Course Authors
Maxwell J. Mehlman, J.D.
Mr. Mehlman reports no commercial conflict of interest.
Estimated course time: 1 hour(s).
Albert Einstein College of Medicine – Montefiore Medical Center designates this enduring material activity for a maximum of 1.0 AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
In support of improving patient care, this activity has been planned and implemented by Albert Einstein College of Medicine-Montefiore Medical Center and InterMDnet. Albert Einstein College of Medicine – Montefiore Medical Center is jointly accredited by the Accreditation Council for Continuing Medical Education (ACCME), the Accreditation Council for Pharmacy Education (ACPE), and the American Nurses Credentialing Center (ANCC), to provide continuing education for the healthcare team.
Upon completion of this Cyberounds®, you should be able to:
In the last conference, I discussed a number of ways in which contracts with managed care plans could make life difficult for physicians. Physicians could face an unenviable choice. On the one hand, they could obey plan policies and violate their ethical and legal duties to their patients. On the other hand, they could fulfill their duties to patients and be subjected to reprisals by the plan, including the ultimate sanction -- de-selection. In this conference, I want to discuss some of the ways in which the law can help protect physicians in these situations. As before, I hope you will join in the discussion, bringing your own experiences and questions to bear.
One of the most notorious attempts by managed care plans to interfere with the patient-physician relationship is a "gag" clause in the physician's contract that purports to prohibit the physician from discussing certain matters with patients, such as the patient's need for services that the plan does not cover. These clauses are almost certainly unenforceable as a matter of law; that is, the plan could not successfully sue a physician for breach of contract if the physician ignored the clause and discussed with a patient what the physician reasonably believed the patient needed to know in order to obtain proper health care.
But, just to be sure, a number of state legislatures have passed or are considering passing laws that would prohibit managed care plans from restricting physician communication with patients. For example, Tennessee imposes a fine of $5,000 on any plan that willfully restricts a physician's ability to inform patients of services that they may need but that the plan does not cover. California has taken another approach. Voters there have placed a referendum banning "gag" clauses on the November 5th ballot.
Unfortunately, these state laws do not affect one group of managed care plans: ERISA plans that employers provide on a self- insured basis. Federal legislation would be needed to protect physicians in these plans. A bill (H.R. 3222) that would accomplish this by imposing a $25,000 penalty for restricting physician communication with patients has been introduced by Representative Sanders (Ind.-Vt.).
Another way in which the law can protect physicians in managed care plans is to make the plan liable for malpractice when it refuses to cover services that the physician reasonably believes are medically necessary.
Ideally, the plan alone would be liable in this situation, not the physician. One of the approaches to reforming the malpractice system that was proposed as part of President Clinton's health reform effort -- "enterprise liability" -- would have accomplished this, but was never adopted. In a development that may signal a trend in this direction, however, an arbitrator in California in October of 1995 ordered a managed care plan to pay over a million dollars in damages to the family of a woman who died of breast cancer because the plan had interfered with her doctors's recommendation that she receive HDC/ABMT.
Unfortunately, some plans make physicians agree to indemnify the plan for any costs associated with liability for malpractice. That means that, even if the plan rather than the physician were deemed to have committed malpractice, the physician would still have to reimburse the plan for any damages that the patient recovered from the plan, plus the plan's attorney's fees.(1) Physicians contracting with managed care plans must be on the lookout for such indemnification clauses and should avoid signing them if at all possible.
None of these approaches addresses the physician's ultimate risk: that the plan will cancel or refuse to renew the physician's contract. Most contracts permit the plan to de-select a physician without giving a reason. This is known as an "at-will" arrangement, and it has certain advantages for the physician. For example, the plan does not have to file a report with the National Practitioner Data Bank when it terminates a physician's contract without giving a reason. But at-will status also allows a plan to get rid of a physician without giving a reason when it in fact has a reason: for example, when the plan is annoyed at the physician for costing the plan too much or for objecting to plan policies.
Some courts will permit the physician to challenge a de- selection even though the physician's relationship with the plan is said to be at-will. In the spring of 1996, for example, the New Hampshire Supreme Court held that a physician could challenge a de- selection on the basis that it was in retaliation for protecting patient interests even though the plan terminated the at-will contract without "cause" -- that is, without giving a reason. But most courts continue to uphold terminations without cause, and even where they permit a challenge, it may be difficult for the physician to establish the "real" reason for the termination and to persuade the court that de-selection would be contrary to the public interest. What is needed is state or federal legislation that allows physicians to challenge de-selections and other adverse actions by a plan and that shifts the burden to the plan to prove that its action was not for an impermissible reason, such as in retaliation for advising patients about the need for non-covered services.
Some states have passed laws requiring plans and other health insurers to cover certain services, such as minimum lengths for hospital maternity stays. These mandates can reinforce physician judgments in specific cases against interference by the plan. As I mentioned earlier in connection with state laws prohibiting gag clauses, these state laws do not apply to employer self-insured ERISA health benefit plans. In a recent case, however, the United States Supreme Court sanctioned a clever technique that New York State had developed to get around this. What New York did was to require hospitals to provide the mandated services and to impose a tax on insurers, including ERISA plans, to reimburse the hospitals. Other states, such as Connecticut, are reported to be interested in pursuing this approach. Physicians might not want state legislatures to interfere with their clinical judgment any more than managed care plans, but efforts by organized medical groups to enact treatment mandates are a promising means of offsetting the growing power of managed care plans.