By R. Michael Kemler, J.D.,LL.M.
There is irony in authorizing under law an entity that administers and delivers as critical an item as health care; and, subsequently, enacting an Accountability and Protection Act to regulate the entity, due to the perils involved, without seeking to modify the entity.
Act 68, The Pennsylvania Quality Health Care Accountability and Protection Act became effective this January. The Act defines a “managed care plan” (plan) as a health care plan (a) that utilizes a gatekeeper to manage utilization of health care services; (b) that integrates the financing and delivery of health care services to enrollees by arrangements with participating health care providers; and (c) that provides financial incentives for enrollees to use the participating health care providers in accord with plan procedures. A managed care plan includes both HMOs and PPOs.
The Act is directed at managed care accountability and protection for the subscriber. The Act, among other things, requires a plan to assure availability/accessibility of health care providers; to adopt and maintain a definition of medical necessity; to ensure that emergency services are provided at all times; to adopt procedures by which an enrollee can obtain services outside the service area; and to adopt and maintain a complaint and a grievance process.
Act 68, however, also contains provisions, which although subscriber protective, provide protection for physician interests and increase the opportunity for exercise of independent clinical judgment.
Financial Incentive Prohibition
The Act prohibits a plan from use of any financial incentive that compensates a health care provider for providing less than medically necessary and appropriate care to an enrollee. (A savings clause provides that there is no prohibition of the use of capitated payment or other risk-sharing arrangements). The prohibition against plan compensation or reward for underutilization seeks to assure medically necessary care for the patient. The prohibition also protects the integrity of practice of primary care physicians (PCP), in making appropriate referrals to specialists, laboratory, radiology and emergency services, from receiving less compensation than their counterparts, who may withhold referrals, for a reward.
The prohibition does not address a device utilized in the past in Medical Assistance managed care projects (see HealthPASS) known as the PCP Referral Services Fund (RFS), which may still be utilized in some MA/HMO plan products. Under the former HealthPASS model, PCPs received about half their monthly capitation per patient. The remainder was deposited in an RSF, which was retained by the plan. When the PCP made a referral (specialist, lab, x-ray, ER), either all or a portion of the referral cost was paid out of the RFS funds on account with the plan. To the extent that MA/HMOs or other plans still use RSFs, the plan prohibition against compensating for less than medically necessary services is of no effect, since Act 68 does not address plan mechanisms directed at imposing financial sanctions against providers who either utilize properly or overutilize. In failing to address punitive, as well as compensatory incentives, the Act is not comprehensive. Further, Act 68 protects the fundamental cost containment devices of managed care, i.e., capitation and risk sharing practices. As reform legislation, Act 68 is moderate.
Medical Gag Clause Prohibition
The Act provides that no plan may penalize or restrict a health care provider from discussing (1) the “process” that the plan, or one contracting with the plan, uses or proposes to use to deny payment for a health care service; (2) medically necessary and appropriate care of enrollees, including information as to the nature of treatment, risks of treatment, and alternative treatments; or (3) the decision of a plan to deny health service payment. These provisions offer the subscriber greater information access; and they offer the physician greater clinical freedom to discuss matters that govern treatment. Accordingly, the physician may appear less to be an instrument of the HMO. The first item regarding physician-patient discussion of the process used to deny payment for a service is ambiguous. The exchange of information as to the plan denial process does not necessarily comprehend the prohibition of “gag clauses” relating to RSFs, which provide an incentive for a PCP to deny a referral. Also, the incentive to deny is not itself denial; the existence of a disincentive is not necessarily a process.
This section of the Act is highly protective of physician interests. It provides that no plan shall terminate the employment of or a contract with a health care provider for:
• Advocating for medically necessary and appropriate health care consistent with the ordinary degree of learning and skill of reputable providers practicing according to the applicable legal standard of care.
• Filing a grievance (pursuant to the Grievance Procedures of the Act).
• Protesting a decision, policy or practice that the provider reasonably believes, consistent with ordinary learning and skill of reputable providers, interferes with the health care provider’s ability to provide medically necessary and appropriate health care.
These provisions erect a conditional safety net for physicians who advocate, grieve or protest with a plan in the interest of patient care.
Continuity of Care
The Act provides that, if a managed care plan terminates its contract with a provider for other than cause, an enrollee may continue an ongoing course of treatment with that provider for a transitional period. As to an enrollee in the second/third trimester of pregnancy at the time of a termination, the transitional period is to extend through postpartum care. Further, a new enrollee may continue a course of treatment with a nonparticipating provider for a transitional period. These specific provisions benefit the patient, but also benefit the physician in that the professional relationship is made less disruptive.
Complaint and Grievance Procedures
Act 68 provides for an internal complaint process as well as an internal and external grievance process. The complaint process pertains to enrollee concerns with providers, coverage and management policies; the grievance process addresses subscriber appeal of plan denial of payment for a health care service. The focus here is on the grievance process
The grievance process is convoluted and lengthy. The Act provides, as to internal grievance, that a plan shall establish two levels of review, by which an enrollee or a health care provider, (with the enrollee’s written consent) shall be able to file a written grievance contesting payment denial. An internal grievance consists of an initial review by plan personnel who did not participate in the denial; and a second level review by a committee who did not participate.
The second level of internal grievance involves written notice to the health care provider of the right to appear before the committee and of the decision, including its basis and clinical rationale. First and second level internal grievance includes review by a licensed physician in the same/similar specialty as the service at issue. The Act also provides for external grievance, by which the enrollee or health care provider (with consent) may appeal payment denial on internal review.
The external grievance process shall be conducted by an independent utilization review entity, not affiliated with the plan; it shall include a licensed physician in the same/similar specialty. The Act provides for notice to the provider of the filing and of the decision, with rationale; and provides, as well, for external review of any written submission of the provider. The standard of review is whether the health service denied, internally, was medically necessary and appropriate under the terms of the plan. The external grievance decision shall be subject to appeal to a court
The grievance process is notable for two reasons. First, the process carries nearly the procedural complexity and delay of the court system; the time required for an enrollee, with physician assistance, to traverse the procedure is 165 days.
Second, the Act provides opportunity for the physician, as health care provider, to stand in the subscriber’s shoes in grieving and to act as the subscriber’s advocate in formulating what will ultimately be a final decision based upon medical necessity. The Act also places a burden on the physician, as health care provider, since, by implication, it sends a message to subscriber/enrollees that if you seek to use the grievance procedure, your next friend, ally and advocate is your doctor. The latter may not be welcome to physicians whose primary concern is the practice of medicine rather than administrative law.
There is, however, more than an ethical or altruistic interest in assisting in grievance pursuit, since establishing a right to coverage means that the physician may pursue the desired course of treatment and, in the case of a specialist, be paid for it. The AMA Principals of Medical Ethics do strongly encourage physicians to assist in such coverage matters, especially in “agency” proceedings, i.e., Social Security. But such assistance, in health insurance, appears not mandatory.
The grievance process confers standing upon a health care provider (with consent) to grieve. The entire process, directed at determining medical necessity, is factually dependent upon the PCP/ specialists’ medical records and any correspondence drafted by the physician on the payment question at issue. Physicians who choose to draft letters, beyond the medical record, focusing on the legitimacy of health services denied, should bear in mind some elementary principles of advocacy.
First, advocacy contemplates supporting or furthering the cause of another and optimally doing so by “argument.” Letters should therefore be written in a deductive (not inductive) style, involving syllogism, that is, premises and a conclusion, rather than only a conclusion. Argument contemplates specific delineation of the reasons for a conclusion.
Thus, if the denial relies on lack of medical necessity, the physician should articulate every clinical reason why medical necessity exists and only then conclude that it exists. If the denial is based on custodial care, i.e., the patient has already reached his/her maximum level of function or care involves only activities of daily living, the physician should delineate every reason why the patient can achieve further progress or that more than ADL is involved, and, then, conclude that care is not custodial.
Second, advocacy contemplates defeating the arguments of the opposition. Accordingly, a letter drafted by a physician in aid of coverage should specifically address the reasons, if any, given by the plan for denying coverage and rebutting them from the medical record or by professional opinion, with possible citation to journal articles.
An additional physician protection the Act provides for is prompt payment, i.e., within 45 days of receipt, of a clean claim submitted by a provider. If a plan fails to timely pay a clean claim, the Act provides for ten percent annual interest.
R. Michael Kemler, J.D., LL.M. is in private practice in health care law based in Philadelphia and is a guest lecturer at the University of Pennsylvania School of Medicine.