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  • Liability Exposure of Providers


  • Liability Exposure of Providers

    Liability Exposure of Providers and Network/MCOs

    In addition to changing the manner in which mental health care and substance abuse treatment are provided, managed care has created new liability exposure for providers and health plans. By forcing providers to fill the dual role of care provider and cost-container, managed care creates potential exposure on the part of substance abuse service and mental health providers not only to claims of professional negligence traditionally confronted by such providers, but also to a range of managed care-specific liability. At the same time, network/MCOs that were previously insulated from claims for professional liability are exposed with increasing frequency to State law tort claims, as courts expand the application of traditional hospital liability theories to these entities. The following section provides a general overview of this evolving and complex area. It is important to note that our discussion in this section has focused on guidance from the commercial sector largely because this is where guidance exists. Liability exposure for a provider or network/MCO that operates in the public sector is different from that experienced in the private sector. Where appropriate, this section will highlight these distinctions in more detail.

    Provider Liability Exposure

    As managed care changes the way providers render services, it also complicates the issue of professional liability. Managed care cost-containment mechanisms such as UR and provider financial incentives have a significant impact on practice patterns. By focusing on short-term and pharmaceutical treatments rather than talk-based and institutional therapies, managed care arguably is causing the standard of care for substance abuse services and mental health care to evolve. While the consequences of these changes remain unclear, it is apparent that providers who participate in a network/MCO, either as employees or as contractors, may be subject to liability exposure that is unique to a managed care environment. Specifically, a provider may have (1) a duty to appeal adverse funding decisions by UR; (2) a duty to disclose the network/MCO financial incentives to which the provider is subject; and (3) a duty to continue treatment after the denial of funding.

    Failure to Appeal Adverse UR Determination

    Providers have a nondelegable duty to make medical decisions regarding the care of a patient. If a patientís care will be adversely affected by the refusal of a network/MCO to authorize what the provider deems to be necessary treatment, the provider may not be relieved from liability if he or she fails to initiate an appeal process for denial of that care. As one California appellate court noted, "The physician who complies without protest . . . with the limitations imposed by a third-party payor, when his medical judgment dictates otherwise, cannot avoid his ultimate responsibility for the patientís care." In other words, the purpose and role of cost containment may not be used to discharge or disregard the providerís obligation to make medical decisions. Thus, an individual mental health care and/or substance abuse service provider may be exposed to liability for failing to appeal a network/MCOís refusal to fund needed care.

    Failure to Disclose Financial Incentives

    Attendant to a providerís duty to disclose information to obtain a patientís informed consent, a provider may have a duty to disclose the implications of a network/MCOís policies relevant to that patientís treatment. At least one case has excluded evidence that the treating physicianís profits could be adversely affected by a decision to hospitalize a patient because of its potentially prejudicial impact. However, the same court recognized that this evidence was at least marginally relevant. Thus, the ability of patients to use evidence of financial incentives to show a deviation from the standard of care in future cases remains an open issue. At a minimum, providers may consider themselves to have an ethical duty to disclose any incentives that may place the providersí decisions regarding patient care at odds with their compensation.

    Abandonment

    Abandonment is the legal claim of malpractice because the provider improperly terminated treatment; it occurs when the provider fails to provide needed treatment in a case in which the provider had already assumed responsibility for the patientís care and knew or should have known that continued care was necessary. For example, if a patient needs further outpatient treatment for substance abuse after he or she has already received the maximum benefit of seven outpatient visits, the provider conceivably may have a duty to continue treatment regardless of the lack of funding. As a practical matter, continuing treatment when it has not been authorized may cause the provider to fall into disfavor with the network/MCO. While providers may mitigate these concerns by discussing time limitations at the initial stage of designing a treatment plan with the patient, it is important to keep in mind that prior notice of the benefit restrictions will not necessarily absolve a provider from the obligation to render reasonable care in spite of such limitations.

    This information came from a
    SAMSHA online article.

    *** Any law, statute, regulation or other precedent is subject to change at any time ***

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