PURPOSE: In 2007, a legal reform introduced formal health economic evaluation for selected reimbursement decisions by the statutory health insurance in Germany. The methods of evaluation are currently under discussion. This study assesses whether an approach based on decision-analytic cost per QALY modelling fits with the legal requirements set by Book Five of the German Social Code (SGB V). METHODS: It is based on a review of legal documents and the relevant literature. RESULTS: Key specifications for economic evaluation in Germany are the differential interpretations of "benefit" in the relevant legislation as well as the requirement that the methods follow "international standards of evidence-based medicine and health economics" ( section sign section sign 35b, 139a SGB V). In German reimbursement decision practice, new interventions have undergone an assessment of (1) benefit, (2) necessity and (3) cost-effectiveness (prior to the legal reform only exclusion of dominated alternatives). While the establishment of benefit in step (1) is preferably based on clinical trials in current practice, also two different interpretations of "benefit" in steps (1) and (3) would be in accord with SGB V. Methods for establishing QALYs measure and evaluate different dimensions of health benefit based on transparent and theoretically justified methods. They also capture the dimensions specifically stated by section sign 35b SGB V, e. g., extension of life or improvement in quality of life. Compared to ad-hoc synthesis of the different measures of patient benefit from clinical trials, this is more consistent with the standards of evidence-based medicine and health economics. Decision analytical modelling provides a practical and theoretically sound method to integrate the condition-specific evidence for estimating the costs and benefits associated with a medical treatment in health care practice. CONCLUSIONS: Both the establishment of health effects in terms of QALYs and decision-analytical models for evidence synthesis meet the requirements of SGB V. Further methodological issues that need to be addressed include guidelines for QALY measures, and the choice of analytical perspective that fits best with German law. This notwithstanding, it remains an open question how the appropriateness of a cost-benefit ratio should be appraised and what role cost-effectiveness should play in health care decision making, compared with other principles potentially relevant to the decision.