Study objective: Almost every state has enacted a "prudent layperson" standard for determining insurance coverage for emergency department (ED) services. This study evaluates whether these laws are achieving their goals or causing unintended side effects.
Methods: Six states were selected for in-depth case studies to represent a range of market, demographic, and legal conditions. In each state, 11 to 15 interviews were conducted with insurers, regulators, providers, employers, patient advocates, and industry observers, for a total of 87 interviews. In addition, regulators in all 50 states completed a written survey about likely enforcement responses for hypothetical violations of these laws.
Results: Basic compliance with prudent layperson laws appears to be widespread. Regulators actively enforce these laws, and most subjects reported no systematic violations. Insurers explained that it is difficult to operationalize a coverage standard that relies on patients' experience of symptoms rather than on providers' assignment of diagnostic and procedure codes. No strong evidence was found that these laws have significantly increased insurance costs, which is due in part to various strategies insurers have adopted to reduce payments to providers for ED services and to greatly increase patients' copayments. Accordingly, few subjects believe these laws have increased inappropriate ED use.
Conclusion: Prudent layperson laws have helped to catalyze industry-wide changes in how health insurers review ED claims and how they manage ED costs. Whether these changes, on balance, are beneficial to patients and to society requires further study focused on outcomes and system-wide costs.