Insight Matters
Summer 2005

Managing Managed Care
Brooke Wolf, M.D., Chair, Psychiatric Practice Committee and President, Cleveland Psychiatric Society

The Practice Committee is pursuing a four-pronged approach to rectify unfair managed care company practices.

Instigate and monitor investigation by Insurance Commissioner. Commissioner Womer Benjamin has assured us that the investigation of managed care companies is proceeding. We informed the Ohio Department of Insurance (ODI) that a managed care company in Ohio is referring subscribers and providers of self-insured plans for whom that company is the agent to ODI for external reviews of denied inpatient days. However, ODI is unable to act because they have no jurisdiction over self-insured plans. These appeals should be directed to: The U.S. Dept. of Labor, 1885 Dixie Highway, #210, Fort Wright, KY 41011. According to the Patient Protection Act of 1999, the managed care company has an obligation to refer potential appeals for external review to the correct agency.

Consider reporting the medical directors of managed care companies to the Ohio State Medical Board for establishing, approving, or failing to monitor company policies which result in unreasonably narrow medical necessity determinations. If followed by participating psychiatrists, these policies would jeopardize patients' safety. According to the AMA Code of Ethics (8.02), "physicians in administrative and other non-clinical roles must put the needs of patients first … the ethical obligations of physicians are not suspended when a physician assumes a position that does not directly involve patient care." The committee has recommended that two psychiatric medical directors receive warning letters advising them to correct these problems or face being reported to the medical board.

Consider legal action. Inform members about lawsuits brought against managed care companies for medical necessity denials or unfair business practices. Several lawsuits are close to being filed by physicians of other specialties. A Lorain County neurosurgeon will file a suit against a managed care company for failure to pay UCR, using instead a secret formula, failure to pay for medically necessary services, bundling, downcoding, and lack of good faith and fair dealing. A suit on similar grounds will be brought by a pediatrician in Cuyahoga County. Although the ERISA law protects insurance companies from liability for medical necessity denials, they are liable when they conspire with their employed phsycians to reduce the standard of patient care according to a recent Texas case (Smelik vs. Humana). We are considering the viability and advisability of suits regarding unfair medical necessity denials, unfair business practices and unfairly-based low fees which do not vary with UCR or RBRVS as their contracts state they will.

Support legislation that mandates monitoring of managed care companies by independent physicians, either under the ODI or as a separate agency like the California Dept. of Managed Healthcare (www.hmohelp.ca.gov). Cleveland Psychiatric Society representatives will talk with representatives of other Ohio specialty societies and the OSMA to explore whether they would support legislation mandating monitoring of managed care companies by a group of independent physicians. We will also consider support for legislation to state that physician reviewers who review cases in Ohio must have a valid Ohio license.

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