NU Online News Service, June 20, 3:10 p.m. – Washington
In a decision that could have major implications in the debate over patient protection legislation, the U.S. Supreme Court has ruled that states can require managed care plans to accept independent review determinations regarding medically necessary treatments.
In a 5-4 decision, the court upheld a 7th Circuit Court of Appeals determination that the Employee Retirement Income Security Act of 1974 does not preempt state laws mandating independent review.
ERISA tries to iron out differences between state benefits laws and cut employers’ benefit costs by prohibiting states from regulating employee benefit plans. But a “saving clause” in ERISA does give states the ability to regulate insurance policies used in benefit plans.
In the case of Rush Prudential HMO Inc. vs. Moran et al., an employer-sponsored managed care plan challenged the independent review provision of the Illinois HMO Act, arguing that it is preempted by ERISA.
The 7th Circuit rejected the challenge, stating that while ERISA preempts most state laws affecting employer-sponsored plans, state laws that regulate the business of insurance are saved from preemption.
Applying the definition of the “business of insurance” from a series of Supreme Court cases, the 7th Circuit said that the independent review mandate in Illinois is a specific statutory provision aimed at the business of insurance which provides additional safeguards to preserve the integrity of the decision-making process.
Thus, the 7th Circuit said, the Illinois law is saved from preemption. The Supreme Court upheld this reasoning.
Nearly 40 jurisdictions in the U.S. have similar laws.
Mandatory independent review is one of the primary features of patient protection legislation now pending before Congress.