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Liability exposure in a managed care environment

By James W. Saxton, Esq.

With 85 percent of the employed population transitioning into a managed care environment, certainly the liability landscape is beginning to change. This article will discuss some of the global concerns as well as some specific liability exposure concerns for physicians.

Specifically, there are several areas of high liability exposure. First, generally in a heavily penetrated managed care environment volumes of patient encounters increase. This makes the need for appropriate documentation systems as well as policies and procedures all the more important to help insure certain aspects of care or follow-up do not fall between the cracks. Telephone triage increases. This makes it extremely important to make sure individuals at your front desk who may be taking on additional or different types of responsibilities are trained and acting pursuant to policy and protocol.

A recent case showed the importance of this advice. The patient was discharged after a week-long hospital stay with a respiratory illness and acute bronchospasms. He was discharged on several medications. Shortly after returning to home, he became acutely ill. He called his primary care doctor, as he knew it was the protocol to let them know he was going to go back to the hospital. The individual at the front desk, perceiving that the policies and procedures of the HMOs would require they see the patient first, told the patient that he needed to come to their office first. The patient was adamant, but not nearly as adamant as the office worker, thinking she was doing her job appropriately. The patient did come back to the office driven by a son only to collapse in the waiting area and needed to be taken to the emergency department via an ambulance. He died shortly after getting to the hospital.

A claim was made against the primary care physician for failing to have appropriate policies and procedures in place so that only individuals with certain levels of clinical experience were responding to these triage questions. To reduce this risk, make sure your front desk personnel know when to refer calls to an individual with appropriate credentials. It may be a nurse or physician, depending on the circumstances. Further, have policies and procedures in place that a receptionist can follow so, in case of litigation, you can show that reasonable policies were in place.

In a managed care environment one often finds that an increase in the use of advance practice providers is warranted and advantageous. This includes certified nurse practitioners, physician assistants and certified nurse midwives. In fact, the number of these individuals has tripled in the last five years. These individuals can be a very successful compliment to a physician’s practice. However, the physician must be aware of the regulatory requirements of using these extenders and also must embrace them as colleagues in order that patients feel that they are getting another avenue to their doctor and not just being blocked from seeing their doctor. Make sure they feel that they can raise their hand for help in a difficult or confusing clinical situation. Remember that often negative body language, when there are questions, can discourage an advanced practice provider for appropriately seeking guidance from you when the clinical circumstance warrants the same.

There also are certain protocols and specific documentation which need to be considered. The advanced practice providers should be credentialed, supervised consistent with their particular regulatory requirements and there should be ongoing training and continuing medical education opportunities. Does your collaborative agreement match the hospitals credentialing criteria, for example? There is no data to suggest that any of these professionals provide a less appropriate quality of care when practicing within their scope. In fact, data has shown that they actually do quite well and enhance patient satisfaction. However, there could be a “knee-jerk reaction” from a patient when there has been a misdiagnosis.

If you are taking on the role of coordinating health for patient population, additional responsibilities come along with the same. Have you done appropriate health screens? Have you promoted certainly healthy habits? Have you discussed smoking, dieting, exercise with patients? Are you truly coordinating their care in the case where the patient is seeing multiple providers? Recent case law goes so far as to suggest that you may be responsible if a referral is made to another provider on a specialty panel and in retrospect that provider lacks a certain level of competence. This could mean that you need to make yourself aware of the individual physicians to whom you may be referring or at least inquire as to the type of credentialing that the particular health plan goes through. Assure yourself that there are certain credentialing criteria which are met and also are monitored on a yearly basis.

Another evolving new area of exposure is that of breach of a fiduciary responsibility. This comes into play when a provider is at financial risk with the payor. It could mean a withhold, a risk pool, a bonus program or a capitated arrangement. Many plaintiff’s attorneys will assert that, if you are at financial risk, you need to disclose to patients the fact that you have this financial relationship so that they can determine whether that fact is impacting your decisions about the treatment which you are suggesting. If you do not make them aware of this arrangement, many plaintiff’s attorneys would say that you breached this fiduciary duty and are responsible for whatever damages occur because of the lack of a diagnostic test or certain surgical procedure. Some attorneys have gone so far as to suggest that this become part of informed consent.

This claim has not become the law in Pennsylvania yet but is gaining acceptance from across the country. It may become necessary in the future to place a statement in a practice brochure setting forth the different types of financial arrangements you do have with payors and reminding them that they can simply call their benefits coordinator or employer to find out more about their particular health plan and what arrangements their health plan has with its providers. In the alternative a notice may need to be given to patients at the beginning of your relationship with them setting forth the varying financial arrangement with which you participate.

A related concern in this environment is the challenge that your decisions were not just faulty judgment or alleged malpractice, but that they were economically motivated, giving rise to claims for punitive damages or a verdict impacted by emotional overtones. In these cases, attorneys, on behalf of injured patients, claim that the diagnostic test was not ordered because certain financial disincentives were in play. During discovery they will obtain copies of your contracts with payors, utilization reports, perhaps memorandum concerning your utilization, or even patient complaints from the managed care organization that relate to you. They will then weave a theme around financial incentives that they can find in your contract. They will try to show that you could economically benefit from deciding that a certain diagnostic test wasn’t warranted under a certain clinical situation.

To combat these claims you need to be vigilant to make sure you take a clinical snapshot through documentation of significant clinical decisions. Carepaths, pathways and clinical protocols should contain a risk management flag that mandate documentation when a certain significant clinical decision is made. This would include discharge from the hospital, a decision not to admit from the emergency department or a decision concerning the use of certain diagnostic tests. It is more important than ever to make sure that you document why your decisions are clinically supportable.

The environment is fraught with risk right now but with some planning, exposure can be reduced and in many cases without operational disruption.

James W. Saxton, Esq., is chairman of the Healthcare Litigation Group, Stevens and Lee, in Lancaster Pa.

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