Risk management issues in the new managed care environment

SURVEY OF OPHTHALMOLOGY

VOLUME 41 - NUMBER 3 - NOVEMBER-DECEMBER

MEDICOLEGALITIES,

1996

JEROME BETTMAN, EDITOR

Risk Management Issues in the New Managed Care Environment JEROME W. BETTMAN, MD,’ BYRON H. DEMOREST, MD,2 AND E. RANDY CRAVEN, MD”

l Woodside, Calafornia, 2Sacramento, California, and 3Denvq

Colorado, USA

Abstract. Malpractice cases in which the defense was based on cost-containment this article reprinted from Ophthalmic Risk Management Digest. These cases “dollar defense” is no defense. (Surv Ophthalmol 41:268-270, 1996)

Key words.

HMO

l

managed

care

l

medicolegal

If the goal of managed care is to keep health care costs as low as possible, it follows that referrals to

claims

l

are discussed in illustrate that the

risk management

training. Improper screening can delay timely and effective treatment for patients with sight-threatening problems, while inappropriate treatment can resuit in a poor therapeutic response. 2) Primary care optometrists or physicians diagnosing and treating complex ocular problems, which may delay the correct diagnosis and treatment beyond the optimal time for referral to an ophthalmologist. 3) Sharing of responsibility for patient care between primary physicians and ophthalmologists or between optometrists and ophthalmologists. Under some plans, only one visit to the ophthalmologist may be authorized. If a patient’s ocular condition deteriorates while being followed by a primary physician and there is a poor outcome, any ensuing malpractice action is likely to name the ophthalmologist as well as the primary physician. Shared responsibility translates into shared and increased risk. 4) Denial of care by the managed care organization, particularly for perceived nonemergency problems, leading to serious complications and visual debility.

“expensive” specialists and costly laboratory and diagnostic radiographic tests will be kept to a minimum. Unfortunately, it also follows that patients who receive a hasty examination will go away angry and confused because their physician no longer has time to talk to them. Both situations encourage patients to seek the advice of an attorney when response to treatment is suboptimal. Under capitated care plans, which pay the same overall fee per patient regardless of the services rendered, and reduced fee-for-service plans, which encourage physicians to see high volumes of patients, there are greater opportunities for misdiagnosis, denial of treatment, and loss of doctor-patient rapport, all of which increase a physician’s exposure to malpractice claims. The following four scenarios point out some of the health and liability risks raised when cost cutting takes priority over patient welfare: 1) Ancillary medical personnel assuming patient care responsibilities beyond the scope of their

Courts Define Physician’s Duty

This article is reprinted from Ophthalmic Risk Management Digest, Spring 1996, with permission of Ophthalmic Mutual Insurance Company, A Risk Retention Group sponsored by the American Academy of Ophthalmology

What should a physician do if the elements proper care are denied, whether in the form 268

0 1996. Survey of Ophthalmology.

(7 Kent Street, Brookline,

MA 02146. Tel: 617-56&2138.

Fax: 617-566-4019)

of of

RISK MANAGEMENT denial

IN MANAGED

of hospitalization,

confinement,

a shorter

or refusal

CARE than

to use consultants

269 optimal or order

that

cost containment

ries when

it is based

will not be tolerated solely on corporate

certain diagnostic tests? A physician’s first duty is to the patient, not to an insurance company, HMO,

interests, be black

and it asserted that medical and white, not gray.

or PPO. At the same time, overutilization sult in a physician being dropped from

HUGHES

V. BLUE CROSS4

may rea plan’s

provider list. While physicians find themselves caught in the middle of these conflicting obligations, a series of court decisions has redefined the scope of a physician’s below. WICKLINE

duty to the patient,

as noted

V. STATE OF CALIFORNIA’

A Medi-Cal

(California

Medicaid

program)

pa-

tient was approved for a lo-day hospital stay for vascular surgery. The patient, a diabetic, developed postsurgical complications necessitating additional surgery. The patient’s filed the appropriate

physician and two surgeons paperwork to request an

eight-day extension from MediCal, but only a fourday extension was approved. Although they disagreed with Medi-Cal’s decision, the physicians discharged Mrs. Wickline after the approved four-day extension. and sued.

The patient subsequently Stressing that the ultimate

lost her leg responsibility

for medical decisions belongs to the physician, court stated: “While we recognize, realistically, cost consciousness has become a permanent ture of the health care cost limitation programs

the that fea-

system, it is essential that not be permitted to cor-

The

court

21-year-old

found

in favor

hospitalized

by.ju-

economic denials

of the

schizophrenic

must

family

of a

patient

after

Blue Cross authorized only $6,500 in coverage toward payment of a hospital bill exceeding $23,000. The court stated that the utilization review was not based upon the standard of care and that Blue Cross was responsible for seeking formation before denying a claim.

all relevant

in-

Physician’s Obligation to Appeal Denial of Care As these

cases indicate,

the courts

will not allow

a defense based upon cost containment whether it is at the hands of a physician or managed care organization. Economic constraints must not determine what should be done for the patient. When an HMO, PPO, or capitated group denies care, it is the physician’s duty to protest and attempt to change the decision. Verbally and in writing, the physician should clearly state the reasons for the recommended therapy, the consequences of denial, and

provide

supporting

literature

to demon-

strate the standard of care. A copy of the letter should be sent to the patient and all protestations

rupt medical ,judgment.” Interestingly, the court also stated that third party payers are responsible for defects in cost containment mechanisms, but a physician who does not protest on behalf of a patient cannot avoid ultimate responsibility.

documented in the chart. Since the Wickline decision, physicians are required under California Law to appeal a plan’s decision to deny care. Such appeals must be made carefully, as many agreements between physicians

WILSON

and the HMO include a so-called “gag rule,” whereby the physician agrees not to criticize the HMO to the patient. In California physicians who

V. BLUE CROSS2

A physician recommended zation for a depressed suicidal the HMO reviewer certified tional hospitalization, the

extended hospitalidrug abuser. When

only three psychiatrist

days addiprotested

and carefully documented his protest as the patient was being discharged. The patient committed suicide and the family sued the Blue Cross utilization review group and won on appeal when the court accused the group of bad faith benefit denial. Unlike the Wickline case, which placed the burden of responsibility on the physician, in Wilson, the court made it clear that liability is shared by the HMO. FOX V. HEALTH NET OF CALIFORNIA:’ A patient with breast cancer won a $90 million jury award after she was denied treatment with high dose chemotherapy and an autologous bone marrow transplant. This case reinforced the fact

advocate

for their

patients

are

now

legally protect-

ed from retaliation by health care organizations, and if a physician is dropped from a plan because of patient advocacy, damages may be recovered. Gag clauses are banned in Massachusetts, and legislative efforts are underway to eliminate them in other states, including California. Additionally, so-called “hold harmless” clauses, which attempt to shift responsibility for economic harm or liability from one party to another, are no longer permitted in health care contracts in California,i where both the physician and medical plan are held equally responsible for damages. Interestingly, the legal profession has allied itself with physicians on the issue of securing proper care under managed care contracts. There have been many more claims brought against managed care organizations than the ones cited in the arti-

270

Surv Ophthalmol

cle. In Texas gence

alone

41 (3) November-December

there

are

17 medical

cases in the courts naming

an HMO

defendant. In some cases, insurance and health maintenance organizations

neglias a

companies are settling

out of court to avoid setting precedent court decisions that will open the door to other claims involving significant financial loss. Several recent cases suggest that a financial compensation scheme may violate

the standard

case is illustrative

of care. The

following

of this trend.

1996

BETTMAN ET AL

tially enormous

damages when a jury is confronted

with testimony and evidence that an HMO’s “cost control measures” contributed to or caused a patient’s injury. In Bush U. Duke, the HMO probably believed an appeal would have risked setting a bad precedent and decided matters got worse.

to settle out of court before

Risk Management Recommendations Always act in the patient’s best interest. The physician’s duty is to the patient not to the HMO.

BUSH V. DAKEF

Adverse

An HMO that had eliminated PAP testing to reduce costs was sued by a woman who had clinical signs of cervical carcinoma. The patient sued her

protested vigorously but honestly. Such protests should involve the patient and be carefully documented. If proper care is denied, help the patient

primary care physician, her gynecologist, and the HMO, alleging that the HMO’s capitated gatekeep-

find other avenues to secure treatment. abandon the patient! Cost containment should never reduce cian to substandard practice. Remember

er arrangement violated the standard of care when it deferred referral for consultations and procurement of indicated laboratory procedures. The cost control provisions at issue included: 1) that participants were required to see a primary care physician before referral to a specialist could be made, and 2) that a financial incentive system encouraged HMO physicians not to refer patients to specialists. Prior to trial the court determined that the plaintiff offered sufficient evidence supporting an allegation that the cost control system had contributed to a delayed diagnosis of cervical cancer and inadequate treatment. The case quickly settled out of court under a protective order. Clearly, an HMO is exposed to the risk of poten-

decisions

and denial

the courts, the “dollar

defense”

of care

should

be

Do not a physithat in

is no defense.

References 1. Wicklinr v. Stntr of California. 192 Cal App 3d 1630 (1986) 2. Wilson u. Blur Cms. 222 Cal App 3d 660 (1990) 3. Fox v. Health Net ofCalafornin. California Superior Court, Riverside County, No. 219692 4. Hughes v. Blur Cross. 215 Cal. App. 3d 832. 5. Prohibition of “Hold Harmless” clauses in Health Plans. California AB 1840 6. Bush v. Duke. Michigan Circuit Court, Saginaw County, No. 86:25767-NM (April 27, 1989)

Reprint Address: Jerome Rd., Woodside, CA 94062.

W. Bettman,

MD,

3910

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Hill