The Prudent Layperson Standard: Patient Rights Under Attack as Insurance Companies Put Profits Over Patients

Health insurance was designed to keep patients from being hit with medical debt, but the current state of insurance does not have patients in mind. In fact, many of the biggest insurers are actively going against a patient protection known as the prudent layperson standard. Recently, Blue Cross Blue Shield of Texas (BCBS TX) decided to move forward with a controversial new practice of charging patients for their visits if the final diagnosis isn’t reflective of an emergency situation. This article will provide background on the prudent layperson standard, will explore the current state of this patient protection.

What is the Prudent Layperson Standard?

Due in large part to the advocacy of emergency physicians, congress enacted the prudent layperson standard in 1997. This standard requires that a health plan must cover any emergency visit that results from presentation of symptoms that a “prudent layperson”—someone with average medical knowledge—could reasonably expect to result in a serious adverse health event. Essentially, this means that health insurance carriers must cover the cost of an insured patient’s visit based on the patient’s symptoms, not their final diagnosis. For example, chest pain brings you to the emergency room but a physician finds that your symptoms are related to indigestion, your insurance carrier cannot legally deny coverage for your ER visit because you—a prudent layperson—experienced symptoms that gave you reason to believe your life might be in danger.

Why does this standard exist?  

The fact is, there are thousands of conditions with overlapping symptoms.  A person with average medical knowledge cannot be expected to know whether their severe abdominal pain is related to a ruptured appendix (life-threatening) or an ovarian cyst (non-life-threatening)—especially when they are experiencing extreme pain. With so much overlap in symptoms, even emergency physicians can’t be expected to diagnose a patient without seeing them. This is why ER doctors advocated for this standard—they didn’t want the threat of medical debt to influence a patient’s decision to seek potentially life-saving medical care.

Originally, this standard only applied to Medicare and Medicaid managed care plans. In 1999, it was extended to all federal employee medical plans, and in 2010, the Affordable Care Act (ACA) applied it to individual, small-group, and employer coverage plans. The ACA even established that the prudent layperson standard must appear in any revisions or replacement legislation of the act.

Current state of prudent layperson

As we mentioned above, the prudent layperson standard is—and must continue to be—law. Even so, recent and continuing changes to the ACA are empowering insurance carriers to push the boundaries of this legal requirement. For example, in 2017, Anthem Blue Cross Blue Shield (BCBS) sent a letter to policyholders in Georgia, Kentucky and Missouri stating that they would no longer cover “inappropriate” emergency room visits. The letter included a list of 200 medical diagnoses that would not be covered by the insurance carrier.

In early August of 2018, despite major pushback from emergency physicians, Blue Cross Blue Shield of Texas (BCBS TX) decided to move forward with new billing practices that involve basing coverage decisions on claims reviews, ultimately deciding whether a visit will be covered based on the patient’s final diagnosis.

Why Are Insurance Companies Doing This?

Insurers claim that their goal is to help keep the emergency room, its physicians and resources available for people with “true emergencies.” With 24/7 access to the best medical technologies, life-saving drugs and top physicians, the cost of emergency care is necessarily higher than it would be if you were to be seen by a physician at an urgent care facility or your primary care provider.

While insurance companies claim their new policies will keep costs down and lower premiums for all policy holders, it shouldn’t be overlooked that top insurance companies saw profit margins in Q1 for 2018 that were the highest in a decade, and all six of the largest insurance companies paid their CEOs over $17 million in 2017, while patient access to care has decreased significantly.


Due to recent policies established by major insurance companies, patient health is in jeopardy while insurance companies’ profits increase. Emergency physicians offered major push back to the new BCBS TX policy, with concerns over the ethical nature of this practice—how will this practice impact a person’s willingness to seek medical attention in the event of an emergency? Dr. Renee Hsia, MD, MSc, and professor of emergency medicine at the University of California, San Francisco, says, “From a policy perspective, you can understand the insurance companies' desire to contain costs in ways that don't waste unnecessary societal resources…but even if the intentions are well-meaning, the consequences of a policy like this are potentially dangerous.”