Who decides what is
November 12, 2023
ProPublica published a lawyer's challenge in getting a health insurance company to cover the costs of a specific cancer treatment. While the insurer offered to cover a different treatment, that treatment is less precise and could cause significant damage to the patient's health. Part of the article details the multiple medical reviews by different medical doctors that the appeal went through, leading readers to think that the denial was reasonable. However, it becomes clear that all of the doctors relied on guidelines that were published by a separate company. For the lawsuit that the patient field, one of the patient's doctors compiled evidence that the preferred treatment could lead to meaningfully better health outcomes. After losing the case, the insurer filed an appeal, which ended in the patient's favor.
The article explains that in this case, the insurer was governed by a statute known as the Employee Retirement Income Security Act (ERISA), which apparently gives insurers broad discretion in deciding what to cover. This arrangement seems like an inherent conflict of interest. Theoretically, the insurer adopting guidelines published by an independent company addresses the conflict of interest. However, if most of the company's revenue is derived from insurers, it is not difficult to imagine the company guidelines being biased in a certain direction. Additionally, it is not clear how strong of an incentive the company has to evaluate and recommend newer technologies, especially since they tend to be more expensive.
The federal government (or state governments) could offer an appeals panel to adjudicate disputes on what constitutes "medically necessary" on a case-by-case basis. Alternatively, the government could publish guidelines. A less direct way would be to hold the insurer responsible for unnecessary pain and suffering -- beyond the cost of the operation. If legal liabilities were significant enough over a long enough period of time, insurers might be more collaborative. This option is likely the least pleasant for patients, and perhaps for insurers as well -- assuming the legal liabilities are high enough.