When Colonel Steve Austin, the main character in the $6 Million Man TV series, wanted to save his fiancée, Jaime Sommers, from the effects of a devastating skydiving accident, he promised her services to a intelligence agency in exchange for bionic body parts.
Today, in the real world, patients who need expensive new procedures try to raise the necessary funds with bake sales, crowdfunding websites, home equity loans, and whatever cash they can squeeze out of their insurance policies.
Even if you shut down your health insurance business years ago, you could still end up talking to a diabetic life insurance policyholder who needs a life settlement to pay for a pancreas transplant.
Harvard Bioscience Inc., Holliston, Mass. (Nasdaq:HBIO), put the experimental treatment finance issue in the spotlight late last year when it announced that it was helping Christopher Lyles, a 30-year-old Abingdon, Md., engineer who was dying from trachea cancer, grow an artificial windpipe from his own stem cells.
Lyles had some of the best health insurance coverage in the United States – federal employees’ health benefits through the U.S. Department of Defense – but the trachea transplant researchers could not get U.S. Food and Drug Administration (FDA) approval to perform a transplant in the United States. Lyles had to travel to a hospital in Sweden to have his transplant.
That meant Lyle was getting an experimental procedure, and getting the procedure done overseas.
“His insurance company would not pay for that surgery,” said David Green, president of Harvard Bioscience.
Major medical policies usually exclude coverage for experimental treatments. But insurers sometimes use definitions of “experimental” that leave themselves flexibility. Even if they clearly state that they do not cover experimental treatments, they occasionally might, because of legal considerations, concerns about bad publicity, or other reasons.
The medical review teams that make the decisions have to balance the need to conserve scarce health funding resources against consciousness of what’s at stake, according to J.D. Piro, the Norwalk, Conn-based leader of Aon Hewitt’s health and benefits legal practice.
“Very few people want to be in a position to deny life-saving treatment,” Piro said. “There’s always an element of emotion when you deal with stuff like that.”
WHAT IS EXPERIMENTAL?
The U.S. Food and Drug Administration (FDA) classifies a new drug or procedure as experimental if the treatment seems to be safe enough to test on humans but regulators have not resolved questions about how safe and effective the treatment really is. The FDA requires that new treatments undergo three levels of pre-approval clinical trials and, in some cases, a phase of post-approval trials.
Experimental treatments are not necessarily expensive, and expensive treatments are not necessarily experimental. Kidney dialysis, for example, has been around since the 1940s and costs about $25,000 per year. The Foundation for Innovative New Diagnostics, Geneva, Switzerland, recently developed an innovative new system for detecting multi-drug-resistant tuberculosis that costs less than $20 per test.
Definitions of “experimental treatment” vary.
Medicare may classify a treatment as experimental if the FDA has not yet decided whether it is safe and effective but will let researchers test it on human subjects.
Network Health, Medford, Mass. — a private, nonprofit plan — says “experimental and/or investigational drugs” are “new kinds of treatment.” “We decide whether to cover new drugs and procedures based on scientific evidence and what doctors and other clinicians recommend,” the company says in its plan member handbook.
Kaiser Permanente of Colorado, an arm of Kaiser Permanente, Oakland, Calif., gives an eight-part definition of “experimental or investigational services” in a member guide. To determine the status of a new treatment, Kaiser committees consider the views of state health agencies and the U.S. Department of Health and Human Services as well as the FDA.
Congress included minimum standards for health insurer internal appeal and external review programs in the Patient Protection and Affordable Care Act of 2010 (PPACA). Because lawmakers refused to let the new PPACA standards preempt stronger state standards, the rules continue to differ from state to state.
California has an independent medical review law that gives insureds seeking experimental treatments for “life threatening or seriously debilitating conditions” an edge. The law also lists the kinds of sources patients can use to support arguments about whether a treatment is or is not experimental, consultants at Kelch Associates, Elk Grove, Calif., wrote in an analysis for the California HealthCare Foundation, Oakland, Calif., earlier this year.
WHO PAYS FOR THAT?
About 33% of the independent review cases involving California health insurers and about 25% of the cases involving California health maintenance organizations are experimental treatment cases, the consultants reported.
Texas has been another trend-setting state. The attorney general’s office there negotiated a settlement with Aetna Inc., Hartford (NYSE:AET), in April 2000. The settlement requires Aetna to post coverage policy bulletins on its website and to cover experimental treatments for terminally ill patients with life expectancies of less than two years who are not responding well to conventional treatments.
The National Association of Insurance Commissioners (NAIC), Kansas City, Mo., tried to bring order to claim decision reviews by adopting the Uniform Health Carrier External Review Model Act in 2008. Section 10 of the model gives a patient access to an external review if a carrier denies coverage because it says a procedure is experimental and if the patient’s physician will certify that standard treatments have not worked, standard treatments are not medically appropriate for the individual involved, or there is no standard treatment that is more beneficial than the requested treatment.
About 9 states have adopted laws or regulations based on the NAIC model.
The federal appeals courts have given mixed messages about experimental treatment decisions.
Federal courts have often used the Employee Retirement Income Security Act (ERISA) to give employers and health insurers wide latitude to make what the courts believe to be employers’ reasonable decisions about what plan and policy terms mean.
In a 2002 ruling, a three-judge panel at the 2nd U.S. Circuit Court of Appeals ruled 2-1 that a health insurer, Empire Blue Cross and Blue Shield, New York, ought to provide coverage for high-dose chemotherapy for a man with breast cancer, even though one of the foremost authorities on bone marrow transplants, Dr. Thomas Spitzer, told the company that high-dose chemotherapy would likely be no more effective than conventional chemotherapy.
In 2004, a three-judge panel at the 8th U.S. Circuit Court of Appeals ruled 3-0 the UnitedHealth Group Inc., Minnetonka, Minn. (NYSE:UNH), could deny coverage for intravenous feeding to a woman who was said to be suffering from the toxic effect of petrochemicals and other health problems. The 8th Circuit observed that UnitedHealth had put the request through a total of five rounds of review, including two by in-house physicians and two by independent physicians.
Other indicators, such as whether other competing payers are covering a treatment and whether a new product has a Current Procedural Terminology (CPT) also count, according to Dr. Bruce Quinn, a senior health policy specialist at Foley Hoag L.L.P., Boston.
When a procedure has a CPT code, “It means you passed a certain bar,” Quinn said. “It gives a procedure a certain amount of credibility.”
The insurers themselves have created what amount to in-house judicial systems to handle patient concerns about claim decisions.