Reduce your risk in the managed care jungle.
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Read Making a Killing

home / healthcare / in the media

Mar 01, 2001

by Gayle Hacker Sullivan, RN, JD.

Reduce your risk in the managed care jungle.

"This court had no choice but to pluck ... [the plaintiff's] case out of the state court in which she sought redress ... and then ... to slam the courthouse doors in her face and leave her without any remedy." Those words came from a judge clearly upset over a loophole that shielded a managed care plan from any liability for a patient's death following its denials of coverage.

The plaintiff's husband had been admitted to a hospital for alcohol detoxification. He had health insurance coverage through his wife's employer-sponsored plan. It allowed at least one 30-day inpatient rehab program per year. The plan's utilization reviewer, however, authorized only a five-day stay. The husband resumed drinking a few weeks later. Following his request for readmission, the insurer granted an eight-day stay. Within 24 hours of discharge, he attempted suicide.

Although his doctor wanted him treated in a 30-day detox program in a private hospital, the patient was denied coverage. He was put instead into a correctional center, where, according to court documents, he not only received little treatment, but was raped and sodomized.

After his release, he went on a three-week drinking binge, was put in protective custody, and later brought to a medical center for a head injury; his blood alcohol level was well beyond the legal limit. He was discharged the next morning. Later that day, he committed suicide.

Why were the courthouse doors "slammed" in his wife's face? Because of a provision in a 1974 federal law called the Employee Retirement Income Security Act. ERISA, as it is known, was created to protect against fraud in employee benefit plans, including employee healthcare coverage.

ERISA requires that malpractice suits against employer-sponsored health plans be filed in federal court, where damages are generally limited to lost benefits. The problem is that ERISA was passed at a time when most health insurance plans were fee-for-service; few, if any, plans required prior certification for procedures. Under the old system, patients were treated and then fought in court over the amount of coverage. Under today's rules of precertification, though, patients may have to forego treatment until after the court fight is finished.

Providers face new sources of liability
The cost-containing strategies that now permeate healthcare have created new rules of practice. Busy hospitals and providers are faced with more requirements for documentation, precertification, network restrictions, and financial pressures. These policies are all the more frustrating because health plans have often escaped liability and payment of damages.

At the same time, new kinds of liability risks have emerged for providers, In a landmark case, the court warned healthcare providers that they have an obligation to appeal health plan denials that may result in patient harm: "The physician who complies without protest ... cannot avoid his ultimate responsibility for his patient's care. He cannot point to the healthcare payer as the liability scapegoat when the consequences of his own determinative medical decisions go sour."

Laws governing a patient's right to appeal a health plan's denial of coverage are changing, though. In some states, Pennsylvania among them, courts have allowed suits against employer-sponsored plans to proceed.

Depending on what lawmakers finally agree on, federal patients' rights legislation, once passed, may grant consumers the right to sue any health plan for damages. In the meantime, hospitals and providers will continue to face liability, since juries usually have a hard time understanding how a patient's life could come second to financial concerns.

As a nurse, you may not be able to beat the system. But the more you know about how to work within its rules, the better you can help patients get the care they need. That, in turn, will help reduce your risk of being involved in one of the managed care nightmares that wind up in litigation. Here's what you can do to protect yourself.

Be sure you can justify your decisions
In managed care malpractice suits, the most common allegations involve access to care (which may be limited by telephone triage, requirements for precertification, and restricted choice of physician), the timeliness of referrals and diagnostic tests, and communication issues.

There may also be times when you think that having to follow clinical pathways--the treatment protocols established by a health plan or healthcare organization--poses a challenge to reasonably prudent care. Generally speaking, however, when these protocols meet professional and clinical standards, they can improve the quality and consistency of care.

The key to protecting yourself from liability in all of these areas is to be sure that any actions you take meet the standard of "reasonably prudent under the circumstances." Demonstrating that you acted on the basis of sound clinical judgment requires solid documentation, since every clinical judgment you make can potentially be seen as a cost issue.

If you are involved in reviewing or developing such protocols for your facility, be sure that they're consistent with current professional and clinical standards. Document the reviews (including minutes of review meetings), and, if the pathways are out of date, suspend their use.

Insist on support for telephone triage
Telephone triage is a standard means of steering patients toward the appropriate level of care. This can keep costs down if, for example, patients are channeled away from the ED when a less expensive alternative is available--and appropriate.

If you're involved in telephone triage, your potential for liability lies in the fact that you're advising a patient you cannot see and whose medical record you probably don't have. To reduce your risk of liability, ask your employer for standardized assessment and treatment algorithms.

As with clinical pathways, these algorithms should be developed with input from specialists and should be reviewed periodically. If you supervise triage nurses, insist that they be well-trained and that they have easy access to medical consultants for expert guidance on complicated cases.

All teletriage calls should be documented in detail, specifying the caller's name, the date and time of the call, all pertinent information the caller gives, and the nurse's instructions and other actions. If the health plan gives financial incentives for reducing ED visits, be especially careful that you use reasonably prudent judgment, can defend that decision based on clinical need, and have documented your actions accordingly.

Provide support for treatment plans
Nurses in private or group practices often are responsible for notifying insurers of treatment plans to obtain precertification. If this is not done systematically, it may delay approval or even result in a denial of care. You can minimize these risks by taking the time to provide enough details from the patient's records to justify the recommended treatment,
First, confirm that the physician and patient have discussed why the procedure or treatment is necessary, what other options are available, the risk of not undergoing the recommended procedure, and the costs to the patient if his health plan fails to authorize a test or procedure.

Make sure these discussions are documented in detail. You should not speak for the insurance carrier or interpret a patient's insurance contract. Instead, suggest that the patient speak with a representative of his health plan so that he understands his coverage policy and what recourse he has in the event of a denial of coverage.

Make your patients aware that a new federal regulation issued by the Department of Labor requires a faster response from ERISA-regulated health plans on claims and appeals. [4] The Patients' Rights Claims Procedure Regulation requires decisions on initial claims (in most cases) within 72 hours for urgent care, 15 days for pre-service, and 30 days for post-service.

You may also want to refer patients to a consumer fact sheet on the precertification (and the appeals) process called "The HMO Self-Defense Kit," available at This Web site is sponsored by the Foundation for Taxpayer & Consumer Rights, a nonprofit education and advocacy group based in Santa Monica, Calif.

This fact sheet gives a step-by-step strategy for making an appeal, pinning down a time frame for a decision, and working through the hierarchy within an HMO or other organization. The Web site also provides links to HMO regulatory agencies in each state.

Another resource is the Web site of the federal Agency for Healthcare Research and Quality ( It explains in simple language how consumers can take an active role in choosing and using a health plan.

Learn how to work the appeals process
If a patient is denied coverage, a nurse increasingly may find herself involved in an appeal, whether in the role of case manager, office nurse, or patient advocate. To be effective, you will need to know each step required by a particular health plan.

The new claims procedure regulation also places new limits on the amount of time that health plans take to respond to appeals. Rather than the 60 days or more that plans had under previous rules, the new regulation requires that plans make a decision (in most cases) within 72 hours for urgent care claims, 30 days for pre-service claims, and 60 days for post-service claims. Furthermore, patients now have 180 days to file an appeal rather than only 60 days.

In addition, the regulation says that health plans must treat a claim as "urgent" if the treating physician determines it to be so. And if a claim or appeal is denied, the plan must provide specific reasons for the denial, including any guidelines, rules, or protocols that it used to make that decision.

When you deal with a health plan representative by phone, document the date and time of the call, contact name, the details of the conversation, and the specific reason for the denial. Mail supportive documentation and send any e-mail communication "return receipt requested."

Before you forward any documents, be sure to verify that the patient has signed a consent form authorizing you to release details from his record. Know the time limits a plan sets on appeals. At the same time, you should specify your need for a timely response given the nature of the patient's condition.

If your appeal fails or if the length of time required for an appeal puts the patient at risk, the patient may decide to forgo a medically necessary treatment purely on the basis of coverage. The consequences of that decision may have too high a price.

In one case, after a patient suffered a heart attack, his primary care physician and three specialists agreed that he needed heart surgery. Because the local hospital lacked the proper equipment, surgery was scheduled at Barnes Hospital in St. Louis, where the physicians believed the patient had the best chance of survival.

The insurer, however, refused to precertify the procedure because Barnes was outside its service network; the health plan also required a second opinion. So the surgery was canceled.

More than two weeks after the originally scheduled date of surgery, the insurer finally gave its approval. But the surgical team was unavailable for over a month--by which time the patient's condition had deteriorated so much that the procedure was no longer an option. He died four months later as he was awaiting a heart transplant.

When managed care practices appear to be keeping a patient from getting needed care, your attention to details to support sound clinical judgment can go far in helping your patients and enabling you to fulfill the standards of care.

The author, a member of the RN editorial board, is president of Quality Assurance Associates, Inc., a medical liability consulting firm in Fairfield, Conn., and visiting assistant professor at the Fairfield University School of Nursing.

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