Do your contracts place you at risk?
What you need to know about managed care
Case managers can't be expected to know every detail of each managed care contract that affects them or their patients. However, without a basic understanding of those contracts, case managers may be placed in the unacceptable position of moving from advocate to adversary. (For more information on how to advocate for your patients, see stories, pp. 113 and 115.)
"Not only do managed care contracts determine what benefits your patient receives, but they often direct the care physicians provide and may, unknown to you, place you at increased legal risk," says Mark O. Hiepler, JD, a partner with Hiepler & Hiepler in Oxnard, CA.
To illustrate for case managers at the recent Case Management Society of America conference in Reno, NV, how managed care contracts affect patient care and place providers, health plans, and case managers at risk, Hielper cited some of his own cases involving managed care organizations (MCOs).
Fox v. Health Net: $89.3 million
In this case, a 38-year-old mother of three was diagnosed with breast cancer. Conventional treatment failed, and her physician recommended a bone marrow transplant. A review of the patient's managed care contract showed that bone marrow transplants were a covered benefit as long as the patient's physician agreed it was necessary, a university hospital believed it was indicated, and a qualified physician agreed to perform the procedure.
A provider was found to perform the procedure. However, the patient received a letter from her MCO denying coverage for the transplant because it was considered an "experimental" treatment. Hiepler wrote a letter to the MCO asking the plan to reconsider its decision. In the meantime, the patient's family began a fundraising effort in the belief that the MCO eventually would pay for the transplant. The patient died without receiving a transplant.
Hiepler says several facts moved the jury to impose punitive damages on the MCO:
1. The medical director admitted he had no special knowledge of bone marrow transplants. In addition, he consulted no experts before denying the claim on the basis of its "experimental" nature. Instead, he contacted the patient's oncologist, whose practice was 90% dependent on the MCO, and persuaded him to change his recommendation for a bone marrow transplant.
"During that conversation, the doctor who had advocated appropriately for his patient, who was also my sister, suddenly changed his mind and had no explanation to offer other than that he had gotten a call from the medical director," he says.
2. In addition to his salary, the medical director received two bonuses. One was based on how well the MCO performed during the year. "I began to call the medical director `Dr. Bonus.' I argued that the incentive was a conflict of interest," Hiepler says. "After all, the medical director was charged with making millions of dollars worth of decisions about patient care each day." The second bonus was based on how many costly bone marrow transplants he denied. The MCO advertised that it paid for transplants, and the company was concerned it would be swamped with requests for the procedure.
3. An executive in the MCO received a bone marrow transplant for her breast cancer. "She testified that she had the same contract as the patient and a much worse prognosis," Hiepler says. "She testified against the MCO."
4. A doctor with the same MCO covered by the same managed care contract also had his bone marrow transplant covered.
5. The MCO ordered a technological survey done on bone marrow transplants. The reviewer found that bone marrow transplants were so effective they no longer could be considered "experimental." The medical director buried the report.
6. The MCO established a transplant pool to pay for catastrophic care. "The day my sister died, there was $4.8 million dollars in the transplant fund," Hiepler says. "By the end of the year there was $10 million left over in the transplant fund. At Christmas, the MCO's four top executives received $9 million in bonuses. I couldn't link that bonus money directly to the transplant fund, but the jury did."
Hiepler says case managers should learn the following lessons from Fox v. Health Net:
o Make sure you are receiving objective, informed advice. "Continue to advocate for your patient even if you get that call from Dr. Bonus, who tries to convince you to change your mind even when you're sure you're correct," he says.
o Document clearly what you are advocating on behalf of your patient. "You may not be successful in obtaining everything you want for your patient. However, you can follow proper procedures for making requests and appealing denials. And you can document your actions.
"The key to every case we review is finding the source and motivation of the denial," Hiepler says.
Ching v. Gaines: $3 million
In the case of Ching v. Gaines, the medical group received $20 per member per month for each covered life. The patient had been part of the group for only two months when she presented to her primary care physician with 10 classic symptoms of colon cancer. The physician repeatedly refused all the patient's requests, including a request for emergency department treatment, X-rays, and a referral to a gastroenterologist.
In desperation, the patient's husband barricaded himself in the physicians' office and demanded a gastroenterology referral. The patient saw the gastroenterologist within the hour. Her cancer was diagnosed, and she had surgery. However, treatment came too late, and the patient died a painful death over the next six months.
A review of the physician's capitated contract with the health plan revealed that the physician was "on the hook" for the first $7,500 of care, Hiepler says. In addition, the only reimbursement the physician received in return was the $20 capitated fee. "The $20 fee was not actuarially sound. In this case, you had a combination of a bad doctor and bad business."
Hiepler put the chief executive officer of the medical group on the witness stand and had him crunch numbers with a noisy calculator. "I asked him, how many times do you have to have this type of referral before you lose profitability?"
In this case, the main lesson for case managers is not to allow themselves to become pawns in the capitation game. "If the medical group pressures you to deny home health care, and you take the position of denying all home health care without questioning why, if that denial results in a tragic consequence, you're in trouble," Hiepler explains. "If there's a memo that says, `To all case managers, deny all home health care,' - it will be found in discovery. And these memos exist."
In addition, he urges independent case managers not to sign capitated contracts unless they are actuarially sound. "Never accept a contract that does not adequately cover the cost of your services."
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