Managed Care and the Law

With medical costs skyrocketing, health insurance is vitally important to every American family. Managed care (identified in most minds with HMOs, though there are variations) is a method of keeping down the costs of medical care, and more and more employers are offering it to their employees. Often it costs the employees less in premiums, and employees have no deductible amounts to meet and pay less (sometimes nothing) in co-payments.

Whether this is for you or not will depend on many factors-your age, health, budget, etc. Here’s a quick look at how the law is involved, and some possible developments on the horizon.

How Managed Care Works

Managed care programs cut costs by limiting your access to health care. That does not mean that managed care is bad or wrong. It simply means that you must follow more rules when you go to the doctor in exchange for paying less for your health care.

Under managed care specific doctors, hospitals and other health care providers agree with the insurance company to give you medical care at a reduced cost in exchange for making all members use that specific list of doctors and hospitals.

In general, your HMO gives you a list of doctors, from which you choose one doctor for your care. That doctor coordinates all of your medical care. If you want to see a specialist your primary doctor must refer you. If you go to a doctor that is not in your HMO, the HMO will pay no part of your bill. by limiting the care for which it will pay. What used to be a decision between you and your doctor is now a decision between you, your doctor and your health plan. You either must abide by your managed care policy or pay for the treatment out of your own pocket.

How the Law is Involved?

There is no law that stops a doctor from considering the cost of your medical care when deciding how to treat your illness. The courts, though, generally require that your doctor base his decision on what is best for you.

One problem with managed care is that it puts your doctor between a rock and hard place. The doctor may feel you need a particular treatment but your health plan will not approve it. Your doctor can either decide to not offer you the treatment or to prescribe the treatment and bill you directly. If your doctor decides to bill you directly there is the chance that the doctor will not be paid.

The HMO may also offer your doctor financial incentives to keep costs low. In some plans, the doctors get a percentage of the money they save the HMO. In some cases HMOs will kick doctors out of their plan if the doctors try to push for more expensive medical treatment for their patients.

Malpractice and Managed Care

If your doctor makes a neglectful decision about your care and you’re injured as a result of the decision, your doctor may have committed malpractice. In these days of managed care, though, that decision may have more to do with your health plan than with your doctor’s judgment. Yes, you can still sue your doctor for malpractice, but right now it is nearly impossible to sue your managed care company, although lawmakers are trying to change that.

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that controls how your employee benefit plan is administered. Part of the law protects the health plan offered by your employer from being sued for interfering in your health care.

Remember, ERISA only protects health plans that are offered by employers. If you buy your health plan on your own or through some other type of group, you may still be able to bring a lawsuit against your HMO.

Is There a Limit on Damages if I Sue?

The states do not agree on how or when you can sue an HMO and what kind of damages you can recover. In some states awards can be high. In others, you can only recover the cost of the treatment or test. If a prostate exam costs $200 in your state and your HMO refuses to pay for a prostate exam, you could sue your HMO for $200 if the exam would have turned up the fact that you have prostate cancer. It does not matter if you die because of the HMO’s refusal to pay for the test.

If I Die Because of Care Denied by my HMO, Can my Heirs Sue the HMO?

Not at the present time if it’s an employee benefit plan. ERISA does not give your heirs the right to sue your HMO on your behalf. Look for consumer groups to try to change this rule in the coming years.

What Can We Expect in the Future?

ERISA’s effect on HMOs is a hot topic. Medical care and HMOs are on every political candidate’s platform-although they are not always on the same side. As for action on the state level, at least one state has made it legal for HMO members to sue their HMOs for malpractice when the HMOs did not use ordinary care in making medical treatment decisions. That state’s law also makes it illegal for HMOs to throw doctors out of their health plans when the doctors help the patients appeal HMO decisions or prescribe treatments the HMOs do not want the doctors to prescribe.

This is obviously a fast-changing area. Consult your lawyer to learn the legal situation in your state.