WASHINGTON, Jan 15, 2002 (United Press International via COMTEX) -- The Supreme Court is about to hear argument in an important case that may determine how accountable health maintenance organizations must be for their patients' health.

The high court already has ruled in 2000's Pegram vs. Hedrich that patients can't sue under federal law when doctors, acting as officers of HMOs, make decisions based on economics rather than sound medical practice.

The latest case dealing with HMO accountability comes out of Illinois and is scheduled to be heard Wednesday morning. At issue is whether federal law pre-empts laws in 41 states requiring independent review when a medical procedure is denied by an HMO.

The Supreme Court dispute is at the core of the ongoing national political debate -- whether decisions by doctors regarding health care may be overridden by a health care provider, sometimes for economic reasons.

As do laws in 40 other states and the District of Columbia, Section 4-10 of the Illinois Health Maintenance Organization Act requires independent review when a patient's primary care doctor considers a proposed procedure to be medically necessary, but an HMO disagrees and denies coverage.

The patient may have the HMO's decision reviewed by an outside physician, and under state law the HMO must abide by that physician's decision.

Under a health care plan sponsored by the employer of Debra Moran's husband, Rush Prudential HMO Inc. provides access to medical and hospital care.

In 1996, Moran sought treatment from Dr. Arthur LaMarre, a Rush-affiliated primary care doctor, for pain, numbness and decreased mobility in her right shoulder.

When physiotherapy did not relieve her symptoms, LaMarre sought advice from Dr. Julia Terzis, a Virginia surgeon who specializes in micro-reconstructive surgery. Terzis agreed with LaMarre that Moran's problems were caused by what is commonly called "pinched nerves" -- actually "nerve compression syndrome."

Terzis's surgery technique for relieving the compression is more complicated that normal procedures, according to court records, but the doctor felt Moran was a good candidate for the procedure.

After meeting with Terzis, Moran asked LaMarre to get approval from Rush for the procedure. However, LaMarre sent her first to see two Rush-affiliated thoracic surgeons, both of whom recommended more conservative surgery.

Moran persisted in asking for the Terzis procedure, and in October 1997 LaMarre asked Rush to approve it, adding that she would be "best-served" by Terzis's more complicated surgery.

Rush denied the request, saying the surgery was "out of network."

Although administrative appeals failed, Moran underwent the Terzis surgery anyway in February 1998. She sent the bill to Rush -- just under $95,000.

When Rush did not act on the bill, Moran filed a complaint in Illinois circuit court asking for an order requiring Rush to appoint an independent physician to review her claim. An independent physician eventually determined that the Terzis procedure was "medically necessary."

However, Rush successfully had the case switched to federal court, contending that the federal Employment Retirement Income Security Act of 1974 -- better known to human resources departments everywhere as ERISA -- pre-empts the state law.

ERISA doesn't provide for outside review; it simply allows a patient to file a civil suit in an attempt to recover medical expenses. The chances that Moran could prevail in a civil suit under a "denial of benefits" claim were remote, since the procedure was performed out of the HMO network.

A federal judge ruled for the HMO, saying ERISA pre-empted the state law requiring independent review. But a federal appeals court reversed, and Rush asked the Supreme Court for review.

Both sides are scheduled to do battle in the Supreme Court Wednesday morning.

A "report in progress" for the Kaiser Family Foundation by researchers at Georgetown University's Institute for Health Care Research and Policy has already come to some conclusions about the effectiveness of outside review programs.

The first state external review requirement was established by Michigan in 1978. By the end of 2001, 41 states and the District of Columbia had enacted external review laws, with most created in the last three years.

Although the programs vary significantly from one state to the next, the researchers found, consumers are granted relief through external review on average about half the time. The researchers said 45 percent of the time insurance plan denials are overturned completely; 6 percent of the time they are overturned partially.

Currently, almost half of workers with employer-sponsored health insurance cannot use state external review programs because they are in "self-insured" plans (those provided directly by the employer rather than purchased through an insurance company), the Kaiser researchers found.

Under the federal ERISA law, self-insured plans are federally regulated and have been considered exempt from state external review programs.

Both the House and Senate have passed bills that would establish a federal right to independent external review of health plan denials for all privately insured individuals. However, the bills take different approaches to already enacted state laws, the Kaiser researchers said.

The Senate bill would establish a federal floor for external review protections, leaving in place features of state programs that are more protective of consumers, but overriding those that are less protective. The House bill, by contrast, would preempt all state external review programs as well as state requirements for internal appeals, replacing them with a single federal standard.

From Healthy.ent