The sad story of a woman who went ahead with liver surgery her insurer would not cover was considered by the Ninth Circuit in Conahan v. Sebelius, 2011 U.S. App. LEXIS 22071 (9th Cir. Nov. 1, 2011).
By way of background, Medical Advantage beneficiaries receivemedical services within the network of providers established by their HMOs. Federal regulations, however, require Medicare Advantage plans to cover certain out-of-plan medical care, including emergency and "urgently needed services."
Gaye Glaser of Hawaii was a member of Kaiser Permanente Senior Advantage plan. She was diagnosed with cancer of the liver. Kaiser's Tumor Board, a group of thirty physicians, from both within and outside of Kaiser, determined that complete removal of the tumor could leave too little liver for Ms. Glaser to survive, and that surgery would not eliminate the possibility of the cancer recurring. The Tumor Board therefore recommended chemotherapy to hopefully shrink the tumor.
Not happy with the recommendation, Ms. Glaser went to another physician, unaffiliated with Kaiser, and had the liver surgery performed. Approximately 70% of her liver was removed and she was in the hospital for three weeks. Kaiser refused to reimburse her for the cost of the surgery, approximately $150,000.
Ms. Glaser appealed to the Office of Medicare Hearing and Appeals. The ALJ concluded Kaiser failed to make its medical services available, accessible, and adequate, as required by federal regulation. Further, Kaiser was obligated to pay for the out-of-plan surgery because it was an "urgently needed service" under the regulations.
Kaiser then appealed to the Medicare Appeals Council (MAC), which reversed the ALJ's decision. Next, Ms. Glaser appealed to the federal district court, where Judge Ezra affirmed the MAC. Ms. Glaser died while her appeal to the Ninth Circuit was pending, and her personal representative continued to pursue the appeal.
The Ninth Circuit affirmed the MAC and the district court. First, the court considered whether care was "available and accessible." If the HMO's in-network specialty care was "unavailable or inadequate"to meet the enrollee's medical needs, it had to arrange out-of-network care. The MAC found that Kaiser denied a referral to an out-of-network provider, but it did not deny her medical care that was reasonably believed to be within the standard of appropriate medical care. The Ninth Circuit agreed that substantial evidence supported this conclusion.
Next, the court considered whether the surgery was an "urgently needed service" which should be covered. The personal representative contended that Kaiser's refusal to perform the surgery rendered its network "unavailable or inaccessible," making the out-of-plan liver surgery an "urgently needed service." If this reasoning was accepted, the Ninth Circuit felt Medicare Advantage organizations would always be required to pay for out-of-plan procedures they refused to perform. Therefore, the court deferred to the agency's reasonable determination that the "urgently needed services" exception was not triggered by a denial of coverage. Accordingly, Kaiser was not required to pay for the surgery.
