Page 301

Index

A

Acquired immune deficiency syndrome (AIDS), 119, 121, 128, 131, 138, 139

Admission review, 18, 37

Aetna Life and Casualty HEALTHLINE, 97

Allstate, 15

American College of Physicians, 36 n.5, 107

American College of Surgeons, 36 n.5

American Federation of State, County, and Municipal Employees, 42

American Hospital Association, 94, 107, 148, 154

American Medical Association, 107, 148, 154

American Society of Anesthesiologists, 36 n.5

Amyotrophic lateral sclerosis, 121

Anderson, Odin, 37

Assessment of care, see Criteria for assessment of care

appropriate use of medical services, 45-46, 48, 52, 83

data sources for, 49

extrapolation from rates of nonconfirming second opinions, 39

methods for assessing illness severity, 48-49

variations in use of medical services, 44-45, 46, 48, 65

B

Back pain, 80-81, 82, 104

Bank of America, 131

Blue Cross and Blue Shield

development of prior review guidelines, 107, 148, 154

effects of cost-management programs, 93, 98, 115

employer monitoring of cost-containment activities of, 41-42

first plan, 30, 35

of Greater Philadelphia (Independence), 95-96, 131

health planning efforts, 36

high-cost case management by, 119, 129, 131

integrated service/insurance products, 50

losses, 2

managed fee-for-service days under, 95

of Massachusetts, 95

of Minnesota, 45

of North Carolina, 93

of Northeast Ohio, 36

operational problems in, 222

of Pennsylvania, 43

small-area study by, 45, 69



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement



Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.

OCR for page 301
Page 301 Index A Acquired immune deficiency syndrome (AIDS), 119, 121, 128, 131, 138, 139 Admission review, 18, 37 Aetna Life and Casualty HEALTHLINE, 97 Allstate, 15 American College of Physicians, 36 n.5, 107 American College of Surgeons, 36 n.5 American Federation of State, County, and Municipal Employees, 42 American Hospital Association, 94, 107, 148, 154 American Medical Association, 107, 148, 154 American Society of Anesthesiologists, 36 n.5 Amyotrophic lateral sclerosis, 121 Anderson, Odin, 37 Assessment of care, see Criteria for assessment of care appropriate use of medical services, 45-46, 48, 52, 83 data sources for, 49 extrapolation from rates of nonconfirming second opinions, 39 methods for assessing illness severity, 48-49 variations in use of medical services, 44-45, 46, 48, 65 B Back pain, 80-81, 82, 104 Bank of America, 131 Blue Cross and Blue Shield development of prior review guidelines, 107, 148, 154 effects of cost-management programs, 93, 98, 115 employer monitoring of cost-containment activities of, 41-42 first plan, 30, 35 of Greater Philadelphia (Independence), 95-96, 131 health planning efforts, 36 high-cost case management by, 119, 129, 131 integrated service/insurance products, 50 losses, 2 managed fee-for-service days under, 95 of Massachusetts, 95 of Minnesota, 45 of North Carolina, 93 of Northeast Ohio, 36 operational problems in, 222 of Pennsylvania, 43 small-area study by, 45, 69

OCR for page 301
Page 302 utilization review efforts/programs, 37, 59, 60-61, 93, 94, 98, 171 C Cancer, 88, 121, 125 Cardiac pacemakers, 48, 83 Carotid endarterectomies, 46, 48, 83 Case management, see High-cost case management Cataract surgery, 49, 158 Caterpillar, Inc., 131, 138 Ciba-Geigy, 122 Claims administrators case management by, 123, 125 prior review by, 61, 68-69, 258-259, 261-262 Claims data defects in cost and utilization data based on, 111, 158 high-cost case identification through, 127 HMO processing of, 220-221 quality-of-care information from, 115 Codman, Ernest, 36 Commercial health insurance companies, see Health insurance industry; Health insurance plans; and individual companies Commission on Professional and Hospital Activities, 81-82 Committee on the Costs of Medical Care, 28 Concurrent review, see Continued-stay/concurrent review Confidentiality of medical information employer respect for, 7, 151 in high-cost case management, 132, 139 n.6 utilization management organization responsibility for, 7 Consumer price index, changes in, 15, 33 Continued-stay/concurrent review appeals processes, 193 by Blue Cross plans, 37 criteria/standards for, 48, 81-82 defined, 18, 170 effectiveness of, 98 focus of, 120 high-cost case management and, 127, 139 liability for, 180 by PSROs, 39, 66 responsibility for, 66 variations in, 65, 66 Coronary angiographies, 46 Coronary artery bypass surgeries, 46, 147 Cost management/containment strategies basic elements of, 32-33 benefit plan design, 20, 34-35, 214 control of provider payments, 21, 35 early efforts by third parties, 32-38 effectiveness of, 24-25 employer interest in, 40-43 federal government initiatives, 38-40 financial incentives to providers, 20-21 gatekeeping/triaging, 21 health planning, 35-36 inappropriate utilization as a target for, 44-46 physician education, 21 and quality assurance, 43 and quality of care, 46-47 risk pool management, 33-34 by small businesses, 42 utilization review, 36-38 Costs of health care aging of population and, 24 causes of increases in, 23-24, 32, 115 and clinical judgments about value of treatments, 23 economic shocks and, 40 effects of utilization management on, 1-2, 3-4, 14, 52, 92, 95, 145-146 increases in, 2 information resources on, 47-48 number of providers and, 24, 35-36, 43 prior review and, 92, 100-101, 104 screening for untreatable diseases and, 24 third-party financing and, 28 trends in, 3-4 and U.S. competitiveness, 15 Council on Wage and Price Stability, 40 Criteria for assessment of care adoption and modification of, 83-84, 177-178 appropriateness evaluation protocol (AEP), 80, 82 availability of, 5 competitiveness and, 22-23, 80, 154, 160 computerization of, 80, 107 n.3 diagnosis-specific, 48 differentiation by level of review, 84-85 exceptions to, 3, 72, 79, 173 of HMOs, 215 hospitalization, 79-82, 104

OCR for page 301
Page 303 ISD-A, 80-81, 82 length-of-stay norms, 48, 81-83, 84 and liability, 176-178 lists of procedures, 79 medical community involvement in, 147, 153, 205 procedure necessity, 45, 83, 172-173, 177 recommendations on, 6, 7, 9, 11, 147, 149, 154, 159-160 reliability of, 80 research needs on, 4-5, 159-160 sources of, 11, 83-84, 283 standardizations of, 178 statistical models for, 178 steps in generation of, 147 variation in, 89 D Discharge planning, 18, 64, 121-122, 125 Dunlop Group of Six, 41 Dunlop, John, 40 E Economic Stabilization Program, effectiveness of, 30, 40 Education enrollee/patient, on utilization management obligations, 7, 103-104, 109, 151, 156 physician, as cost-containment strategy, 21, 48-49, 147, 156 see also Health education Employee Retirement and Income Security Act (ERISA), 30, 41, 174, 187-188, 189 Employers, see Private employers Evaluation of utilization management barriers to, 110 behavioral biases against, 22 biases in, 96, 101 compared to expected utilization with no intervention, 95 competition and, 22-23 conceptual and methodological problems, 21-23, 86, 93, 100-101, 102, 111-116, 145 cross-sectional and longitudinal analyses, 97 of high-cost case management, 125-126, 131, 145 by retrospective reviews, 87 review-versus nonreview groups, 96, 100 see also Studies and surveys of utilization management Expenditures for health care by business/private industry, 15, 16 by health plan members for high-cost illnesses/injuries, 120-121 hospital care, 31 by major sources of funds, 31 number of physicians and, 24 personal health care, 31 physician services, 31 prior review and, 96 total, trends in, 14-15 Experimental Medical Care Review Organizations, 39 F Federal government health care cost-containment initiatives, 38-40 see also Medicare; Peer review organizations Fee-for-service high-cost case management and, 129 managed programs for, 50 and volume of physician services, 44 Foundations for Medical Care, 30, 35, 37, 39 G General Motors, cost-containment reports, 30, 41-42 Greater Phoenix Affordable Health Care Foundation, 42 Group Health Association of America, 31 Group Health Association of Washington, D.C., 30-31, 35 H Health benefits, see Health insurance plans Health Care Financing Administration, 121 n.1, 154 Health education, employer support for, 41 Health Insurance Association of America, 107, 148, 154 Health insurance industry growth of, 27-32 integrated service/insurance products, 50

OCR for page 301
Page 304 losses, 2, 15, 60 premium setting, 100-101 utilization management by, 60 withdrawals from group insurance market, 15 Health Insurance Plan of Greater New York, 35 Health insurance plans coinsurance rates, 104 community rating, 33 cost controls in, 20, 34-35 cost sharing in, 96, 109, 115, 151 coverage of alternatives to hospitalization, 41 derision-making process, 212 deductibles, 104 defined contribution programs, 110 design of benefits, 20, 34-35, 94, 115, 148, 151, 214 duplicate coverage, 114 enrollee/patient navigation of, 103-104 enrollment trends, 30-32 exceptions to limitations in, 19-20, 122, 140-141, 173 expenditures by businesses, 14-15 experience rating, 33 HMO underwriting practices, 214 individually purchased, 34, 153 information on prior review policies in, 79 limits on coverage, 141 n.8, 173 premium increases, 15 prior review integrated with, 66, 68-69 refusal to certify, 4 risk pool management for, 33-34 second-surgical-opinion provisions, 37 for self-employed people, 34 sources of, 32 triple option benefit package, 51 see also Costs of health care; Uninsured people Health maintenance organizations (HMOs) antitrust liability, 184 benefit design, 214 carrier-sponsored, 235-240 case studies, 213, 229-243 claims processing, 220-221 clinical protocols/guidelines, 215, 218 congressional support for, 47 data analysis by, 215-216, 219 data integrity in, 221-222 defined, 206 delivery of health services, 215-219 employer support for, 41 enrollee understanding of benefit restrictions in, 205-206 enrollment criteria, 214 enrollment information, 114 enrollments, 50, 214, 219, 220 factors affecting performance, 209-213 federally qualified, 214, 219 goals of, 210-211 group-model, 207, 217, 233-235 growth in, 50 high-cost case management by, 129, 218 hospital-sponsored IPA, 230-232 hospital use in, 44, 177 integrated service/insurance products, 50 losses, 2, 209 management information systems, 220-221, 222, 223, 231, 234, 236-237, 238-239, 241-242 market effects of and on, 209-210 medical director's role, 222, 232, 237, 240 medical necessity determinations, 173 network model, 207 open-ended, 51 operational problems, 220-222 operations, 211-213 organizational structure, 65, 207-209, 210-211, 216 patient flow procedures, 215, 218 patient payment obligations, 195 peer review in, 216, 219, 222 physician contracting arrangements with, 211-212, 217 physician incentives used by, 47, 211, 216, 224-227, 230-231, 233-234, 236, 238, 241 physician selection, 215 physician-sponsored IPA, 240-243 policy and research issues, 227-229 quality assurance in, 206, 216, 219-220, 222-224 quality of care in, 50, 205, 210, 211, 223 regulation of, 50, 207, 210, 219-220, 223 staff model, 207, 215 types of, 207 underwriting benefits, 214 utilization management approaches, 6, 66, 214-222, 229, 231-232, 234-235, 237, 239-240, 242

OCR for page 301
Page 305 see also Independent practice associations Health planning cost-containment effects of, 35-36, 40 employer support for, 41 High-cost case management administrative aspects of, 133, 139 basic process, 3, 123-130 case manager responsibilities, 121-122, 126, 128-130, 139, 140, 280-281 confidentiality concerns, 132, 139 n.6 cost-effectiveness judgments in, 5, 66, 149 costs of, 130 definition of, 19, 119 denial rates, 145 employee awareness of, 127 employer support for, 41, 133-134 enrollee preceptions of, 132-133 evaluation of, 134-138 exceptions to limitations in benefit contracts, 19-20, 122 focus and characteristics of, 3, 19, 120-122, 134, 145 freestanding programs, 123-124 growth of, 119 hypothetical case summaries, 123, 125-126 identification and screening of cases, 68-69, 123, 126, 127-128, 137-139, 148 impact of, 4, 130-131, 146 improvements in, 138-139 legal issues in, 140-141 measures of, 135-136 of Medicare patients, 138 negative aspects of, 132-133 number of patients in programs, 137 objectives of, 122-123 on-site, 129 operational variations in, 123-127 positive aspects of, 132, 133, 141-142 protocol standardization, 139, 148 provider effects, 133 purchaser effects, 133-134 purchaser's role in, 122-123 and quality of care, 133, 134 savings opportunities with, 121-122, 131 sources of, 122 team approach to, 128 utilization management categories applying to, 123-124 Hill-Burton program, 30, 35 Home care, 135, 136, 138, 141 Hospitalization criteria for determining need for, 79-81, 104 for diagnostic purposes, 171 effects of utilization management on use and costs of, 3-4 elective, 3 emergency admissions, 3, 108 HMO rates, 44 length-of-stay norms, 81-83 prior to day of surgery, 79 versus outpatient care, 93-94 Hospitals attitudes on high-cost case management, 133 diversification by, 106 incentive payments to physicians, 47 multihospital systems, 50 occupancy rates, 106 physician relations with, 106 preadmission checks on insurance coverage, 70 responsibilities on utilization management, 155-156 third-party-payer relationships with, 106-108 unnecessary ancillary services, 45-46 utilization management by, 64-65, 106; see also Discharge planning Hysterectomy, 46, 88 I Independent practice associations (IPAs) financial incentives in, 224-225, 226, 241 management information system in, 241 model for, 35, 37 operational responsibilities of, 212-213 peer review in, 216, 222 physician contracting arrangements with, 217 physician selection by, 215, 218-219 physician-sponsored, 240-243 quality assurance in, 216, 218 utilization management procedures, 51, 59, 217-218, 242 Information resources, on cost and use of health services, 47-48 International Medical Centers Inc., 205 Intracorp, 131

OCR for page 301
Page 306 J John Deere & Company, 30, 93 Joint Commission on the Accreditation of Health Care Organizations, 116 Joint Commission on the Accreditation of Hospitals, 36 n.5 K Kaiser Foundation Health Plan, 30, 35 Kaiser Permanente, 218 Kemper, 15 Knee arthroscopy, 83 L Labor-Management Group, 30, 40-41 Legal issues and litigation appeal rights, 180-181 award of attorneys' fees, 188 discriminatory treatment claims, 141 ERISA preemption, 174, 187-188, 189 exceptions to limits in benefit contracts, 140-141 expedition of judicial review, 193-194 in high-cost case management, 140-141 independent contractor defense, 189-190 and jury sympathies, 174-175 limits on damages, 187 medical necessity concept, 171, 172-173, 174, 176-177, 184, 185, 187, 194 ostensible agency doctrine, 190 for patients, 193-195 payment for unnecessary medical services, 194-195 qualified privilege defense, 184 racketeer influenced and corrupt organization action, 188 Sarchett v. Blue Shield of California, 88, 170-171 in utilization review, 88-89, 169-196 Wickline v. California, 88, 109, 140, 170, 171-172, 174-176, 178-179, 186, 188, 191, 192 Liability antitrust, 184-185 of attending physician, 88, 105, 190-192 bad faith in insurance and, 175, 180-181, 187, 189 for breach of contract, 175, 179-180, 189 causation and, 172, 174, 178-179, 180, 181, 187 of consultants and employees, 185-186 for defamation, 183-184 direct, 189 and duty of care, 175-177, 180 of employer/payer, 109, 188-190 fiduciary relationship and, 181, 187-188 indemnity, 190 infliction of emotional distress, 182 and informed consent, 192 for interference with contractual advantage, 183-184 negligence, 175-179, 180, 181, 189 products, 182-183 of review organization, 4, 78, 83, 88, 89, 140, 145, 173-188, 284-285 and standard of care, 176-178, 185 vicarious, 189-190 and warranty theories, 182 Louisiana, regulation of utilization review organizations, 186 M Maine, regulation of utilization review organizations, 186-187 Mammography screening, 23 Maryland, regulation of utilization review organizations, 186 Massachusetts Business Roundtable, 42 Mayo Clinic, utilization review plans, 59, 107 McCarthy, Eugene, 37 Medicaid programs cost-containment strategies, 38 evaluation of cost-containment strategies, 96 geographic data integration on, 69 liability for cost-containment mechanisms, 88, 171 second-opinion programs for, 39 Medical malpractice, 41, 105, 159, 191; see also Liability Medical organizations, see individual groups Medical practice employer influence on standards for, 109 guidelines, 10-11, 23, 49, 107, 147, 159-160, 215 medical necessity concept, 171, 172-173 reasons for changes in patterns of, 136-137 variations in physician styles of, 46

OCR for page 301
Page 307 Medical services/procedures criteria for determining necessity of a procedure, 45, 83 expenditures for, relative to number of physicians, 24 fee-for-service payment rates and volume of, 44 geographic variation in patterns of, 44-45 inappropriate/unnecessary, 2, 15, 39, 44-46, 103, 194-195 methods for indentifying inappropriate use, 45 payment for unnecessary services, 194-195 rationing of, 24, 148-149 variations in utilization, 44-45 Medicare cost-containment strategies, 38, 43 costs of, 38 denials of payments, 77, 102 economic incentives to minimize days of care, 64 high-cost case management in, 138 preadmission review for, 14, 102 precertification of beneficiaries, 59, 60 prospective payment system, 30, 40, 98, 101, 102, 106, 115, 116, 121 n.1 quality assurance program for, 116 quality of care in HMOs, 205 responsibility for reviewing care for beneficiaries, see Peer review organizations second-opinion programs for, 39 Methodological problems in studies of utilization management behavioral biases, 22 claims data, 111, 137, 158 confounding by other interventions, 93-94, 96, 102, 115, 138 cost/price change considerations, 100 data availability and quality, 48 evaluator knowledge of data sources, 100 group data, 94, 111, 114, 137 high-cost case management, 134-138 measures of impacts and limitations, 22, 86, 112-113, 134, 135-136 medical care prices, 115 noneconomic effects, 115-116 nonprogram variables, 100 program data, 100, 114 in review versus nonreview groups, 100 savings calculations, 114-115, 134-137 short time series, 100 Midwest Group on Health, 42 Muscular dystrophy, 121, 136 N National Conference on Medical Costs, 40 Nazemetz, Patricia M, 42 Nightingale, Florence, 36 n.5 Nurse reviewers/managers high-cost case management by, 128, 140 n.7 liability of, 177 monitoring of, 73 qualifications, 72-73, 140 n.7, 276-277 responsibilities, 66, 70, 71-73, 77, 84, 85, 89, 103-104, 276-277 scope of assessments, 148-149 training, 73, 104 Nursing homes, prospective payment system and utilization of, 102 O Office of Personnel Management, 122 n.2 P Patients/enrollees case manager relationship with, 128-130 high-cost, types of, 121 legal issues for, 193-195 medical abandonment of, 192 payment obligations for unnecessary services, 194-195 penalties for noncooperation in review, 18-19, 69, 88 responsibilities on utilization management, 9, 69-70, 108, 155-156 Peer review organizations (PROs) appeals processes, 85 case management by, 121 n.1 claims data tracking by, 116 congressional support for, 47 demonstration project on small-area analyses for, 45 n.7 denials of Medicare payments, 77, 102 federal oversight of, 11-12, 65, 154 geographic data integration, 69 high-cost case management by, 131 liability of, 185 physician adviser role in, 74-75

OCR for page 301
Page 308 preprocedure review by, 83 private clients, 39, 60 second opinion programs, 39 utilization management in, 40, 66, 69, 89, 246-249 variation in, 65, 89 Physician incentives administering, 226-227 HMO, 205, 211, 216, 224-227, 230-231, 233-234, 236, 238, 241 punitive/negative, 49 and quality of care, 205, 224-225 to reduce Medicare services, 47 restrictions on, 47, 225 surveys on, 225-226 types of, 224-225 Physician-patient relationship liability and, 183-184, 191, 192, 194 prior review and, 105-106 Physician Payment Review Commission, 107 Physicians, advisers attitudes of practicing physicians toward, 75 bases for decisions, 73-74, 85, 176, 177 caseloads, 76, 278-279 liability of, 176, 177, 185-186 licensing of, 77, 88 local versus nonlocal, 76 monitoring performance of, 75, 77 PRO use of, 74-75, 77 productivity incentives, 77 qualifications of, 77, 278-279 role in prior review, 66, 72, 73-78, 83, 86, 89 scope of assessments, 148-149 training of, 77 Physicians, attending attitudes on high-cost case management, 133 attitudes on prior review, 102-103, 105, 146, 170 case manager relationship with, 128-130 contracting arrangements with HMOs, 211-212 defamation suits by, 183-184 education of, as cost-containment strategy, 21, 49, 147, 156 fee-for-service payments and volume of services, 44 goals of, 211 -hospital relations, prior review and, 106 incentives for acceptance of utilization management, 153-154 information feedback to, 49 interference with contractual advantages of, 183-184 involvement in developmental criteria, 147, 153, 205 liability of, 88, 105, 172, 178-179, 190-192 number of, and costs of health care, 24 obligation to provide treatment to patient who cannot pay, 192 response to prepaid plans, 35 responsibilities on utilization management, 8, 155-156 review organization's handling of, 72, 74, 78 third-party-payer relationships with, 106-108 variation in practice styles, 46 Preadmission review cost assessments during, 66 defined, 18 for emergency admissions, 108 employer support of, 41 focus of, 120 high-cost case screening by, 127 by hospitals, 106 impact on Medicare beneficiaries, 102 and inpatient hospital days, 93, 98 patient initiation of, 87 physician certification of necessity of admission, 37 by PSROs, 39 variations in, 65 waiver of second-opinion requirement because of, 88 Predetermination programs, 134 n.4, 137 Preferred provider organizations (PPOs), 50, 69, 184 Prepaid group practices (PGPs), 30-31, 35, 51 Preservice/preprocedure review, 18, 79 Prior review and actuarial estimates of savings, 101 anxiety and inconvenience caused by, 4, 103, 146 appeals processes, 6, 7, 85-86, 107, 108, 149-150, 171, 172, 179, 183 before-and-after studies of, 91-93, 94 comparative studies of, 93-96 components of, 3, 18, 66-67, 83

OCR for page 301
Page 309 contingent nature of, 19 contractual descriptions of services, 282-283 criteria for assessment of care, 7-8, 79-85, 89, 159-160 definition of, 17-18, 170 employer/purchaser reactions to, 42, 108-110 enrollee/patient education on, 7, 103-104, 109 financial penalties for noncooperation in, 18-19, 104 focus of, 66, 89, 110 guidelines for conduct of, 108, 148 handling of attending physicians, 72, 74, 78 impact of programs, 91-116 initiation of, 42, 69-70 and inpatient hospital utilization, 92, 93, 96-97, 110 integration with benefit plan administration, 66-69 liability in, 180 limitations of data on, 114 measures of impact, 112-113 for Medicare recipients, 14 multivariate studies of, 96-98 nurses' role in, 66, 71-73, 89 and outpatient/physician office services use, 92, 97 and patient costs, comfort, and convenience, 92, 104, 109 physician adviser role in, 66, 72, 73-78, 83, 86, 89 and physician-hospital relations, 106 and physician-patient relationship, 105-106 and provider-purchaser relations, 106-108 and quality of care, 4, 7, 102-103, 110, 115-116, 146, 149 refusals to authorize services, 19 reporting and feedback mechanisms, 86-87 responsibility for obtaining, 108 retrospective denial of claims following, 19, 98, 106 spillover effects of, 98, 101, 110 targeting of, 108 timeliness in handling of requests, 107, 108 trends in use of, 14 weaknesses in evidence on, 99-101, 145 see also Admission review; Continued-stay/concurrent review; Discharge planning; Preadmission review; Second-opinion programs Private employers attitudes on high-coat case management, 133-134 education of employees on utilization management requirements, 7, 103-104, 109, 151, 182 effects of prior review on, 108-110 expenditures for health benefits, 2 factors shaping decisions on prior review, 109-110 health care cost-containment initiatives, 40-43 with insured health benefit plans, 2; see also Health insurance plans liability for utilization review, 109, 188-190 population covered by health insurance plans through, 32 PRO review contracts with, 39 responsibilities in utilization management, 6-7, 69-70, 150-151 self-insurance by, 2, 41, 60, 61, 182, 189 share of spending for health services, 40 Professional Standards Review Organization (PSROs), 39, 59, 60, 66, 79, 93 Proprietary information, and competition, 7-9, 286-287 Prospective Payment Assessment Commission, 102 Prospective reimbursement employer support for, 41 see also Medicare Prostatectomy, 46, 156 Provident Mutual, 15 Provider payments controls on, 35 Psychiatric cases health plan coverage for, 141 n.8, 149 high-cost case management for, 128, 138, 141 n.8 Q Quality assurance defined, 219 in high-cost case management, 140 in HMOs, 206, 216, 219-220, 222-224

OCR for page 301
Page 310 monitoring performance of nurse-reviewers and physician-advisers, 73, 75, 77 operational problems impairing, 222-224 in utilization management, 6, 73, 75, 77, 140, 150 Quality of care guideline development for, 154 high-cost case management and, 133, 134 in HMOs, 205, 210, 211 physician incentive plans and, 205 prior review and, 4, 7, 102-103, 110, 115-116, 146 utilization management and, 4, 36 n.5, 46-47, 146, 154 R Rand Corporation, 46, 107 RCA Plan for Health, 95 Recommendations appeals of review decisions, 6, 149-150 disclosure criteria, 6, 7, 149, 160 employer/purchaser responsibilities, 6-7, 150-151 long-term, 9-12, 157-161 near-term, 6-9, 150-157 oversight of utilization management, 11-12, 160-161 patient responsibilities, 9, 156-157 practice guidelines, 10-11, 159-160 practitioners/institution responsibilities, 8, 155-156 quality assurance mechanisms, 6, 150 research on effectiveness, 6, 9-10, 149, 157-159 review criteria, 6, 7, 9, 11, 149, 159-160 utilization management organizations' responsibilities, 7-8, 151-154 Research on appropriate care, 45-46, 48, 52, 83 Research on utilization management clinical, limits on, 158, 159 feedback and education strategies, 4-5, 147 impediments to, 10 programmatic, 158-159 recommended, 6, 9-10, 157-159 targets of, 89, 158 see also Evaluation of utilization management; Studies and surveys of utilization management Research on variations in utilization management, 44-45, 46, 48, 65 Retrospective utilization review advantages and disadvantages of, 20 appeals processes, 193 denial of claims following prior certification, 19, 98, 106 of high-cost cases, 127 hospitalization criteria, 79-80 initial focus of, 35 litigation, 88, 170-171 by PROs, 69 by PSROs, 39, 69, 79-80 regulation, 39; see also Legal issues and litigation targeting problem providers, 69 Risk pools, management of, 33-34 Ross-Loos Medical Group, 30, 35 S Second-opinion programs impact of, 98-99 objectives of, 87 participation rates, 99 and patient anxiety, 103 penalties for nonparticipation in, 99 prior review combined with, 83, 99 procedures subject to, 68, 79, 87 requirements of, 87-88 resistance from medical community, 37 screening referrals for, 18 types of, 87 Self-insurance advantages of, 41 claims processing, 61 and insurance industry structural changes, 60-61 and liability, 182, 189 monthly costs for family coverage, 41 Service Employees International Union, 95, 130-131 Services Interaction Targets for Opportunities program, 120 Social/Health Maintenance Organization demonstration projects, 120 Social Security Amendments of 1972, 39 Spinal injury cases, 131, 138 Store Workers Health and Welfare Fund, 37 Studies and surveys of utilization management before-and-after, 91-93, 94

OCR for page 301
Page 311 case studies of HMOs, 229-243 case studies of PSROs, 93 comparative, 93-96, 145 control for systemwide influences, 95 Health Interview Survey, 94 Hospital Discharge Survey, 94 multivariate, 96-98, 145 small-area, 44-45 see also Methodological problems in studies of utilization management T Third-party financing of health care cost management efforts, 32-38 defined, 28 n.1 growth of, 27-32 see also Health insurance industry Tonsillectomy and adenoidectomy, 68, 76, 80, 82, 104 Transamerica Occidental, 15 Tympanotomy tube insertion, 83 U Uninsured people access to health care, 24 number of, 31-32 United Mine Workers Union, 37 Utilization management administrative burdens on providers, 4, 5, 7, 107, 144, 146, 147, 154 assessment strategies, 48-49, 66; see also Criteria for assessment of care; Methodological problems in studies of utilization management case studies, 229-243 claims administration integrated with, 61, 68-69 common elements of programs, 66 computerization of, 5, 70, 71, 73, 139, 145, 148, 182-183, 221 concerns about, 5-6, 149-150 definition of, 2-3, 17 education strategies for, 48-49 effects on health care use and cost, 1-2, 3-4, 14, 52, 145-146, 220 employer initiatives, 40-43 evolution of, 147-149 federal government initiatives, 38-40 focus of, 4, 145, 169 growth of, 2, 14, 105, 143, 169 guidelines for conduct of, 108, 154 in health maintenance organizations, 205-243 industry structure and process, 58-90 information resources for, 47-48 and inpatient days, 95-96 operational efficiency, 148 operational problems impairing, 220-222 origins of, 21-52 in peer review organizations, 246-249 policy and research issues, 227-229 public hearings on, 250-252 quality assurance in, 6, 7, 43, 150 and quality of care, 4, 7, 36 n.5, 46-47, 102-103, 110, 146, 154 and rationing of medical services, 148-149 recommendations on, 5-12, 143-162 refusals to certify benefits, 4 regulation/oversight of, 4, 11-12, 73, 89, 144, 150, 160-161 research influences on, 5, 43-46, 145, 147 scope of review, 66, 147 spillover effects of, 98, 101, 110 standardization of processes, 107 status of, 144-146 and surgical days/rates, 95-96, 97 third-party efforts, 32-38 see also Cost management/containment strategies; Prior review; Second-opinion programs Utilization management organizations agreements with clients, 282-287 analysis and reporting of utilization and cost data, 109 antitrust liabilities, 184-185 breach of contract by, 179-180 constraints on growth of, 5 consultant/employee liability, 185-186 contact with patients or physicians, 66 defamation by, and interference with contractual advantage, 183-184 duty of care, 175-176 effects of organizational differences in, 65 employer/purchaser investigation of, 150-153 financial incentives offered by, 50, 73 freestanding services, 51, 62, 63, 123-124, 145 geographic data integration in, 69 growth of, 50, 59-61

OCR for page 301
Page 312 handling of attending physician, 72, 74, 78 improvement of provider relations with, 153-154 independent review organization, 62, 173-174, 179-180, 185, 187-188, 259-260, 266-268 infliction of emotional distress, 182 insurance bad faith liability, 180-181 insurance company subsidiaries, 62, 262-264 insurer-based service, 63 insurer- or broker-based service, 63-64 IPA model HMO, 62, 271-272 largest firms, 60 liability of, 4, 5, 78, 83, 88, 145, 173-188, 284-285 management priorities, 5 moral obligations of, 153 negligence by, 175-179 not-for-profit PRO, 269-270 peer review organizations, 60, 66, 272-274 procedural safeguards for, 176-177 proprietary information and competition among, 7-8, 286-287 provider-based, 64 quality assurance mechanisms, 6, 62 regulation of, 50, 65, 75, 88, 94, 145 responsibilities of, 7-9, 151-154 reviews/audits of, 62 role specification in contracts, 283-284 selection of, 6-7 site visit summaries, 62, 253-281 small, private, for-profit, 253-256 staff model HMO, 62, 268-269 staffing and performance criteria, 71-78, 276-281, 285-286; see also Nurse-reviewers/managers; Physicians, advisers state regulation of, 186-187 subsidiary of third-party payer, 256-257, 264-266 telephone call handling, 70-71 third-party claims administrators, 61, 258-259, 261-262 triple option benefit package, 51 types and numbers of, 49-51, 59-62 variability in programs, 4, 65, 89, 144-145 volume of business in, 275 Utilization review admission review, 18, 37 ambulatory care review, 37 computerized claims screening, 37 continued-stay/concurrent review, 3, 18, 37, 39, 48, 65, 66, 81-82, 93, 98 effectiveness of, 38-39 historical background, 36-38 model treatment profiles, 37 preadmission, 3, 18, 37, 39, 41, 65, 66, 87, 88, 93, 98 as a prerequisite to Medicare participation, 38 retroactive, 41 timeliness in handling of requests/appeals, 107, 108, 186-187, 193-194 V Value Health Sciences, 107 n.3 W Washington Business Group on Health, 30, 42 Wellness programs, 45 Wennberg, John, 30, 44 Workers compensation, high-cost case management in, 131 Z Zenith, 122 1. See generally Byrnes, "Corporation's Institution of Healthcare Utilization Review," Medical Trial Technique Quarterly (Spring 1987), at 478; Carabillo, "The Manageable Risks of Managed Care," Health Cost Management, Vol. 3, No. 6 (Nov./Dec. 1986), at 1; Eisenberg and Rosoff, "Physician Responsibility for the Cost of Unnecessary Medical Services,'' New England Journal of Medicine, Vol. 299 (July 13, 1978), at 776; Hershey, "Fourth-Party Audit Organizations: Practical and Legal Considerations," Law Medicine & Health Care, Vol. 14, No. 2, at 54; Lanzafame, Provider Liability Under Public Law 98-21: The Medicare Prospective Payment System in Light of Wickline v. State, 34 Buffalo L. Rev. 1011 (1985); Jespersen and Kendall, "Utilization Review: Avoiding Liability While Controlling Health Costs," HEALTHSPAN, Vol. 4, No. 7, at 3 (July 1987). 2. For a contrary decision, see Van Vactor v. Blue Cross Association, 50 Ill. App. 3d 709, 8 I11. Dec. 400, 365 N.E. 2d 638 (1977), which found no justification for the denial of benefits solely on the ground that the insurer disagrees with the honest judgment of the treating physician. The court concluded that decisions of medical necessity are "vested solely and exclusively in the judgment and discretion of the treating physician." Id. 365 N.E. 2d, at 647. 3. The court also concluded that Blue Shield acted in bad faith when it failed to inform the insured of his fight to impartial review and arbitration as provided in the policy. Although this aspect of the case turned on the particular conduct of Blue Shield, which went beyond a simple failure to inform of appeal fights, the decision emphasized the duty of the insurer to protect the rights of the insured at least equally with its own. 233 Cal. Rptr., at 84-86. Thus, even if the insurance policy contains clear and conspicuous language regarding remedial rights, the insurer should take affirmative steps to inform the insured of his or her rights if a denial of coverage is disputed. 4. The decision proceeds to review the beneficial aspects of the Medi-Cal program and the Medi-Cal regulations providing for prior authorization for hospitalization. Id., 228 Cal. Rptr., at 671. Although the court may have been citing this material in connection with the alternative defense of immunity raised by the state, the court states that it declines to address the immunity defense. See 228 Cal. Rptr. 669, at 672. The purpose of discussing the Medi-Cal regulations appears to be simply to show that prior review is an integral part of the payer's system. 5. Several courts have held an exclusion for "experimental" procedures to be inherently ambiguous, and hence unenforceable. See Johnson v. District 2 Marine Engineers Beneficial Assoc., 857F. 2d 514 (9th Cir., July 11, 1988); DiDomenico v. Employers Cooperative Industry Trust, 676 E Supp. 903 (N.D. Ind. 1987). 6. Some policies simply use the term but do not define it. These policies run the risk that a denial based on medical necessity will not be upheld because the term is not adequately defined. See, e.g., Dallis v. Aetna Life Insurance Co., 100 F.R.D. 765 (N.D. Ga. 1984); Zuckerberg v. Blue Cross Blue Shield of Greater New York, 119 Misc. 2d 834, 464 N.Y.S. 2d 678 (1983), rev'd on other grounds. 487 N.Y.S. 2d 595, 108 A.D. 2d 56 (1985). 7. Sarchett, supra, 233 Cal. Rptr., at 78. 8. One plan defines "medically necessary services" as those which are: "(1) Appropriate for the symptoms and diagnosis or treatment of a condition, illness or injury. (2) Provided for the diagnosis, or the direct care and treatment of the condition, illness or injury. (3) In accordance with the standards of good medical practice. (4) Not primarily for the convenience of the Member, or the Member's physician and surgeon, or the provider. (5) The most appropriate supply or level of service which can safely be provided to the Member. When applied to hospitalization, this further means that the member requires acute care as a bed patient due to the nature of the services rendered or the member's condition, and the Member cannot receive safe and adequate care as an outpatient." 9. Hughes v. Blue Cross, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273 (1988), upheld liability against an insurer which applied a standard of medical necessity which was more restrictive than that of the medical community. Citing Sarchett, the court emphasized that the term medically necessary must be construed liberally so that uncertainties are resolved in favor of coverage. The court noted that by employing a standard of medical necessity significantly at variance with the medical standards of the community, the insurer places the insured at risk of incurring unforeseen liability, which is contrary to the insured's reasonable expectations. "[G]ood faith demands a construction of medical necessity consistent with community medical standards that will minimize the patient's uncertainty of coverage in accepting his physician's recommended treatment." Id. 245 Cal. Rptr., at 279. 10. See Wickline, supra, 228 Cal. Rptr., at 669; Rowland v. Christian, 69 Cal. 2d 108, 70 Cal. Rptr. 97, 443 P. 2d 561 (1968). Rowland lists the following factors as the major considerations in determining whether a duty exists: "The foreseeability for harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for breach, and the availability, cost and prevalence of insurance for the risk involved." Id. 69 Cal. 2d, at 112. Although the Wickline decision states that these factors lead it not to find liability, it appears that Wickline's holding is based on lack of causation rather than on the nonexistence of a duty. This is evident from a statement later in Wickline to the effect that third-party payers may be held liable for medically inappropriate decisions resulting from their cost-containment program. 228 Cal. Rptr., at 670. 11. UR contracts usually expressly distinguish between the role of the UR organization in determining the availability of coverage, the roles of the payer in making payment decisions, and the roles of the provider and patient in deciding whether to proceed with treatment. One UR contract states that the UR provider "shall not determine a participant's eligibility for benefits under the Group Contract. Group shall have final and sole authority for all benefit determinations." Another contract states that "the decision or determination to obtain or deliver any health care service is always made only by the [patient] and/or his or her physician, and any decisions made by the [UR organization] ... or the health benefit insurer... shall relate only to the obligation for payment for any such service under the terms of the group insurance policy " 12. The patient who requires treatment and is harmed when care that should have been provided is not provided should recover for the injuries suffered from all those responsible for the deprivation of such care, including, when appropriate, health care payers. Third-party payers or health care services can be held legally accountable when medically inappropriate decisions result from defects in the design or implementation of cost-containment mechanisms, as, for example, when appeals made on a patient's behalf for medical or hospital care are arbitrarily ignored or unreasonably disregarded or overridden. Wickline, supra, 228 Cal. Rptr., at 670-671. 13. Every person or entity is expected to exercise the care that the ordinary, reasonable person of common skill and prudence would use under the circumstances of the case. The standard of care is heightened if the person causing the injury enjoys some specialized skill or knowledge. Professionals such as doctors and lawyers are expected to use the skill and care common to their professions, not merely that of the "ordinary person." Prosser and Keeton, The Law of Torts, Section 32, at 185-186 (1984). 14. Wickline, supra, 228 Cal. Rptr., at 666. 15. Wickline's suggestion that the burden is on the treating physician to provide the reviewer with sufficient information is no': a panacea for every utilization review liability case. In Hughes v. Blue Cross of Northern California, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273 (1988), the reviewing physician consultant testified, in explaining why his file lacked complete medical information, that he felt it was the responsibility of the treating doctor or the hospital to submit any information they felt was important. The court nevertheless upheld liability for bad faith claims denial, noting that the letters sent to the treating physician did not explain the medical basis for denial and failed to advise what information the reviewer already had and what additional information would be useful. Id. 245 Cal. Rptr., at 280. 16. See generally Jesperson and Kendall, supra note 1, at 7. 17. For a discussion of state regulation, see the section State Regulation. 18. See the sections Liablity of Consultants and Employees and Liability of the Treating Physician infra regarding the vicarious liability of the UR organization for the torts of its agents. 19. See Hughes v. Blue Cross, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273 (1988) (bad faith verdict upheld in a case in which the insurer applied a standard of medical necessity that was more restrictive than the community standard). 20. See generally J. Restuccia, "The Appropriateness of Hospital Use," Health Affairs, at 130 (Summer 1984). 21. See the section The Elusive Concept of Medical Necessity for a discussion of situations in which criteria are expressly included as part of the plan benefits. 22. For example, a criteria that disallows all fertility services under an HMO plan that covers all medically necessary physician services may be too sweeping an exclusion. 23. Wickline, supra, 228 Cal. Rptr., at 671. 24. Id. 228 Cal. Rptr., at 668. 25. Id. 228 Cal. Rptr., at 669. 26. The payer's liability for tort damages resulting from the negligent act of an independent review organization may be more complicated, depending on whether the UR entity is viewed as an independent contractor or an agent or employee of the payor (see Liability of the Treating Physician). 27. When a contractual duty is delegated, the obligor remains liable to the obligee, unless the delegate assumes the obligations and the assumption is accepted by the obligee in substitution for the original obligor. See Calamari and Perillo, The Law of Contracts, Sections 277-280 (1970) and Restatement (2d) of Contracts, Section 150(3). There also would be a significant question of whether the duty to perform UR functions is a delegable duty under the law. See Calamari and Perillo, supra, Section 278; Hughes v. Blue Cross, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273, (1988) (an insurance company generally cannot delegate its responsibilities to the insured). 28. See Calamari and Perillo, Restatement (2d) of Contracts, Section 302. The court will look to the surrounding circumstances to determine whether the patient is an appropriate third-party beneficiary. In cases in which the benefit literature describes the UR program as a beneficial service for the insureds, for example, in helping to avoid unnecessary hospitalization, the employee has a better chance of establishing a third-party beneficiary relationship. 29. This issue is likely not to be of much practical importance, since the patient can probably assert a negligence claim directly against the review organization. Whatever benefits the patient can obtain from a contract action, such as an action for breach of the implied covenant of good faith and fair dealing, ordinarily can be obtained in an action directly against the payor. 30. Restatement (2d) of Contracts, Section 351. 31. See generally Pilot Life Insurance Co. v. Dedeaux, 107 S. Ct. 1549 (1987); Fletcher v. Western National Life Ins. Co., 10 Cal. 3d 376, 401, 89 Cal. Rptr. 78, 93 (1970). 32. See, e.g., Egan v. Mutual of Omaha, 24 Cal. 3d 809, 157 Cal. Rptr. 482, 598 P. 2d 452 (1979) (bad faith failure to properly investigate claim); Taylor v. Prudential Ins. Co. of America, 775 E 2d 1457 (11th Cir. 1985) (reversing summary judgment for the insurer on the issue of bad faith where the insurer relied on a Medicare determination of no medical necessity without making its own investigation); Hughes v. Blue Cross, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273 (1988) (bad faith verdict upheld where insurer denied claims without reviewing all relevant medical records, applied a standard of medical necessity that was more restrictive than a community standard, failed to explain medical grounds for denial of coverage, and failed to advise treating physician of what additional information would be useful for decision); Mordecai v. Blue Cross/Blue Shield of Alabama, 474 So. 2d 95 (Ala. 1985) road faith allegations arising from failure to consider portions of nurses' notes and to consult with treating nurses and physicians); AEtna Life Insurance v. LaVov, 470 So. 2d 1060 (Ala. 1984) (bad faith claim upheld where insurer misrepresented the extent of its medical review in denying the claim). 33. See generally Sarchett v. Blue Shield, supra; Davis v. Blue Cross of Northern California, 25 Cal. 3d 418, 158 Cal. Rptr. 828 (1979) (bad faith upheld in a case in which the insurer failed to inform the insured of rights to appeal an arbitration). 34. In such a case, the payer could seek indemnity from the reviewer, unless prohibited by some provision of the contract between the payer and reviewer. See Hughes v. Blue Cross, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273 (1988). 35. Gruenberg v. AEtna, 9 Cal. 3d 566 (1973) (demurrer sustained as to bad faith liability of insurer's independent contractor adjusters and attorneys who were not party to the insurance contract); Iversen v. Sup. Ct., 57 Cal. App. 3d 168, 127 Cal. Rptr. 49 (1976) (reversal of judgment against claims supervisor and claims examiner, both found to be independent contractors, because they were not party to insurance contract); Hale v. Farmers Insurance, 42 Cal. App. 3d 681, 117 Cal. Rptr. 146 (1974) (insurer not liable for employee's bad faith handling of claim where insurer has not ratified employee's acts). See also Reiderscheid v. Comorecare. Inc., 667 P. 2d 766 (Colo. Ct. App. 1983) ("The test of bad faith failure to exercise due care in discharge of a contractual duty and the granting of damages for mental anguish caused by a willful and wanton breach of contract are grounded in basic common law, and not solely in the area of insurance law."); Taylor v. Prudential Ins. Co. of America, 775 F. 2d 1457 (11th Cir. 1985) (upholding cause of action against insurer for bad faith and emphasizing the weight to be given to treating physician's opinion); Linthicum v. Nationwide Ins. Co., 723 P. 2d 675 (Sup. Ct. Ariz. 1986) (punitive damages may be recoverable against insurer for failure to disclose medical basis for denial or failure to seek direct input from treating physician). 36. 93 Cal. App. 3d 642, 155 Cal. Rptr. 843 (1979). 37. See Sprague v. Equifax Inc., 166 Cal. App. 3d 1012, 213 Cal. Rptr. 69 (1985); Younan v. Equifax Inc., 111 Cal. App. 3d 498, 169 Cal. Rptr. 478 (1980). 38. Fletcher v. Western National Life Ins. Co., 10 Cal. App. 3d 376, 89 Cal. Rptr. 78 (1970). 39. See Schlauch v. Hartford Acc. & Indem. Co., 146 Cal. App. 3d 926, 936, 194 Cal. Rptr. 658, 665 (1983), quoting Ricard v. Pacific Indem Co., 132 Cal. App. 3d 886, 895, 183 Cal. Rptr. 502, 507 (1982). 40. See Pulvers v. Kaiser Foundation Health Plan, 99 Cal. App. 3d 560, 160 Cal. Rptr. 392 (1979) (advertisement of "high standards" of medical service held not to warrant a specific result, but was generalized "puffing," to the effect that physicians would exercise good judgment in care). 41. The Restatement (2d) of Torts, Section 402A, states as follows: "... One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if (a) the seller is engaged in the business of selling such a product, and (b) it is expected to and does reach the user or consumer without substantial change in the condition in which it is sold." In California, the plaintiff need not show that the product was "unreasonably dangerous," but only that the product was "defective." See Cronin v. J.B.E. Olson, 8 Cal. 3d 121, 104 Cal. Rptr. 433 (1972). 42. See Restatement (2d) of Torts, Section 402A, Comment f. 43. See generally CCH Products Liability Reporter, Section 4235. 44. See AEtna Casualty and Surety Co. v. Jeppesen & Co., 642 E 2d 339 (9th Cir. 1981); Brocklesby v. United States, 767 F. 2d 1288 (9th Cir. 1985), cert. denied sub nom, 106 s. Ct. 882 (1986). 45. See Slaughter v. Friedman, 32 Cal. 3d 148, 185 Cal. Rptr. 244, 649 P. 2d 996 (1982) (defamation; interference with prospective economic advantage); Teale v. American Manufacturers Mutual Ins. Co., 687 S.W. 2d 218 (Mo. Ct. App. 1985) (tortious interference); Moore & Assoc. v. Metropolitan Life Ins. Co., 604 S.W. 2d 487 (Tex. Civ. App. 1980) (claim stated for tortious interference with doctor-patient relationship by association of anesthesiologists against group medical insurer for insurer's letters to former patients advising that claims would not be paid in full because associaton's charges were excessive). 46. Supra. 47. See, e.g., California Civil Code, Section 47(3). 48. Slaughter, supra, 185 Cal. Rptr., at 248-249. The court pointed out that defendants were only required "to inform dental patients of the basis for rejection of their claims; they were not required additionally to defame plaintiff with accusations regarding his dental practices." 49. See Chicago Board of Trade v. U.S., 246 U.S. 231 (1981); Dos Santos v. Columbus-Cuneo-Cabrini Medical Center, 684 F. 2d 1346 (7th Cir. 1982) (under rule of reason analysis, the hospital was permitted to grant exclusive privileges where policy is grounded in ensuring quality patient care and necessary hospital services). 50. See generally Northwest Wholesale Stationers. Inc. v. Pacific Stationery Printing, 105 S. Ct. 2613 (1985) (unless an organization possesses market power or controls access to an element essential for competition, expulsion for failure to follow reasonable rules is not per se illegal); see generally remarks of Charles E Rule, Assistant Attorney General, U.S. Department of Justice, March 11, 1988. 51. 15 U.S.C., Section 1. 52. Cf. Copperweld Corp. v. Independent Tube Corp., 467 U.S. 752, 104 S. Ct. 2731, 81 L. Ed. 2d 628 (1984). 53. Plaintiffs often attempt to rely on the doctrine of "conscious parallelism." Conscious parallelism is easy to allege but exceedingly difficult to prove. It requires proof that the parallel conduct was against the defendant's self-interest and was not based on good faith business judgment. See Supermarket of Homes v. San Fernando Valley Board of Realtors, 786 E 2d 1400 (9th Cir. 1986); Proctor v. State Farm Mutual Ins. Co.. 675 F. 2d 308 (D.C. Cir.), cert. denied, 459 U.S. 839 (1982). 54. See, e.g., California Civil Code, Sections 43.7, 43.8; California Health & Safety Code, Section 1370. 55. For example, Norcal Mutual Insurance Company's malpractice policy only covers claims alleging negligence in "direct patient treatment" or involving professional committee activities (which are limited to hospital staff committees or American Medical Association or medical society committees). Coverage is specifically excluded for "the performance of administrative duties, which are not direct patient treatment, as a medical director." If liability is found against an independent physician reviewer in a Wickline-type case, it is not clear whether the coverage for "direct patient treatment" applies. The physician providing consultant services should seek clarification from the carrier. 56. See, e.g., California Corp. Code, Section 317(d).57. 58. Md. Health Code Ann., Sections 19-1301 et seq. 59. Minn. Stat. 1988, Section 72A.20(4a). 60. Maine Ins. Code Title 24-A, Section 2679. Maine also has legislation pending that, if enacted, would impose certain criteria on independent review organizations, such as requiring prospective UR decisions to be made within a set time. 61. La. Revised Stat. 22:657(D). 62. 107 Sup. Ct. 1549 (1987). 63. See 29 U.S.C., Section 1144. See generally Helvestine, "ERISA Preempts Insurance Bad Faith Actions," HEALTHSPAN, Vol. 4, No. 10, at 8 (Dec. 1987). 64. Significant exceptions to ERISA coverage are government employee plans (including local government plans, such as school districts), certain church plans, and certain statutorily required workers' compensation, unemployment, and disability laws. UR cases will not be preempted when they arise under these kind of plans. See 29 U.S.C., Section 1003(b). 65. One major area of uncertainty has been whether ERISA preempts causes of action based on state statutes governing unfair insurance practices, such as California Insurance Code, Section 790.03(h). In Kanne v. Connecticut General Life Ins. Co., 857 F. 2d 96, No. 85-5641, 5642 (9th Cir., Oct. 4, 1988), the Ninth Circuit held that ERISA preempts such claims. This issue is of considerably less importance following the California Supreme Court's decision in Moradi-Shalal v. Fireman's Fund Ins. Co., 46 Cal. 3d 287, 250 Cal. Rptr. 116 (1988), which overturned 10 years of precedent and held that no private right of action exists under Section 790.03(h). At this time, only Montana and West Virginia continue to recognize private actions under unfair insurance practices statutes. See Moradi-Shalal, supra, 250 Cal. Rptr., at 121 and note 6. 66. 29 U.S.C., Section 1002(21)(A); see Stanton v. Shearson Lehman/American Express, Inc., 631 E Supp. 100, 102 (N.D. Ga. 1986). 67. See Nieto v. Ecker, 945 F. 2d 868 (9th Cir. 1988) (rejecting a theory of liability under ERISA for aiding and abetting a fiduciary); So. Cal. Meat Cutters Unions v. Investors Research, 687 F. Supp. 506 (C.D. Cal. 1988) (ERISA only applies to those defendants against whom ERISA provides a statutory right of action); Munoz v. Prudential Ins. Co. of America, 633 F. Supp. 564 (D. Colo. 1986) (same findings as previous case). 68. See 29 U.S.C., Section 1132(a)(1)(B); Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 105 S. Ct. 3085 (1985) (emotional distress damages prohibited); Sokol v. Bernstein, 803 F. 2d 532 (9th Cir. 1986) (same findings as previous case). 69. See 29 U.S.C., Section 1132 (a)(3). 71. See, e.g., Blau v. Del Monte Corp., 748 F. 2d 1348 (9th Cir. 1984). 72. 18 U.S.C., Section 1961 et seq. 73. See Marcial v. Coronet Ins. Co., No. 87C 3072 (N.D. Ill., 1987 WL 19532); Unocal Corp. v. Superior Court (Harbor Ins. Corp.), 198 Cal. App. 3d 1245, 244 Cal. Rptr. 540 (2d Dist. 1988), decertified (June 2, 1988). 74. Under the theory of respondeat superior, an employer may be held liable for the torts of its agents or employees acting within the scope of their employment. See Witkin, Agency and Employment, Sections 113 et seq.; California Civil Code, Section 2338. 75. See Witkin, supra, Agency and Employment, Section 61, at 67. 76. See Hughes v. Blue Cross, 199 Cal. App. 3d 318, 245 Cal. Rptr. 273 (1988). 77. See note 24, supra. 78. See, e.g., Restatement (2d) of Tons, Section 411; Elam v. College Park Hospital, 132 Cal. App. 3d 332, 183 Cal. Rptr. 156 (1982) (hospital negligently allowed podiatrist to remain on staff despite malpractice complaints). See Burch 122 Mich. App. 798, 333 N.W. 2d 140 (Mich. 1983); Kendall v. Gore Properties, 236 F. 2d 673 (D.C. Cir. 1956); Giles v. Shell Oil Corp., 487 A. 2d 610 (D.C. 1985) (employer responsible for harm caused by employee in a case in which the employer negligently failed to screen the employee's background). 79. The general rule that parties are not liable for the torts of their independent contractors is fiddled with exceptions. When the plaintiff can show that one party retains control over the enterprise, benefits from it, selects the independent contractor, and is free to require indemnity and insurance from the contractor, that party may be found vicariously liable for the torts of its independent contractor. Also, when the plaintiff can demonstrate a "special relationship" giving rise to an affirmative duty of care owed by the defendant, vicarious liability may result. See Witkin, supra, Tons, Section 997. An insurance company is likely to be found to have a special relationship with its insureds, thus increasing the likelihood of liability for the acts of independent contractor UR organizations. 80. The fact that the contract between the payer and reviewer specifies independent contractor status is not dispositive. The reviewer may be considered an independent contractor for purposes of its relationship with the payor, and yet be considered an agent of the payor in matters involving the patient. Cf. Arthur v. SL Peter's Hospital, 169 N.J. Super. 575, 405 A. 2d 443 (1979) (physician may be considered an independent contractor in his relations with the hospital, but be deemed an employee of the hospital in his relations with the patient). The principal factor in distinguishing an independent contractor from an employee is the freedom from control by the employer over the details of the work. See Witkin, supra, Agency and Employment, Sections 12, 14, at 28-31; Prosser and Keaton, The Law of Torts (5th ed., 1984) for a discussion of the doctrine generally and a suggestion that it is disfavored. 81. See Restatement (2d) of Agency, Sections 8, 159 (apparent authority of agent); California Civil Code, Section 2300, Quintal v. Laurel Grove Hospital, 62 Cal. 2d 154, 41 Cal. Rptr. 577, 397 P. 2d 161 (1964) (whether the physician was ostensible agent of the hospital is a jury question); Mduba v. Benedictine Hospital, 384 N.Y.S. 2d 527, 52 App. Div. 2d 450 (1976) (emergency room physicians may be named agents of the hospital despite independent contractor language in their contracts). 82. Many of the same dilemmas discussed in this section apply to hospitals as well. Indeed, in a concurrent review situation like Wickline, the hospital has the largest financial stake in the patient's discharge because it is the hospital bills that would remain unpaid. The rights and responsibilities of a hospital are similar to those of a physician and are not treated separately for the purposes of this paper. 83. If the physician is named in a lawsuit, he or she may cross-complain against the review entity for indemnity or contribution. Likewise, a review entity named in a Wickline type of case will consider cross-complaining against the treating physician. 84. See, e.g., Goldman v. Ambro, 512 N.Y.S. 2d 636 (1987); Harper v. Baptist Medical Center-Princeton, 341 So. 2d 133 (Ala. 1976). In Harper, the Alabama Supreme Court held that a doctor and hospital who rendered emergency treatment to the plaintiff, but refused to accept him as a patient because he did not have insurance, were not liable for subsequent injuries because the plaintiff had not been accepted as a patient. Until a professional doctor-patient relationship is established, the physician's only duty is to provide emergency care; there is no duty to accept a patient under other circumstances. 85. See generally, Mains, "Medical Abandonment," Medical Trial Technique Quarterly, at 306 (1985). 86. See, e.g., Meiselman v. Crown Heights Hospital, 285 N.Y. 389, 34 N.E. 2d 367, 217 N.Y.S. 2d 12 (1941) (liability against hospital where the patient was discharged prematurely because he was unable to pay for further care). See generally Lanzafame, supra, note 1, at 1023-1030. 87. Informed consent requires disclosure of all information that the patient would consider material in deciding whether to undergo the treatment. See Canterbury v. Spence, 464 F. 2d 772 (D.C. Cir. 1972). Presumably, economic consequences would be a material consideration for the patient. 88. Physicians should be mindful, however, of the UR organization's legitimate concerns regarding the disclosure of its review criteria and systems, which are usually considered protectable trade secrets. 89. See In Re Quinlan, 70 N.J. 10, 355 A. 2d 647, 649, cert. denied, 429 U.S. 922 (1976) (review would be "inappropriate," not only because that would be a gratuitous encroachment upon the medical profession's field of competence, but because it would be impossibly cumbersome"). 90. For a thoughtful treatment of this issue, see Eisenberg and Rosoff, supra, note 1. 91. The implied covenant of medical necessity should not, however, supplant the patient as the final decision maker in matters of medical care. Rather, it obligates the physician to add a new economic dimension to the physician's determination of medical necessity, which must be communicated to the patient. 92. In one case, the court apparently refused to relieve the patient of payment responsibility, even though the insurer denied coverage because the treatment was not medically necessary. Albert Einstein Medical Center v. Lipoff, No. 3872X (Ct. of Common Pleas, Phila., Apr. 23, 1973), described in Eisenberg and Rosoff, supra, note 1. In that case, the patient sought to hold her physician contractually liable for the hospital bill. The court denied her claim, reasoning that her claim sounded in tort and that she could recover only by proving that the doctor's treatment was medically unsound. That it was economically unsound was irrelevant to a tort claim. 1. Page, Leigh, ''New Era in Utilization Review,'' American Medical News, Vol. 1, December 9, 1988, pp. 48-49. (See also Scheier, Ronni, "Medicine by the Book," American Medical News, January 6, 1989, pp. 1, 20). 2. U.S. General Accounting Office, Medicare Issues Raised by Florida Health Maintenance Organization Demonstrations, Report to Congress, GAO/HRD-86-97, Washington, DC, July 1986. 3. U.S. Congress, House, Maintaining Medicare's HMOs: Problems, Protections, and Prospects, Hearing before the Select Committee on Aging, 100th Congress, First Session, Washington, DC, June 11, 1987. 4. U.S. General Accounting Office, Medicare: Physician Incentive Payments by Hospitals Could Lead to Abuse, Report to the Chairman, Subcommittee on Health, Committee on Ways and Means, U.S. House of Representatives, GAO/HRD-86-103, Washington, DC, July 1986. 5. Trauner, Joan B., "The HMO Identity Crisis." Best's Review 87, April 1987, pp. 60-70. 6. The Group Health Association of America's 1988 analysis of HMO industry performance, using 1986 survey data, showed that 39.2 percent of 181 plans submitting financial data had a profit or surplus. Of the HMOs that we reviewed, 25 percent were profitable in 1986. See Group Health Association of America, Inc., HMO Industry Profile: Financial Performance, Vol. 3, Washington, DC, September 1988. 7. In a study of physician incentives in HMOs, ICF researchers noted that they were unable to check the consistency or accuracy of information supplied by the plans. They also noted that information on file at the federal Office of Prepaid Health Care (OPHC) was not always reliable; in some cases, financial incentive arrangements contained in applications for federal qualification had never become operational, and in other cases, design of incentives had changed without being reported to OPHC. ICF, Inc., Final Report: Study of Incentive Arrangements Offered by HMOs and CMPs to Physicians, Submitted to the Office of the Assistant Secretary for Planning and Evaluation, Department of Health and Human Services, Washington, DC, May 18, 1988, p. II21. 8. InterStudy, The InterStudy Edge, Excelsior, MN, Spring 1988, p. 54. 9. For a different approach, when traditional community- or foundation-based IPAs are contrasted with newer group-based IPAs, see Welch, W. P., "The New Structure of Individual Practice Associations, Journal of Health Politics Policy and Law, Vol. 12, Winter 1987, pp. 723-739. 10. ICF, Inc., Final Report, p. IV-6 (see note 7 above). 11. Gnessin, Alan M., "Physician Incentive Payment Systems and Risk Sharing Alternatives," in Group Health Association of America, Inc., Physician Incentive Programs: Defining the Risk, Washington, DC, October 28-30, 1987. 12. For a description of an HMO in which individual physician incentives are used within pods, see the statement by Jerome Beloff, Corporate Medical Director, Av-Med Health Plan of Florida before the Physician Payment Review Commission, Washington, DC, July 15, 1988. 13. Gnessin, Alan M., "Physician Incentive Payment Systems and Risk Sharing Alternatives," 1987 (see note 11 above). 15. Neipp, Joachim, and Zeckhauser, Richard, "Persistence in the Choice of Health Plans," Advances in Health Economics and Health Services Research, Vol. 6, 1985, pp. 47-72. 16. Borok, Gerald M., "Appropriate Utilization of Resources Program," Quality Assurance and Utilization Review, Vol. 2, May 1987, pp. 57-61. 17. Donabedian, Avedis, "Explorations in Quality Assessment and Monitoring," The Definition of Quality and Approaches to Its Assessment, Vol. I, Ann Arbor, MI: Health Administration Press, 1980. 18. Mosser, Gordon, "Quality Assurance in HMOs," Presentation to Management and Physician Orientation Program, Group Health Association of America, Inc., New Orleans, December 9-11, 1987. 19. For a discussion of 15 ways in which out-of-plan use may occur, see Mott, Peter D., "Hospital Utilization by Health Maintenance Organizations: Separating Apples from Oranges," Medical Care, Vol. 24, May 1986, pp. 398-406. 20. For a discussion of the process used by the Rand Corporation to impute mental health visits and expenditures at one large HMO (Group Health Cooperative of Puget Sound), see Wells, Kenneth, Manning, Willard Jr., and Benjamin, Bernadette, "Comparison of Use of Outpatient Mental Health Services in an HMO and Fee-for-Service Plans: Sensitivity to Definition of a Visit," Medical Care, Vol. 25, September 1987, pp. 894-903. 21. Joint Commission on Accreditation of Health Care Organizations, Report of the Findings of the Joint Commission's Quality Assurance Evaluation and Medical Records Audits of Health Maintenance Organizations in Ohio under the Medical Assistance Program, Submitted to the Bureau of Alternative Delivery Systems, Ohio Department of Human Services, December 1987. 22. Conversation with Jo Ellen Ross, Chief Executive Office, California Medical Review Inc., San Francisco, January 17, 1989. 24. Mathematica Policy Research, Inc., National Medicare Competition Evaluation, Final Analysis Report: The Structure of Quality Assurance Programs in HMOs and CMPs Enrolling Medicare Beneficiaries, Washington, DC, February 1987. 25. Gold, Marsha and Reeves, Ingrid, "Preliminary Results of the GHAA-BC/BS Survey of Physician Incentives in Health Maintenance Organizations (HMOs)," Group Health Association of America, Inc., Research Briefs, Vol. 1, November 1987, pp. 1-15. 26. Findings from the BC/BS survey have been used to augment the GHAA survey, with duplications removed. For the BC/BS results, see Blue Cross and Blue Shield Association, "A Survey of Physician Financial Payment Arrangements in Blue Cross and Blue Shield Plan HMOs," Chicago, January 1987. 27. Hillman, Alan, "Sounding Board: Toward Full Disclosure of Referral Restrictions and Financial Incentives by Prepaid Health Plans," New England Journal of Medicine, Vol. 317, December 31, 1987, pp. 1743-1748. 28. ICF, Inc., Final Report (see note 7 above). 29. Memorandum from Lewin/ICF, Inc. and Group Health Association of America to Chris Bladen, Division of Health Financing Policy, U.S. Department of Health and Human Services, Washington, DC, June 24, 1988. 30. For a review of early research studies on utilization rates in HMO and fee-for-service settings and across HMOs, see Luft, Harold S., Health Maintenance Organizations: Dimensions of HMO Performance, New York: Wiley, 1981. 31. See, for example, Yelin, Edward H., Henke, Curtis J., Kramer, Jane S., Nevitt, Michael C., Shearn, Martin, and Epstein, Wallace V., "A Comparison of the Treatment of Rheumatoid Arthritis in Health Maintenance Organizations and Fee-for-Service Practices," New England Journal of Medicine, Vol. 312, April 11, 1985, pp. 962-967. Also see Quick, Jonathan D., Greenlick, Merwyn R., and Roghmann, Klaus J., "Prenatal Care and Pregnancy Outcome in an HMO and General Population: A Multivariate Cohort Analysis," American Journal of Public Health, Vol. 71, April 1981, pp. 381-390. 32. For a study that assumed that the differential use of diagnostic testing was due to its increased profitability to fee-for-service providers, see Epstein, Arnold M., Begg, Colin B., and McNeil, Barbara J., "The Use of Ambulatory Testing in Prepaid and Fee-for-Service Group Practices: Relation to Perceived Profitability," New England Journal of Medicine, Vol. 314, April 24, 1986, pp. 1089-1094. 33. Scovern, Henry, "Hired Help: A Physician's Experiences in a For-Profit Staff-Model HMO," New England Journal of Medicine, Vol. 319, September 22, 1988, pp. 787-790. 34. For an example of a discussion on referral patterns, see Piland, Neil E, White, Robert E., and Smith, Howard L., "Physician Referral Patterns: Implications for Group Practice," GHAA Journal, Vol. 7, Winter 1986, pp. 4-12. For an example of a discussion on provider feedback, see Berwick, Donald M., and Coltin, Kathryn L., "Feedback Reduces Test Use in a Health Maintenance Organization," Journal of the American Medical Association, Vol. 255, March 21, 1986, pp. 1450-1454. See also Braham, Robert L, and Ruchlin, Hirsch S., "Physician Practice Profiles: A Case Study of the Use of Audit and Feedback in an Ambulatory Care Group Practice,'' Health Care Management Review, Vol. 12, 1987, pp. 11-16.