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Fighting HMOs

The Supreme Court upholds state laws that help patients fight their HMOs.

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  • RAY SUAREZ:

    At issue in this case was the constitutionality of state laws that allow patients to fight their HMO's and get second opinions. Jan Crawford Greenburg is still here; joining her is the NewsHour's health correspondent Susan Dentzer.

    Jan, let's begin by reminding people what this case was about. What was the court trying to decide?

  • JAN CRAWFORD GREENBURG:

    Well it was going to decide whether or not the state laws that 42 states now have to set up these kind of independent review procedures where, you know, if you're a patient and you disagree with your HMO's decision on your treatment, you can go to these outside, independent reviewing boards to try to get recourse.

    The court is going to decide if those state laws were valid or whether or not a federal law passed in 1974 to govern employee benefits and pension plans, whether that federal law took precedence and would pre-empt all of these state laws. So it's a complicated legal issue but obviously very real, practical effects particularly for people who feel their HMO has wrongly denied their claim. That's what Deborah Moran, the Chicago woman, near Chicago at the heart of this case, believed and that's why she took it, as I talked to her today, she said she was going to fight all the way to the end until she won and she did.

  • RAY SUAREZ:

    And how decisive was this court in speaking on this?

  • JAN CRAWFORD GREENBURG:

    Well, I mean, this case was a very closely divided ruling. The Justices were divided 5-4 but they clearly said today that the state laws that establish these independent review boards could proceed, that those were not preempted by that old federal law and so people like Deborah Moran, who felt that they should be able to pursue treatment that the HMO had denied, they could take their claims to these review boards. And try to force the HMO to pay for them.

  • RAY SUAREZ:

    So now, those boards or those mechanisms, which exist in one way or another in most states in the union —

  • JAN CRAWFORD GREENBURG:

    Right.

  • RAY SUAREZ:

    — are stamped approved by the Supreme Court?

  • JAN CRAWFORD GREENBURG:

    If they're set up the way the one in Illinois is, yes. And the people I spoke with today said they believe most of those laws will be able to stand.

  • RAY SUAREZ:

    Susan Dentzer, if you are a patient, which millions are in HMO's, or if you're an HMO, have the rules of the game changed after today's ruling?

  • SUSAN DENTZER:

    No. In fact if anything, this seems to be a validation of the status quo such as it is. This ruling in effect applies to people who are in insured plans, that is to say, HMO's or other plans that are regulated by most states as insurance products. That was the case of this law in Illinois, that was at issue in this case.

    The HMO Act of Illinois applies to HMO's, which are technically insurance products. People in those insured products have the right to go through the state mechanisms that have been created — the appeals boards or appeals processes that Jan has talked about. There are many other individuals in other types of health insurance arrangements, people in Medicare have a separate set of review procedures that apply to them, people in Medicaid will have a different set of review procedures, and then there's an important group of Americans who are in plans that are actually run by their companies.

    These are known as self-insured plans. Those are still governed by ERISA. And those people may or may not have access to independent reviewers depending on what the terms of their plans are. So the situation today is the same as situation yesterday. People have the rights of appeal through their particular plans that they had before the court made this ruling.

  • RAY SUAREZ:

    Now Deborah Moran in a suburb of Chicago wanted very expensive surgery. Her HMO said no. She went and appealed. She even lost in the appeal process. They continued to turn her down. Doesn't this ruling go to the heart of what HMO's were set up in the first place to do, that is, limit health care costs?

  • SUSAN DENTZER:

    Well, does it go to the heart, yes, in fact but let's look at the real effect on Mrs. Moran. She actually did go ahead and have the surgery done eventually. The HMO did, in fact, pay; it paid a $95,000 claim more or less. So the issue here wasn't money; it's like the old joke — it's not the money; it's the principle. Here it really was the principle. She was fighting this battle to say, look, I have this right under state law to appeal this, to determine whether the procedure really was medically necessary. And as we now know 242 states and the District of Columbia have handed people that right. You can go and determine whether your HMO was right to turn this down and the issue will hinge on was it medically necessary or not? So Mrs. Moran had that right in state law and, as of today, that right is reaffirmed.

  • RAY SUAREZ:

    So can HMO's really limit health care costs and the health care cost inflation that we've seen if anybody who is turned down for a procedure or a treatment can now go to a state board and say, hey, my HMO is not giving me what I need?

  • SUSAN DENTZER:

    Well, the irony of this case all along has been that by and large HMO's like independent review. They don't like necessarily being second-guessed. But the fact of the matter is in the several thousand review cases that take place every year, HMO's win about half the time.

    So it is kind of been a draw for people. And many of the HMO's feel that when you push these decisions into an environment where emotion is stripped out and experts are actually looking at the situation and determining on the basis of science, is this really necessary, often the decision goes in favor of the HMO, so they don't hate independent review at all. What they don't like is all of these very different state statutes, which create some complexity for plans that are operating in multiple states.

    They were very hopeful not necessarily that the court would rule the other way because that carried other hazards with it, but they were very hopeful that the court would send a signal about these complexities and basically in effect urge the Congress to step in and create one uniform federal statute involving all of these appeals to make it so that plans could play by the same rules in all states.

  • RAY SUAREZ:

    Well, Jan, you mentioned this was a very close ruling. Who were the dissenters and what was their point?

  • JAN CRAWFORD GREENBURG:

    That's a great point because Justice Clarence Thomas wrote for the dissent. To his way of thinking this was a huge deal. This was an unprecedented step, that the court was allowing the states to kind of fool around in this area that should be up to Congress and what the court had done today in the words of Justice Thomas was eviscerate the uniformity of this federal law that we've been talking about, this ERISA law, and the uniformity, as Susan said, is very important because if you're an employer you may have offices in different states. You may have employees in different states. So they wanted the one uniform law.

    Justice Thomas, in his dissent, was very concerned that it would drive up health care costs. And he agreed with many of the arguments that the managed care industry have put forth. So he believed that the court was really quite making a dramatic departure from some of its previous rulings and one that would have a detrimental effect to the industry and eventually, he argued, to employees because it might make it harder for employees to get health care insurance.

  • RAY SUAREZ:

    Jan Crawford Greenburg, Susan Dentzer, thank you both.

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