ElementsofManagedCare
1)  RestrictschoiceofMDs/otherproviders
•  E.g.,providernetwork
•  E.g.,gatekeepers
2)  Overseesdiscretetreatmentdecisions
•  E.g.,uBlizaBonreview
•  E.g.,qualityassurance
3)  CreatesfinancialincenBvesforMDs/other
providerstoconstraincosts
•  E.g.,capitaBon
•  E.g.,withholdsorbonuses
UBlizaBonReview
•  Defined:Planassesseswhethermedicalcare
is/wasmedicallynecessary
•  FormsofU/liza/onReview:
–  Retrospec/veReview:reviewofpreviously
providedcare
–  PriorReview/PriorAuthoriza/on:reviewof
proposedcare
–  ConcurrentReview:reviewofongoingcarey
Cost-Sharing
•  Defined:PorBonofprovider’sfeepaidforby
paBent
•  Types
–  DeducBble
–  Co-payment
–  Coinsurance
FinancialIncenBves
ExamplesofFinancialIncenBves
•  Withholds
•  Bonuses
•  CapitaBon
TypesofCapitaBon
•  Capitatedpaymentlimitedtoprovider’sservices
•  Capitatedpaymentcoversallcareprovidedtothe
paBentbyallproviders
•  Capitatedpaymentcoversprovider’sservicesand
certainservicesprovidedbyothers
•  Capitatedpaymentlimitedtoprovider’sservices+
withhold/bonusBedtocostofcareprovidedbyothers
PlanLiabilityforMD’sNegligence
•  TheoriesofVicariousLiability
•  MD=employee(respondeatsuperior)
•  MD=independentcontractor
– (1)ImpliedAuthority:planexertssufficient
control/influence
•  CapitaBon/otherfinancialincenBves
•  PaBentchartreview
•  QualityAssurance
•  Gatekeepers
– (2)Apparentagency
*Note:SomejurisdicBons–novicariousliability
(unlessMD=employee)
•  DirectLiability:Planbreachedcorporateduty
ApparentAgency:HMOContext(Petrovich)
(1)  HMOheldselfoutasproviderofcare
–  Query:DidHMO(orMD)actinwaythatwouldleadpaBent
toreasonablythinkMDwasHMO’sagent?
–  RelevantFactors:
•  MarkeBngmaterials
– E.g.,claimsHMOprovidescare,claimsMDis“HMO’s
MD”
•  Plandocuments
– E.g.,disclaimerthatMD≠HMO’semployeeoragent
*Note:ContractbetweenHMOandMDnotrelevant
(2)  PaBentlookedtoHMOasproviderofcare
–  Query:DidpaBent(oremployer)pickHMO,relyingon
theirselecBonofMDs?
•  vs.paBentfirstselectsMDandthenselectsplan
ManagedCare:DirectCorporateDuBes
CourtsgenerallyextendHospitalCorporateDuBesto
ManagedCarePlans:
1)  DutyprovidesafeandadequatefaciliBes,equipment
andpersonnel
2)  Dutyensuregeneralcompetenceofproviders
3)  DutyoverseecareprovidedtoindividualpaBent
4)  Dutytoformulate,adopt,andenforceadequaterules
andpoliciestoensurepaBentsafety/qualitycare
5)  DutyavoidadopBngpolicies/execuBngcontractswith
termsthatunreasonablyencouragesubstandardcare
6)  DutyexercisecarewhenmakinguBlizaBonreview
decisions
TerminaBonofManagedCare
MDsContracts
•  Somecourts:Fairnessstandard(Potvin)
–  Rule:Removalmustbe(1)procedurallyfair,and(2)
substanBvelyraBonal
–  SubstanBvelyraBonalif
•  Plan’sunderlyingobjecBveisreasonable
•  Plan’spolicyservesunderlyingobjecBve
•  ApplicaBonofpolicytoMD-plainBffsupportable
•  Somecourts:Enforcew/outcauseprovisions
–  ExcepBon(somecourts):RaBonaleviolatespublic
policy