Wednesday, June 23, 2004

The Sky Is Still Up There

Yesterday’s newspapers reported that on Monday the US Supreme Court ruled unanimously that patients cannot use state courts to sue most health insurance plans for refusing to cover medical treatments. They have to use federal courts instead, where the permitted damage awards are much lower.

The ruling is based on the provisions of the federal Employee Retirement Income Security Act of 1974, generally known by the acronym ERISA.

Two cases were involved. In one, the patient had been readmitted for post-hysterectomy complications that she claimed were caused by being discharged from the hospital too early because the health plan wouldn’t authorize an additional day. The other patient claimed to have had a reaction to a generically equivalent drug that the health plan substituted for the one prescribed.

The court pointed out that under ERISA patients denied coverage have the right of quick appeal to an independent decision-maker, but neither plaintiff had done so.

What impresses me about all this is not so much the legalities involved, which I do not pretend to understand, but its implications for the structure of the health care delivery system.

The papers quote John Nelson, president of the American Medical Association, as saying “By reserving the right to decide what is – and what is not – medically necessary, managed care plans can now practice medicine without a license.”

Technically, of course, health plans do not deny services. They only deny payment. But everybody seems to think that is a distinction without a difference.

So it seems to me that Nelson is right, but if the losing attorneys made his argument (which surely they did), it didn’t seem to impress the Supremes.

It doesn’t seem to have impressed the Congress either, which after several attempts hasn’t been able to agree on a patient’s rights bill that addresses this issue.

If health plans can practice medicine without a license, does that mean that hospitals can, too?

If a judicial ruling like this had come down fifty years ago, one would have expected the sky to fall. But two days have now passed and the sky is still up there.

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