Preauthorization in the ED - Medical Risks to Patients, Legal Risks for Physicia
August 1, 1997 18 minutes read
Preauthorization in the EDMedical Risks to Patients, Legal Risks for Physicians and Hospitals
By Robert A. Bitterman, MD, JD, FACEP, Department of Emergency Medicine, Carolinas Medical Center, Charlotte, NC
Nothing infuriates patients and emergency providers more than managed care’s preauthorization tactics to deny coverage for ED services. When managed care prospectively denies ED authorization, patients must weigh the financial risk of accepting care in the ED vs. the medical risk of leaving without examination and treatment. Hospitals and emergency physicians must weigh the financial risk of providing care without authorization vs. the legal risks of not examining or treating managed care patients in the ED. The purposes of this article is to elucidate these risks, expose the adverse consequences of preauthorization for ED services, and help providers use existing federal laws to effectively deal with managed care and reduce risks for patients and providers alike.
In fact, this article could also be titled "Managed Care vs. COBRA," because the tenets of managed care are diametrically opposed to the tenets of COBRA, also know as the Emergency Medicine Treatment and Active Labor Act (EMTALA), the federal law which governs the delivery of all hospital-based emergency services in the United States.1 COBRA is an anti-discrimination law; it mandates that hospitals provide all persons emergency servicesin exactly the same way. Managed care wants its enrollees treated differently, or not at all. Congress passed COBRA to remove financial considerations from the delivery of emergency services. Managed care exists to reinstate the economic drive to deny access to emergency care. No wonder more hospitals are now being cited by the Health Care Financing Administration (HCFA) for violating COBRA because of the processes they use to care for managed care patients, including patients in state-sponsored Medicaid managed care plans, than for any other reason.
Federal Law
Two sections of COBRA regulate the gatekeeper/managed care plan (MCP) prior authorization interaction with emergency departments:
1. Medical Screening Provision. "If any individual comes to the emergency department, the hospital must provide an appropriate medical screening exam (MSE) to determine whether or not an emergency medical condition exists."2
2. No-Delay Provision. "A hospital may not delay provision of an appropriate medical screening examination or necessary stabilizing treatment . . . in order to inquire about an individual’s method of payment or insurance status."3
These sections were originally intended to prevent hospitals from denying or delaying access to examination and treatment of medical emergencies because the patient lacked insurance or had inadequate insurance, such as Medicaid.4 Today it’s patients who are insuredunder managed carewho have trouble obtaining emergency care because the MCPs deny authorization for the emergency department visit. The following scenarioand the questions it raisesoccurs every day in EDs across the country:
A managed care enrollee comes to the ED for examination and treatment. The individual is evaluated ("triaged") by a nurse to determine the nature and acuity of the medical complaint. If the nurse finds an emergency condition, the individual is immediately evaluated by an emergency physician; if there is no obvious emergency condition, then the patient’s MCP is contacted for "authorization" before the patient is evaluated by a physician. The authorization process may take minutes or hours, or not occur at all, depending on the availability and responsiveness of the "gatekeeper," who may be a physician, a nurse, or even a clerk.
If authorization is obtained, the patient is evaluated and treated like all other patients. If the ED visit is not authorized, the hospital ED usually releases the patient without a physician evaluation and instructs the patient to seek care at the MCP’s urgent care clinic or with the patient’s primary care physician (PCP) the next day. The hospital may or may not inform the patient of its legally specified obligations under COBRA to provide "an appropriate medical screening examination." Sometimes, the patient is asked to sign a form indicating the patient refused the mandated screening exam. The patient usually leaves unhappy and angry at the hospital, blaming it, not the MCP, for denying treatment.
Must managed care patients be provided a medical screening exam? Yes. The federal courts interpret "any individual" literally. Anyone who presents to an ED must be screened, whether they are indigent, a member of an MCP, or covered by Medicare or Medicaid.5 Illegal aliens are also entitled to MSE, much to the chagrin of border hospitals.6
What constitutes an "appropriate medical screening examination under COBRA" was covered in depth in the April 1997 issue of Emergency Department Legal Letter (8:35-44),7 and is outside the scope of this article. However, to summarize, the MSE must be first, reasonably calculated to identify emergency medical conditions that may be afflicting symptomatic patients, and second, the level of screening must be uniform for all those who present with substantially similar complaints.6,8,9 Triage is not an MSE, and hospitals cannot screen managed care patients, including those covered under a state-sponsored Medicaid managed care plan, in any "different" way than non-managed care patients.10
Does denial of authorization change the hospital’s legal obligation to provide a MSE? No. Managed care authorization is authorization for payment only; it is not and cannot be authorization for treatment. HCFA’s regulations are clear: "Managed health care plans cannot deny . . . permission to examine or treat their enrollees, they may only state what they will or will not pay for . . . Regardless of whether a hospital is to be reimbursed for the treatment, it is obligated to provide the services specified in COBRA."11
Whether an MCP has authorized payment for an emergency visit is irrelevant. A hospital must provide the mandated MSE regardless of whether it will be paid by the MCP or whether the patient could be seen immediately at the MCP’s own clinic. Hospitals are legally obliged to provide the MSE, and they will be held to that standard regardless of the financial pressures placed upon them by MCPs.
Can a hospital wait until authorization is obtained before providing the MSE? No. Waiting for an MCP gatekeeper to authorize payment violates COBRA’s provisions that there be "no delay" on account of the patient’s insurance.3 In passing COBRA, Congress emphasized that "care delayed is care denied." Delaying MSEs or treatment until payment is guaranteed, defeats the purpose of COBRA. Hospitals would treat paying patients first and would force those without insurance to wait. HCFA’s regulations mirror Congress’ intent, the request for authorization not to delay or impede the MSE or necessary treatment, and that registration procedures be applied equally to everyone.4,12 Hospitals violate the law when they delay access to the MSE while waiting for authorization from gatekeepers.
Hospitals "delay" patients’ access to the MSE in a number of ways. The most typical way is described in the opening scenarioafter triage, less urgent patients are asked to wait for care until the hospital calls and obtains authorization from the MCP. Studies have shown that the average time to authorization is approximately 65 minutes, which can substantially impact the health and safety of patients who are not provided examinations and/or treatment in that timeframe.13 One study by Derlet showed that the authorization process delayed care to patients with conditions ranging from acute myocardial infarction to pulmonary embolism, respiratory failure, sepsis, asthma, ectopic pregnancy, and laceration of a hand flexor tendon.13 These were patients who were triaged and screened by specially trained nurses, but yet felt stable and appropriate to wait for the authorization to occur prior to the initiation of further examination and treatment by the physician staff, clearly demonstrating the danger of delaying examination and treatment of patients while waiting for authorization.
Other hospitals, after triaging a patient or sometimes even before triaging patients, direct the patient to a phone and ask them to call their MCP/PCP directly to obtain authorization. If the PCP denies authorization, the patient frequently leaves the emergency department, often without any further interaction with the hospital’s staff. Some hospitals don’t even keep a log or medical record of these patient interactions with triage or with the hospital personnel who directed them to the phonea clear violation of COBRA’s documentation requirement that hospitals log adequate information to track a patient’s presentation to the hospital’s emergency department.14
Remember that, according to HCFA and the federal courts, that triage is not a medical screening exam. The purpose of triage is to ascertain the nature and severity of the patient’s complaint and prioritize patients in the order of which they will be seen by a physician; not to determine if the patient is suffering from an emergency medical condition as that term is defined by law under COBRA.
Does the no delay’ provision mean hospitals cannot tell patients that the MCP denied authorization? This is still an unanswered question. Many hospitals triage patients without asking about insurance status. Emergency patients are taken directly into the ED, examined, and treated. Nonemergent patients are sent to the waiting room and examined in the order in which they arrived. Frequently in busy EDs, these patients may have to wait a substantial amount of time before a screening examination is performed by the emergency physician. This is perfectly appropriate because the process is nondiscriminatory and the delay is not on account of the patient’s insurance status, only the normal vagaries and busyness of the ED.
While the patients are waiting to be seen, hospital registrars call the MCP for authorization of the ED services requested. If the MCP denies authorization after the patient is examined, treated, and released, so be it; the hospital could not legally delay access to the examination and treatment while awaiting authorization. But if denial of authorization occurs before the patient is examined, the real medical and legal issue is whether or not to explain the denial to the patient, who may use that information to decide to leave the ED without an MSE.
This scenario raises significant legal pitfalls for the hospital. If the patient leaves the ED (and thus refuses the MSE) after being told that payment has not been authorized, the hospital must handle the interaction extremely carefully to avoid liability under COBRA.
Federal Court’s View
Patients can refuse the hospital’s MSE, but the federal courts presume that the patient wanted emergency care.15 The hospital must prove that the patient explicitly revoked the request for treatment and left the hospital of his own accord. HCFA regulations state that the hospital must "take all reasonable steps to secure the individual’s written informed consent to refuse" the MSE.16 Hospitals should have the patients sign a "Refusal to be Screened Form." (See enclosed form.) But before obtaining the patient’s signature, the hospital must inform the individual of its obligations under COBRA and explain the benefits of the MSE and the risks involved in refusing that exam.16 The hospital must also determine that the patient is legally competent to refuse care and understands the ramifications of his/her refusal.
I submit that registration clerks and triage nurses are not the appropriate persons to represent hospitals in these interactions; only physicians have the training and expertise to adequately inform patients of the risks and benefits, evaluate the triage data, and assess the patient’s competence and understanding of the issues to secure a truly informed refusal of the offered MSE.
If the patient refuses to sign the form, a hospital representative should document that the MSE was offered and the individual refused to accept the exam or to sign the refusal form. Physicians should dictate a meticulously detailed account of the encounter into the patient’s medical record, clearly indicating the hospital’s conformity to the law and the patient’s choice to refuse the MSE.
However, the federal courts have not yet addressed the question of whether the mere act of informing patients of the authorization denial, assuming it does not delay their availability to the MSE or stabilizing treatment, is itself a violation of COBRA. There has been no litigation concerning this matter to date, so there’s no "precedent" to guide hospitals in assessing the risks associated with informing patients of managed care denials.
HCFA’s View
HCFA believes that telling patients they may have to pay for the offered services is economic coercion, and a violation of COBRA. Informing patients that their MCP will not pay for the ED visit (but will pay for care received at the MCP’s facilities), may induce patients to refuse ED screening examinations. HCFA recognizes the economic duress of this and warns: "Hospitals should not attempt to coerce individuals into making judgments against their best interest by informing them that they will have to pay for their care if they remain."17
Whether HCFA has the statutory legal basis to make such a determination is an open question. However, HCFA has steadfastly refused to hold that hospitals can put up signs with financial language or inform patients in particular language regarding the payment issues under managed care. To my knowledge, HCFA has not yet cited any hospitals for violating COBRA by informing patients of authorization denials.
ACEP’s and AHA’s View
ACEP, the American Association of Health Plans, and the American Hospital Association, as well as other constituencies insist there is no statutory authority for HCFA’s interpretation on this issue, referring to it as "HCFA’s gag rule." These organizations believe patients should be given financial information so they can make informed decisions about how, where, and when to obtain health care services. HCFA has convened a panel of experts to look at this issue, as well as other issues regarding the interpretation and application of COBRA, but, as of this date, HCFA has not changed its position.
Other "Experts’" View
Other authorities have even gone so far as to say that hospitals can’t ask for any financial information until after the medical screening examination has been performed.18 Such a recommendation is probably overreaching, since the statute only states that hospitals cannot delay access to the screening exam on account of an individual’s insurance, and does not actually prohibit obtaining insurance information. In fact, HCFA has directly told ACEP and the American Hospital Association that COBRA should in no way disrupt the normal ED registration process, as long as the process is non-discriminatory and does not impede patients access to screening exams and stabilizing treatment. It’s just that HCFA does not want hospitals to include in that registration process someone informing the patient that their MCP denied payment authorization for their ED visit.
State Laws
State laws further complicate the issue of informing patients of financial consequences. Some states such as California, Florida, and Maryland prohibit authorization calls from occurring until after the patient’s MSE and any necessary stabilizing treatment has been provided.19 Therefore, be certain to check your state law before deciding whether to inform patients of authorization denials prior to the performance of a screening exam.
Recommendation
I believe that hospitals should not tell patients of authorization denials before the MSE is performed for the following reasons:
Economic blackmail leads to adverse outcomes. Informing patients of authorization denials before they are examined is economic blackmail, which may threaten their health and safety. Patients equate denial of authorization with denial of treatment, which puts them in the untenable position of choosing between economic hardship (if they stay) and potential adverse medical consequences, even death (if they leave). Only the intervention of alert and caring emergency nurses and physicians has prevented more disastrous outcomes after managed care patients leave EDs. In my personal experience, many patients cajoled into staying for examination and treatment after authorization was denied were ultimately diagnosed with serious illnesses such as meningococcal meningitis, orbital cellulitis, peritonsillar abscesses, urosepsis, perforated gastric ulcer, anaphylaxis, exertional heat stroke. Each of these patients worried that the cost of the ED visit would not be paid by their insurance. In each case, the ED staff had to overcome the notion of, "But my doctor says I don’t need to be seen in the ED right now."
Published studies have reported patients who left the ED after denial of authorization only to return later for potentially fatal diseases such as ruptured ectopic pregnancy, acute myocardial infarction, meningococcal sepsis, and pulmonary embolism.13,20,21,22 In one study of patients seen in the ED after denial of authorization, 15% had abnormal vital signs, 80% required some testing or ED treatment, and 6% required immediate specialty consultation, admission, or emergency operation.22 Every emergency physician can relate similar experiences with managed care patients.
By saving patients, emergency physicians save managed care companies the adverse publicity and potential liability their ill-advised procedures deserve.
Some authors have stated that MCP authorization is "required" in their part of the country, and chastised MCPs for denying or delaying stabilizing treatment for patients found by MSEs to have an emergency medical condition.13 But the fact is that MCPs cannot require hospitals to obtain prior authorization before MSEs or stabilizing treatment precisely because the authorization is for payment only, not treatment. Yes, some hospitals do contract directly with MCPs to provide services to MCP enrollees. But any contract that allows prior authorization to delay access to screening exams or stabilizing treatment is de facto void, on the basis of illegality, because it is a violation of federal statutory law. Emergency physicians should not blame MCPs for the adverse consequences suffered by patients. Hospitals and physicians, not the MCPs, are both medically and legally responsible for the emergency care provided to these individuals.23
Who knows what service is or is not covered by the MCP? It is impossible for ED personnel to know which services areand are notcovered by myriad MCPs. Each has its own definitions and exclusions, and coverage for emergency services vary. Even when the extent of coverage is known, if the authorization denial is received before the patient is examined, neither the physician nor the patient could know whether the MSE would reveal a condition that would be covered by the patient’s insurance. Nor does the ED know whether the patient could successfully appeal the denial; nationally, more than 25% of ED claims initially denied are overturned via the claims appeals process.
Additionally, a number of national MCPs, including Medicare and Medicaid carriers, have been under fire from state regulators for inappropriate denials of emergency coverage. Recently, in both California and Texas, state agencies concluded Kaiser Permanente was unlawfully denying ED coverage, and in New York, state investigations found the Medicaid MCPs so disorganized, incompetent, or dishonest that it cited 13 of 18 plans for providing substandard care.24
Without examining the patient, emergency physicians are unable to provide gatekeepers the data necessary to make a reasoned decision concerning the patient’s medical management. It is inappropriate to ask physician gatekeepers to make medical decisions over the telephone without benefits of a hands-on examination of the patient in the ED, particularly gatekeepers who may be biased by contractual economic incentives to deny services.
MCPs have no liability under COBRA. Because authorization is for payment only and not treatment, MCPs have absolutely no liability under COBRA for denying an individual examination and treatment in the ED.25 Only hospitals have the legal obligation to provide the MSE, and they will be held to that standard regardless of the financial pressures placed upon them by managed care plans.
MCPs are fully aware of the ramifications of COBRA and use it to their advantage. Some MCPs have gone so far as to intentionally instruct their PCPs, in writing, to deny all ED visits except the most obvious emergencies, informing their PCPs that the hospital is forced to examine these patients by law.26 They also know that a lot of patients will leave the ED if authorization is denied, which is financially beneficial for the MCP. And, if the patient stays, the MCP can either determine whether to pay the patient’s claim retrospectively, after scrutinizing the documentation, or lack thereof, in the ED medical records or force patients to seek financial coverage through a cumbersome appeals process.
Malaligned economic incentives. Physicians should be patient advocates and not incentivized to deny patients medical care. Paying physician gatekeepers more for providing less services distorts the patient-physician relationship traditionally based on trusttrust that the physician will always act in the best interest of the patient.
Critics argue that the fee-for-service system incentivized physicians to perform unnecessary care. That is probably true, in part, but patients are the ones seeking care, and at least under fee-for-service, the physician did more work and spent additional time with the patient to account for the additional compensation. Under managed care, doing less or nothing at all increases the physician’s remuneration. The temptation under managed care, or should I say the "incentives," for the physician are not aligned in the best interest of the patient.
How many PCPs, when they deny patients access to the ED, also tell the patients about the financial incentive arrangements which bear on their decision-making process? Are patients entitled to such information to allow them to make truly "informed" decisions concerning whether they should leave the ED or stay despite the denial of authorization by their PCP? I routinely inform patients who were denied authorization of the MCP/gatekeeper financial arrangements as one more piece of the risks and benefits they must weigh in deciding whether to be examined in the ED.
Several states, in response to mounting assertions by patients and health care advocates that financial factors are adversely influencing MCP clinical decisions, have enacted legislation governing MCP incentive arrangements.27 Ironically, the federal statute that has heretofore protected MCPs from malpractice liability for its denial decisions, the Employee Retirement Income Security Act,28 may require such disclosure. Recently, the federal Eighth Circuit Court of Appeals became the first appellate court to rule that ERISA imposes a fiduciary duty on MCPs to communicate any material facts that could adversely affect a plan member’s interests, including the disclosure of physician financial incentives that discourage referrals to specialists.29 And, emergency physicians are "specialists" in the eyes of the federal government!
Patient’s already "assume responsibility for payment." Many hospitals inform patients of the authorization denial before the MSE, then ask the patient to "assume responsibility for payment" if they decide to stay in the ED. But all patients, by presenting to the ED, already legally assume financial obligation for any care rendered; there exists an implied contract to pay for services requested. Additionally, when obtaining a patient’s initial consent for treatment, nearly all hospitals tell patients they will have to pay any charges not covered by the insurance carrier. Patients understand this, whether or not they are part of an MCP. Why do we handle MCP patients differently than we do any other insured patients? If the ED visit was truly "non-urgent," then the charges should be in a range the patient is able to afford. Paying these bills should be adequate incentive for patients to weigh when next considering whether to visit the ED.
Patients are entitled to all pertinent data, including financial costs, in order to make decisions about their health care. However, until the MSE has been performed, patients may not have adequate information to make a truly informed decision.
Retrospective denial. Most managed care plans reserve the right to deny payment for an ED visit until after they review the medical records of the visit. This includes instances when the PCP authorized payment by phone when the patient presented to the ED, and even when the PCP personally sent the patient to the ED for treatment. The granting of authorization in these cases is irrelevant; it merely wastes a great deal of resources and everyone’s time. (Hospitals with managed care contracts that allow retrospective denial should renegotiate those contracts.)
Better alternatives. Phone contact with the MCP to discuss the plan for care and authorization for payment should occur after completion of the MSE and stabilizing treatment. Then, further care can be approved and coordinated without jeopardizing the patient’s welfare. Nearly a dozen states have recognized these dangers and prohibit authorization calls until after the patient receives the MSE and any necessary stabilizing treatment.30 The American College of Emergency Physicians, in cooperation with Kaiser Permanente, is seeking changes in federal law to prohibit authorization calls until the MSE has been carried out and stabilizing treatment undertaken. Emergency physicians can help effect these changes by educating and coaxing their elected representatives.
Conclusion
Hospitals and physicians must divorce the insurance and payment issue from their mandated duty to provide medical screening examinations and stabilizing treatment for all patients who present to the ED. The authorization process should be entirely separate from the medical treatment procedures. Only after managed care patients have been examined and stabilized should the ED contact the patient’s MCP/PCP to discuss further management or disposition of the patient. At no time should authorization procedures or any insurance considerations delay a patient’s access to the MSE or stabilizing treatment.
Contracts with managed care entities should first outline the process, in accordance with COBRA, by which the hospital ED will triage, medically screen, and stabilize patients. Then, the negotiation of payment issues can be addressed.
References
1. 42 USC 1395dd.
2. 42 USC 1395dd(a).
3. 42 USC 1395dd(h).
4. H.R. Rep. No. 241 I, 99th Cong., 1st Sess. 27 (1986).
5. Eg., Brooker v. Desert Hospital Corp., 947 F2d 412 (9th Cir 1991); Cleland v. Bronson Health Care Group, Inc., 917 F2d 266 (6th Cir 1990); Gatewood v. Washington Healthcare Corporation, 933 F.2d 1037 (DC Cir 1991).
6. Cleland v. Bronson Health Care Group, Inc., 917 F2d 266 (6th Cir 1990).
7. Bitterman RA. What is an "appropriate medical screening examination under COBRA?" ED Legal Lett 1997;8:35-44.
8. Correa v. Hospital of San Francisco, 63 F3d 1184 (1st Cir 1995).
9. Gatewood v. Washington Healthcare Corporation, 933 F2d 1037 (DC Cir 1991).
10. Baber v. Hospital Corp, 977 F2d 872 (4th Cir 1992); Power v. Arlington Hospital, 42 F3d 851(4th Cir 1994).
11. 59 Federal Register 32116.
12. 59 Federal Register 32099.
13. Derlet RW, Hamilton B. The impact of health maintenance organization care authorization policy on an emergency department before California’s new managed care law. Acad Emerg Med 1996;3:338-344.
14. 42 CFR §482.20(3).
15. Stull MK. Construction and application of EMTALA. 104 ALR Fed 1991;166:191-92.
16. 42 CFR §489.24(c)(2).
17. 59 Federal Register 32,101.
18. Moore L. ED Catch-22 means your hospital could lose big either way. Hospital Access Management 1997;16:61-63, quoting Robert Spain of HCFA’s Chicago Office Division of Health Standards and Quality.
19. Eg., Fla. Stat. 395.1041(3)(h) 1994; Calif. SB 1839, Sept. 1994; MD Health-Gen Code Ann 19-701 (1993).
20. Shaw KN, Selbst SM, Gill FM. Indigent children who are denied care in the emergency department. Ann Emerg Med 1990;19:59.
21. Osborn HH. Health maintenance organizations: managed care or mismanaged care? Ann Emerg Med 1996;27:225.
22. Hecker J, Martin ML. Profile of patients seen in the ED after denial of authorization for care. Acad Emerg Med 1996;3:461.
23. Bitterman RA. Emergency department authorization for health maintenance organizations? Just say no! Acad Emerg Med 1996;3:1172-1175.
24. Managed Care Week March 31, 1997, p. 4.
25. Frew S. HMOs and COBRA liability. Patient Transfer News 1993;1:1.
26. Lauren Dame, JD, MPH, Public Citizen; presented at the Case Western University Law School Odette Valabregue Wurzberger Symposium "The Tenth Anniversary of EMTALA: Legal and Policy Issues". April 19, 1997.
27. E.g., Ga. Code §33-20A6 (1996); Vernon’s Texas Ins. Code, Art. 20A.14(l) (1997).
28. ERISA, 29 USC §1001 et seq.
29. Shea v. Esenstein, 107 F3d 625 (8th Cir 1997).
30. American College of Emergency Physicians. EM Today June 18, 1997, p.1.
Resources
1. Luce GM. Defending the Hospital Under EMTALA: New Requirements & New Liabilities. Published by the Na
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