistical Data Included

Healthcare Financial Management, August, 2002

In a 5-4 vote, the U.S. SUPREME COURT upheld the right of an HMO patient to seek an independent second opinion when an HMO denies medical benefits (Rush Prudential HMO, Inc. v. Moran et al., No. 00-1021). At issue in the case was whether the Federal Employee Retirement Income Security Act of 1974 (ERISA) preempted the Illinois HMO Act, which provides HMC patients with a right to independent medical review of certain denials of benefits. In holding that ERISA does not preempt the state law, the Court noted that HMOs are risk-bearing organizations subject to state insurance regulation.

In the case, an HMO patient had sued her health plan after it refused to pay for surgery performed by an out-of-network surgeon. The HMO instead proposed a less-expensive surgery to be performed by a plan-affiliated physician. The patient sued and won in state court, and the case then was heard by Federal district court, where the HMO claimed that ERISA preempted state law. The HMO won in Federal court, but the U.S. Court of Appeals, 7th Circuit, in Chicago reversed the Federal court's decision and ruled in the patient's favor. (See HFM, March 2002, p. 22.)

The U.S. Supreme Court's majority opinion stated that ERISA merely requires health plans to provide beneficiaries with a mechanism for internal review of a benefit denial and provides a right to a subsequent "judicial forum for a claim to recover benefits." The Court added that ERISA does not require that medical necessity decisions be discretionary.

AT A GLANCE

TRENDS IN DISCHARGE DISPOSITION 1993-2000

                         1993   1994   1995   1996   1997   1998

Routing Discharge       81.4%  79.6%  78.1%  76.9%  76.8%  76.5%
Other Institution        9.8%  10.7%  11.6%  12.7%  13.2%  13.8%
Home Health Care         5.0%   6.0%   6.7%   7.0%   6.7%   6.4%
Against Medical Advice   0.9%   1.0%   0.9%   0.8%   0.8%   0.8%
In-hospital Deaths       2.7%   2.6%   2.6%   2.5%   2.5%   2.5%

                         1999   2000

Routing Discharge       76.7%  77.2%
Other Institution       13.4%  13.4%
Home Health Care         6.6%   6.2%
Against Medical Advice   0.8%   0.8%
In-hospital Deaths       2.5%   2.4%

Source: DGA Partners' analysis of United States Agency for Healthcare
Research and Quality's National Inpatient Sample.

Note: Table made from bar graph