Risk Management

Managed Care Gatekeepers and Your Potential Liability

By Richard A. Deutsche, MD

[Argus, September, 1991]

A managed care gatekeeper refuses to authorize your prescribed treatment plan for a patient. What should you do?

As the physician, you must be the advocate for your patient, or face potential liability. A landmark court case in California illustrates the point.

An elderly patient who participated in a Medicaid program which employed pre-authorization gatekeeping was admitted to a hospital for vascular surgery. The pre-admission authorization was good for 10 days. The patient developed complications and her surgeon requested approval for an 8-day extension. The gatekeeper approved an extension of only four days, at which time the patient was discharged. Further complications arose at home which resulted in amputation of her leg.

Claiming that the cost containment mechanism was the proximate cause of her amputation, the plaintiff sued Medi-Cal. A jury awarded her $500,000. The verdict was reversed on appeal, however. Although there were procedures to contest the gatekeeper’s decision, the surgeon failed to appeal the denial to a Medi-Cal reviewer. The court found the surgeon responsible since he alone discharged the patient.

In this case, total responsibility (and presumably any resulting liability) remained with the physician. The court did imply that if the physician had adequately protested the health plan’s decision, responsibility might arguably have shifted to Medi-Cal, the managed health care provider. But, if a doctor complies with an HMO’s decision that is contrary to his or her medical opinion, the physician would in all likelihood bear the ultimate liability for any injuries that the patient may sustain.

As a general rule, physicians owe the same legal duty, and are essentially held to the same standard of care with respect to each patient they treat, regardless of reimbursement arrangements. Consequently, a treating ophthalmologist who disagrees with the gatekeeper regarding the need for treatment or a procedure is obligated to treat the patient according to the appropriate clinical standard of care. If the ophthalmologist fails to provide treatment because the HMO refuses authorization, the physician may likely be exposed to a malpractice claim if a patient injury occurs.

Treating physicians still have an unqualified legal duty to HMO subscribers, even though gatekeepers may pressure them to make unsound medical decisions. Many state statutes regarding managed health care systems may limit somewhat these corporations from liability directly arising from medical malpractice. An ophthalmologist who does not protest limitations imposed by a third party payor when medical judgement dictates otherwise cannot avoid ultimate responsibility for the patient’s care. When there is a conflict between a physician and the managed health care system over the quality of patient care, the physician must uphold the patient’s interest.

In summary, if you recommend a test or procedure which the managed health care system will not approve you should carefully consider the following risk management guidelines:

  • Inform the patient of the potential consequences of not having the test, procedure or treatment performed.
  • Appeal the gatekeeper’s denial, informing the third party of the consequences of not having the test or procedure.
  • Document these actions in the patient’s chart, including copies of letters to the patient and the managed health care provider.
  • Be your patient’s advocate for the highest standard of care.
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