"Managed care is just a euphemism for managed denial, which is arbitrarily based on cost considerations and not
diagnoses or outcomes." Edward Stephens, MD, "Psychiatric News", July 18, 1997.
The Evolution (or Devolution) of Health Care
When you think of evolution, you tend to think of progress, a gradual movement toward something better. Although some may think our health care system has evolved, I’ve watched it devolve into something unrecognizable over the course of my lifetime. When I landed my first “real” job, after college back in 1974 (interestingly, the same year ERISA was enacted), as part of my compensation I was provided a health plan by my employer. It was what was known at that time as a typical “80/20” plan, underwritten by Blue Cross/Blue Shield of Missouri (BCBSM). The way it worked was simple. I paid a relatively modest deductible up front, then BCBSM paid 80% of health care costs and I paid a 20% co-payment, up to a certain limit (probably about $1,000). As was typically the case with most plans at the time, there was a “lifetime maximum” of $1,000,000. (That’s the equivalent of 5.5 million today.) Whenever I saw a doctor I’d usually pay the 20% co-payment for the office visit and sign an “Assignment of Benefits” form so the doctor could to submit a claim for reimbursement to BCBSM for the remaining 80%. But sometimes, for urgent care, I’d have to pay the entire cost of the visit and the doctor’s office would give me what was called a “superbill” that I could submit to BCBSM on my own to be reimbursed. The system, in my opinion, worked beautifully. If I needed to see a doctor, I saw one, usually the same day. And if I needed a specialist, I got one immediately. I did not need to schedule an appointment a month out with my primary care doctor, just to get a referral to a specialist and wait another month to get in. There were no HMOs, PPOs, or IPAs. There was just the insurer, the doctor and me. Simple.
But even back in those days there were people in Congress, who were determined to screw it all up. In 1971 Sen. Ted Kennedy, determined to build on the failures of those who had tried before, proposed his “Health Security Act”, which called for a universal single-payer plan (i.e. nationalized health care.) His bill was never passed into law, but it was followed by battles back and forth between (and among) Democrats and Republicans, with both sides aiming at a way to provide health coverage for the uninsured. Between 1971 and 1973 the concept of Health Maintenance Organizations (HMOs) started to emerge. 
Fast forward to the 1980s, when the health care system was about to undergo a radical transformation. Managed care (to steal a line from Tom Hagen in The Godfather) was becoming “a thing of the future.” After leaving law school and going to work for a health plan administrator, I found myself on a corporate committee, where a concept was being discussed that I’d never heard of before. The word “overutilization” was mentioned by a guy, who was considered to be a top managed care expert. As best as I can determine, this concept seems to have originated with the enactment of Medicare in the 1960s.  Google the term and you’ll find that much has been written on the subject over the years by a number of so-called “experts”. The idea is that if health insurance pays the cost, patients will seek medical care that they really don’t need. You’ll see a lot of anecdotal evidence offered to prove that hypothesis. Personally, I’ve come to the conclusion that it’s all a lot of crap. Back in the days when 20% co-payments were practically universal, it would be insane for any person to go to a doctor or emergency room for treatment if he did not need to. No one had money to burn. But like an unwanted car repair, if you needed it you needed it. However, in keeping with the notion that if you control the language you control the debate, this concept of over-utilization became a central part of the doctrine of a new business model that was gaining tremendous traction at the time, the managed-care industry, designed for the sole purpose of cost containment.
Effective underwriting is at the essence of health insurance profitability. It’s a process by which professional underwriters take various groups or individuals, (depending on which type of coverage you’re talking about) and determine what premium rates to charge. I once had another noted industry expert tell me back in the 80s that the biggest problem with health care was that insurance companies didn’t always know how to “rate it” and as a result, some had lost a ton of money on it at the time. But I can distinctly remember being taught in a college-level accounting class that corporations have ingenious ways of “losing” money on paper, while remaining profitable, so I didn’t buy it for a second. The 2018 “Fortune 500” list includes the largest healthcare insurers in the country: United Health Group (5), Anthem (29), Aetna (49), Humana (56), Cigna (73), WellCare Health Plans (170), and Magellan Health (475). 
The real problem with health insurance is that it’s predicated on a fallacy. Basic health coverage is not really “insurance” at all in the true sense of the word. Catastrophic insurance is real, but basic coverage is a fiction. What we call health insurance is more akin to cash flow management than anything else. True insurance is something you buy to protect yourself from some unlikely event. You may seldom need it, but if that feared event should befall you, such as a serious accident; your house is destroyed by fire; or you’re diagnosed with some major illness, you want the security of knowing that you won’t face financial ruin because of it. But everybody from time to time needs routine health care, such as office visits, blood tests, x-rays, etc. And most working people can afford to pay these things out of pocket, just as we pay for groceries, automobiles and homes. It’s true that many uninsured working people choose not to pay, which is why our hospital emergency rooms are clogged nationwide.
But now that insurance companies are involved in the chain of distribution, wedged between medical service providers and consumers, a different profit motive comes into play. Insurers look for creative ways to squeeze more and more money out of the system. One such way is to “manage” patient care, which is just a euphemism for rationing care. The focus of managed care procedures is usually on the narrow issue of medical necessity. Obviously, employee benefit plans promise benefits, but medical benefits are always limited, by an exclusion in the policy to medically necessary treatment. But what exactly does that term mean? Who decides?
Medical Necessity Claim Denials
Health care claims are frequently underpaid or denied altogether on grounds that treatment is considered not “medically necessary”. Amazingly, this can happen even if the treatment was pre-approved by the insurer and rendered to the patient. I have seen entire hospital stays case-managed and “pre-authorized”, only to have the insurer say after the fact that a particular procedure or set of procedures or in some instances the entire course of treatment was not medically necessary and thus, the claim is denied. Over the years, this has been carried out by insurance companies in a number of different and sometimes creative ways. Of course it doesn’t mean that treatment really isn’t necessary, nor does it mean that benefits are not owed. It's just that in this age of over-managed care insurance companies are often reluctant to let go of a dollar without a fight.
The first time I encountered this problem, it involved a young woman named Susan, who suffered from severe anorexia. Strikingly attractive but a frightening sight to behold, weighing less than 85 lbs. and visibly weak. She had just been released from a hospital on a two hour pass to come to my office. The day before, a friendly representative from Aetna entered her hospital room and hand-delivered a letter, advising that it would not pay for any inpatient care beyond that week. Her treating doctor, who had arranged the meeting with me in advance explained that the treatment program was a minimum 28 days and that she was not quite half way through. He said that if it were discontinued in mid-stream, it would do more harm to her than if she had never entered the program to in the first place. In fact, he said, a premature discharge from the hospital at that point could literally kill her. And to top it off, when Susan’s husband found out that Aetna wasn’t paying for her treatment, he promptly packed his bags and hit the road, leaving her life in shambles.
I’ve always tried to keep emotions out of my work because they often cloud judgment. But this time something inside me snapped. Now this happened back at a time before I had ever thought of litigating an ERISA benefit case and it was before the U.S. Supreme Court had fully mapped out the expansiveness of ERISA preemption. So unrestrained, I came out swinging. I honestly don’t remember if I called the claims representative, who delivered the notification letter or the legal department or whomever, but I basically threatened to not only sue for “bad faith” and punitive damages, but I also promised that I would distribute the story to every media outlet in Los Angeles, the nation’s media center, where it could get picked up and carried nationwide. Whatever I did it must have been taken seriously because it worked. Aetna immediately rescinded the termination and agreed to pay for the remainder of Susan’s hospitalization.
I have not since seen a case where an insurer has engaged in such extreme conduct. But I’ve handled hundreds of health benefit cases, including many eating disorder cases and I have seen some of the stupidest issues raised after the fact, concerning the appropriateness or the duration of inpatient care, even when the need for such care was so clear as to be beyond dispute.
Managed Care - Mismanaged Care
Managed care advocates would have us believe that it performs a vital service, by holding down the rapidly escalating cost of health care. Whether it has done that or not is debatable. What is certain is that it has succeeded in destroying a system of health care delivery that, even with all its faults, was once the envy of the world. And just exactly who is managing our health care? Insurance companies of course. And are they uniquely qualified to do that? Of course not. It’s just another device employed to squeeze every nickel of profit out of the health care system. So it's easy to see who is being fleeced and who is doing the fleecing.
Managed care is nothing more than a fancy term that means someone else besides you will determine what kind and quality of medical care you get, how much of it you get and how long it will take for you to get it. And you can bet your life (and one day you may have to) that someone else, will be far less qualified to make such decisions than you and your doctor will be. So “mangled care” might be a more apt description. At its core is control, the narcotic of every bureaucrat. Its result, a loss of personal freedom. Important treatment decisions are made by nameless, faceless corporate pencil pushers, none of whom have ever seen or spoken to the patient.
Managed care personnel usually work in insurance company departments or units, separate from any claims-related activity. They may also work for a separate company that performs nothing but managed care operations. The people who do the decision-making generally lack the medical expertise to make treatment decisions, as well as the legal expertise to make benefits decisions; and yet, they make both every single day. They usually have access to a consultant, who may be a medical doctor, but often is only a nurse. The consultant then advises whether or not a proposed course of treatment should be approved. If it is, then a certification or authorization is given to the medical provider. Managed care decisions are made quickly and may be based on second or third hand information, transmitted over the phone or by e-mail. This depersonalization of the process removes the people making important treatment decisions from those in need of care, as well as their doctors. Patients are viewed as numbers, not people.
Because of the inherent ambiguity of the term medical necessity, it’s easy to see how the rights of a patient can run head on into the perceived right of an insurer to refuse authorization for proposed treatment or to deny benefits, retroactively. In order to alleviate the uncertainty relating to future treatment, certain managed care procedures were devised. Among these is “utilization review”, which applies to inpatient care. It consists of a “pre-admission review”, which is just what the label says, a review of the known medical information prior to a proposed admission to determine if it is appropriate under the circumstances. Then there is “concurrent review”, which involves periodic reviews, while the patient is undergoing inpatient care, to determine whether continued care will be approved. Usually a provider calls a toll-free telephone number to speak with a person on the other end of the line to obtain the necessary approval(s).
If this first (and perhaps low level) employee refuses give the authorization, there is usually some right to “appeal” the refusal to a higher authority in the food chain. There is a misconception that if authorization is withheld, even after an internal appeal, that a benefit claim is not covered. Depending on what the policy says about coverage, neither the refusal of managed care people to pre-certify an admission, nor the refusal to certify continued care inevitably means that a subsequent benefit claim is not covered. Nor does it always mean that the insurer will not ultimately pay a claim. In this sense, lack of certification may mean nothing, except that the insurer does not guarantee payment. But that’s always true no matter what. Regardless of whether approval is given or not, coverage is still subject to plan exclusions, limitations, eligibility requirements, etc. But from the standpoint of a medical provider, the act of certification does have great importance, because it is intended to lay to rest the issue of medical necessity, so that it can render treatment without concern for whether an insurer will later deny a claim on those grounds.
Most managed care employees are very careful in their communications with patients and medical providers to disclaim any final decision-making authority with respect to an actual claim for benefits under the plan, since they don’t want to assume the responsibility for making such final decisions. Because if they did, they’d magically transform themselves into ERISA fiduciaries and might face legal consequences for making benefit determinations inconsistent with the law or governing plan documents. But it’s not uncommon for the actual claims fiduciary to defer to the judgment of managed care workers, which is a dangerous practice if the certification criteria relied upon are different from the actual plan criteria for determining benefits. If that occurs, the denial should not withstand scrutiny by a court. The bottom line is that fiduciary standards apply to ERISA claims review procedures and managed care companies (MCCs) are not ERISA fiduciaries. In fact, managed care and fiduciary responsibility are such diametrically opposed concepts that it is difficult to envision either co-existing with the other. The function of managed care is to control costs. The purpose of fiduciary responsibility is to protect plan participants. The internal, subjective, cost-containment standards that drive managed care are not the same as the more objective standards to be applied by a plan fiduciary, when making benefit determinations.
Retroactive reviews and the dilemma of secret criteria and guidelines
Nevertheless, in years past, insurers sometimes engaged in retroactive reviews, applied their own internal (secret) certification criteria to deny claims and often got away with it. The poster child for such a practice was a 1999 decision by the 10th Circuit Court of Appeals in Jones v. The Kodak Medical Assistance Plan,  one of the most intellectually and legally flawed decisions I’ve ever seen. The Kodak plan was self-funded. American PsychManagement (“APM”) administered the managed care review process to assess the medical appropriateness of substance abuse treatment. Mr. Jones’s wife was a dependent under the plan. When she sought the required pre-certification from the health plan it was denied, based on the stated finding that she didn’t meet certain unpublished “APM criteria” for medical necessity. The Joneses filed suit in U.S. District Court. They lost. So they appealed to the 10th Circuit Court of Appeals, where they lost again. In upholding the denial of Ms. Jones’ claim, the 10th Circuit held that ERISA did not require plans to state the criteria used to determine when a service is medically necessary. So if a plan won’t tell you what you need to do in order to satisfy it, then how can you ever satisfy it? Clearly, you can’t. And that, in and of itself, enables health insurance companies to deny practically any claim, based upon alleged, secret, internal criteria that no one knows about.
The reasoning of the Court was difficult to follow, let alone swallow. It held that such unpublished criteria were a matter of plan design and structure and thus, not even reviewable by the courts. The Court’s opinion stated, “A plan participant has the right to know where she stands with respect to her benefits. . . . However, ERISA’s disclosure provisions do not require that the plan summary contain particularized criteria for determining the medical necessity of treatment for individual illnesses. . . . Indeed, such a requirement would frustrate the purpose of a summary to offer a layperson concise information that she can read and digest. . . . . The APM criteria did not need to be listed in Plan documents to constitute part of the Plan.”  So on one hand the court specifically acknowledged that the “APM criteria” used to deny the claim were “unpublished”. But then, on the other hand, found those very same criteria to be a “part of the language of the Plan” (“Because the APM criteria were part of the language of the Plan shielded from judicial review . . . the Plan Administrator's reliance on them was neither arbitrary nor capricious.” ).  The court also presumed that a poor ignorant lay person was mentally incapable of reading and digesting the very criteria used by an omniscient insurance plan to pay or deny a claim.
The absurdity of the court’s reasoning was obvious. If indeed the criteria were “unpublished”, then how could they possibly have been a “part of the language of the plan”? How in the hell can it frustrate the purpose of the plan summary to explain the most basic coverage provisions of the plan? The very purpose of ERISA is “to safeguard the well-being and security of working men and women and to apprise them of their rights and obligations under any employee benefit plan.”  As other courts have held, “(T)he evils against which ERISA was enacted to guard” are “insecurity (and) lack of knowledge.”  “ERISA and the accompanying regulations require clear notice to a plan member of the steps the member must take in order to comply with plan requirements and to have the plan reimburse the member for desired medical services.”  Reporting and disclosure requirements are the very essence of ERISA. Without them, ERISA means absolutely nothing, and yet in the 10th Circuit's estimation, secret criteria could be utilized by health plans to deny benefits, eviscerating the fundamental purpose of the law. Fortunately, under the current federal regulations, any such internal rule, guideline, protocol, or other similar criterion must be disclosed. 
The implications of the case were so mind-boggling, it prompted (former) Rep. Greg Ganske (R-IA), a medical doctor, to denounce the decision on the floor of the U.S. House of Representatives, stating that: “Jones v. Kodak provides a road map to health plans to deny any type of care they want.”  Even prior to the change in the regulations, the 9th Circuit held, in a rather long procession of cases, that “imposition of a standard for obtaining benefits, that is not contained in the terms of a Plan, amounts to an arbitrary and capricious decision;”  “[plan administrators] may not construe a plan so as to impose an additional requirement for eligibility that clashes with the terms of the plan;”  and that (“[the plan] administrator lacks discretion to rewrite the plan.”). 
Just to gain an appreciation for how this perpetual game of cat and mouse plays out even when an insurer determines that treatment is covered under the plan, another obstacle is thrown is thrown into the path. Another secret device, used by insurers and MCCs are internal pricing “guidelines” to determine how much of a medical bill it will actually pay. And of course the kicker is they won’t tell anybody what that amount is in advance. Just like the certification criteria, such pricing guidelines are seldom published anywhere and usually no one, except the insurers and MCCs know what they are (and they can change on a whim). Also, as was the case with the certification criteria, the pricing guidelines are generally not a part of any plan document describing coverage and they may even contradict what those documents say about coverage.
One of the best examples of this practice was found in the case of Ingenix, Inc. (a wholly-owned subsidiary of United Health Group). Ingenix claimed to use a proprietary “database”, relating to “reasonable & customary” price schedules. In February 2008, then New York State Attorney General, Andrew M. Cuomo (now Governor), announced that he was conducting an industry-wide investigation into “a scheme by health insurers to defraud consumers by manipulating reasonable and customary rates.” The investigation found that Ingenix, the nation’s largest provider of healthcare billing information, was serving as a conduit for rigged data to the largest insurers in the country. Cuomo stated that Ingenix was “at the center of the scheme”. 
Cuomo's investigation discovered that the “databases” used by Ingenix to quantify “reasonable and customary” rates were distorted and “remarkably lower than the actual cost of typical medical expenses”. This inappropriately provided health insurance companies with a basis to deny a portion of provider claims, keeping their reimbursements artificially low; thereby, forcing patients to absorb a higher share of the costs. United insurers knew most simple doctor visits at the time cost $200, but claimed to their members the typical rate was only $77. The insurers then applied the contractual reimbursement rate of 80 percent, covering only $62 of a $200 bill, leaving the patient to cover the $138 balance. When members complained their medical costs were too high, the investigation concluded, United's insurers allegedly hid their connection to Ingenix by claiming the rate was the product of “independent research”. 
In my own practice I have challenged these secret allegedly proprietary “databases” on several occasions. Each time I did, rather than face off in court the insurer simply rolled over and paid the full amount of the claim, not wanting their illicit ruse to face scrutiny by a court.
The Special Vulnerability of Substance Abuse and Eating Disorder Claims
Claims for treatment of substance abuse and eating disorders face their own special set of problems. Substance abuse treatment generally consists of rehabilitation services (“rehab.”), carried out by trained counselors, under the supervision of medical personnel such as doctors, who specialize in such treatment. More serious cases require medical detoxification, usually involving a three to five day acute hospital confinement. Eating disorders typically involve psychotherapy. Both types of care may require extended individual and group counseling in a controlled setting, isolated away from the stresses of an environment that may have contributed to the problem. Substance abuse “rehab” typically takes up to thirty days. Treatment of eating disorders can require various ranges, depending on severity.
Although a patient’s benefit plan may provide coverage for these illnesses, difficulties frequently arise when the time comes for an insurance company to dig into its pockets and pay a claim. The need for treatment may be clear and not even in dispute, but insurers are notorious for raising issues concerning such things as the type and duration of care, particularly expensive inpatient rehabilitative care. The fact that it’s more abstract makes it susceptible to challenge. Problems occur at both the initial certification and final claims review stages. This is especially true, where care is provided by a residential treatment facility, as opposed to a hospital. I have seen instances, where the facility wins the admission debate only to have to fight the battle all over again at the claims review stage. I’ve actually had many cases where pre-certification was given not only for the initial admission, but the entire duration of treatment was case managed and approved, only to have the insurer later deny the claim on medical necessity grounds.
Also, a persistent problem often concerns not whether inpatient treatment will be covered, but rather to what extent it will be covered. For example, a plan may approve a few days for detoxification, but deny any claim for services related to rehab. To limit inpatient care strictly to detoxification is to ignore most of the patients, who undergo treatment for substance abuse. And again, even assuming that an insurer concedes that some inpatient rehab. is necessary, a further debate may ensue over its appropriate duration.
Insurance companies frequently use “independent” mental health care management (MHCM) companies, who essentially act as “sub-administrators” to make managed care decisions, regarding the appropriateness and length of treatment. These folks are presumed experts at mental health care and thus assumed to be uniquely qualified to make such decisions. But they often recite acute care criteria in reaching those decisions, found nowhere in any plan document and which no one (other than the MHCM) ever heard of before, just like the secret criteria and guidelines discussed above. One of my favorites is a denial of certification for inpatient rehab. on grounds that: “The patient is not imminently suicidal, homicidal or psychotic.” OK, so what? The patient is not a bird, a fish or a Democrat either. How do any of those things relate to the stated plan criteria or to any other objective criteria for determining medical necessity? They don’t. In fact, they relate to nothing. They are nothing more than the MHCM’s unpublished internal non-plan criteria, which are irrelevant under ERISA.
Where an insurer steps over the line, however, is when it later upholds denial of a benefit claim, during the ERISA-mandated claims review, reciting those very same mystery criteria in support of its final denial. Assuming there is no plan provision limiting inpatient treatment to acute care, the use of such criteria should provide no basis for a claim denial. Under the current regulations if an “an internal rule, guideline, protocol, or other similar criterion was relied upon in making” the appeal decision, the notice of that decision must contain a statement to that effect and inform the insured that a copy of it will be provided free of charge upon request.  It can then later be challenged in court.
Whenever a plan refuses to pay for the entire duration of care, it puts the treatment facility in a difficult position. Basically, it has three options: (1) pursue the patient for payment, by filing a lawsuit or handing the account over to a collection agency, which doesn’t exactly make for good provider-patient relations and may even undermine a patient’s treatment; (2) write off the account as uncollectable, which could jeopardize the facility’s financial ability to provide treatment to other patients in the future; or (3) pursue the patient’s claim against his or her insurance company or benefit plan. Depending upon what the plan documents say, the third option is usually the best one. This can often be done with very little effort, expense or inconvenience on the provider’s part, if an assignment of benefits is obtained from the patient, as long as the plan itself does not ban such assignments (and few do). If the provider has such an assignment, it will usually have standing to pursue the claim through all levels of administrative review and in court if necessary.
The subject of pre-existing conditions has been a hotly debated issue in recent years. I think it is also one of the most misunderstood issues. The raging debate has been over the question of whether health plans should be required to cover illnesses that began prior to a person’s effective date of insurance coverage. There seems to be some shared consensus on both sides of the argument that this is indeed something insurers should be obliged to do.
But if you look at it from the insurer’s point of view or even from an objective point of view, guided solely by the very definition of insurance, covering pre-existing conditions is analogous to a situation where a person tries to buy fire insurance to cover a home that burned down the day before. It undercuts the foundation of insurance, by obliterating underwriting standards and it goes against the very core of what insurance is, risk-sharing. Even the proponents of the Affordable Care Act understood this principle, which is why the law included an “individual mandate” and it’s why the law collapsed without it.
But again, this goes back to the point I raised earlier. Health insurance is not really insurance. The insurance industry and lawmakers have understood this and long-ago devised a way to cope with the pre-existing condition problem, at least in certain instances involving group health coverage. In California, for example, laws were directed at insurers providing “replacement coverage”.  In those cases where employers switch carriers, the replacement insurer takes the group over on what’s called a “no loss no gain” basis or as one claims manager explained it to me many years ago, “We get ‘em as we got ‘em.” However, the incentive for the insurer to take on such pre-defined liability comes from the size and potential profitability of taking over a large group. The larger the pool, the smaller the financial risk posed by the assumption of liability for a pre-existing condition in any isolated case. Later on came the Health Insurance Portability and Accountability Act of 1996, which I’m not even going to begin to address. The point is, the issue has been around for a very long time.
 “The Nixon administration endorsed HMOs as the new national health strategy in 1971 and pressed Congress to enact laws to encourage HMO development through planning grants and loans. Passage of the HMO Act of 1973 (Public Law 93-222) provided the initial stimulus for growth of HMOs in the mid- and late 1970s.” Lynn R. Gruber, Maureen Shadle, and Cynthia L. Polich “From Movement To Industry: The Growth Of HMOs,” Copyright © by Project HOPE: The People-to-People Health Foundation, Inc., January 1988. (Published online:
 “In 1965, Congress passed legislation which established the Medicare and the Medicaid programs as Title XVIII and Title XIX of the Social Security Act. . . . In anticipation of the need to assess and direct the care of Medicare patients, Congress established a set of conditions entitled ‘Conditions of Participation,’ . . . These conditions included . . . utilization review. In accordance with these requirements, Utilization Review Committees were established in 1972, to identify if hospitals and medical personnel were providing appropriate clinical services that met conditions of participation. While this system of review committees held potential for effective monitoring, its success was limited. . . ."
Several years later, in response to the ineffectiveness of the 1965 Utilization Review Committees, Congress established pilot organizations entitled ‘Experimental Medical Care Review Organizations’ in 1972. These were physician organizations funded by the National Center for Health Services Research; they were given the authority and responsibility of reviewing healthcare delivery in the inpatient and ambulatory setting, and of assessing the quality and appropriateness of care delivered. These pilot projects shortly became a blueprint for Medicare’s Professional Standards Review Organizations (PSROs) established soon thereafter in 1972.
Based on the success of the pilot Experimental Review Organizations, PSRO legislation created a federally funded network of nonprofit physician-run organizations, tasked with assessing the necessity, applicability, and quality of healthcare services rendered. As with Utilization Review Committees, the goal of PSROs was to affirm that physicians and hospitals met Medicare specific obligations to provide high quality care, which generally involved the avoidance of unnecessary overuse, inappropriate misuse, and non-indicated underuse of services. However, while promising in concept, PSROs never met governmental expectations and were simultaneously viewed as a form of governmental interposition into the practice of medicine, one that was sternly resisted by the AMA and state medical societies. Thus, by the early 1980s, PSROs were considered unsuccessful in both improving quality and containing costs, and were questioned regarding their prioritization of cost over quality. In 1983, PSROs were replaced by the utilization and quality control Peer Review Organizations (PROs).” Marjoua, Youssra, and Kevin J Bozic. “Brief history of quality movement in US healthcare.” Current reviews in musculoskeletal medicine vol. 5,4 (2012): 265-73. doi:10.1007/s12178-012-9137-8. [Footnotes and citations omitted. Published online:
 Becker’s Hospital Review, Copyright ASC COMMUNICATIONS 2019. (Published online:
 Jones v. The Kodak Medical Assistance Plan, 169 F.3d 1287 (10th Cir., 1999).
 Id., at 1292.
 Donovan v. Dillingham, 688 F. 2d 1367, 1372 (11th Cir., 1982).
 Blau v. Del Monte, 748 F.2d 1348, 1356 (9th Cir. 1985); cert. denied 474 U.S. 865, 106 S.Ct. 183 (1985); Elmore v. Cone Mills Corp., 6 F. 3d 1028, 1046 (4th Cir., 1993).
 Bellanger v. Health Plan of Nevada, Inc., 814 F. Supp. 918, 924 (Nev. Dist. 1992).
 29 CFR 2520.104b-1(G)(1)(v)(A).
 Congressional Record — House, May 18, 1999, H3280.
 Blau v. Del Monte, 48 F.2d 1348, 1354 (9th Cir. 1985).
 Canseco vs. Construction Laborers Pension Trust for Southern California, 93 F.3d 600, 606 (9th Cir. 1996).
 Saffle v. Sierra Pacific Power Company Bargaining Unit, 85 F.3d 455, 459-460 (9th Cir. 1996).
 New York Attorney General’s Press Office, January 13, 2009. “Cuomo Announces Industry-Wide Investigation into Health Insurer's Fraudulent Reimbursement Scheme” Archived March 30, 2008, at the Wayback Machine, press release, Office of the Attorney General, New York State, February 13, 2008.
 29 CFR 2560.503-1(j).
 California Insurance Code § 10128.55.
Health Care Claims Under ERISA
By: Michael A. McKuin
ERISA Disability Lawyer