In a major victory for Medicare beneficiaries, a federal appeals court last week ruled that Medicare HMO enrollees who are denied treatment must be given quick hearings by managed-care plans that contract with the government.
In effect, the ruling precludes HCFA from renewing Medicare HMO contracts with plans that violate the due process protections of the constitution.
The ruling comes in the midst of a turbulent time for the Medicare HMO industry, which is beset by huge losses among a number of large companies and simultaneous charges by federal regulators that health plans are overbilling the government for administrative expenses (See related story, p. 10).
In an Aug. 12 ruling on a nationwide class-action lawsuit, the 9th U.S. Circuit Court of Appeals in San Francisco upheld a lower court decision indicating that numerous HMOs have failed to provide Medicare enrollees with appropriate explanations for denials of care. They have also failed to give adequate information about enrollees' right to appeal such decisions.
Writing for the three-judge panel, Judge Charles Wiggins ruled that HMOs act as government proxies when serving Medicare patients and must adhere to the Fifth Amendment's guarantee of due process.
"HMOs and the federal government are essentially engaged as joint participants to provide Medicare services," the court said.
The case involved a 1993 lawsuit on behalf of about 6 million Medicare HMO enrollees nationally. It was filed by a Tucson, Ariz., group called the Center for Medicare Advocacy, which originally represented five elderly Arizona women who were denied treatment without explanation by their Medicare HMOs.
The appeals panel upheld a ruling by the U.S. District Court for the District of Arizona.
"The appeal rights and other procedural protections available to Medicare beneficiaries are meaningless if the beneficiaries are unaware of the reason for service denial and therefore cannot argue against the denial," the appeals court said.
The Washington-based American Association of Health Plans had no comment on the decision, but a spokesman said recent changes in the Medicare appeals process should eliminate some of the problems addressed by the lawsuit.
