Managed-care plans are taking comfort in a recent federal appeals court decision upholding their right to deny care in certain cases.
The ruling is seen as a counterbalance to a jury award of nearly $90 million in February to the family of a patient who died after Health Net, a Woodland Hills, Calif.-based HMO, denied her a bone marrow transplant. HMOs have been hoping for court decisions that would lessen the potentially enormous liability of withholding care.
The new appeals court ruling involves Kaiser Foundation Health Plan. The court said that when a patient's employer or self-insured health plan has delegated responsibility for medical decisions to the HMO, the court will not interfere unless the HMO's decision was unreasonable. The ruling encourages HMOs to have specific protocols in place for denying care.
The case differs in some ways from the Health Net case. One major factor is that Health Net is a for-profit firm, as opposed to an employer or self-insured plan.
Last month, the 9th Circuit Court of Appeals in San Francisco upheld a lower-court ruling in Ralph Barnett vs. Kaiser saying the Oakland, Calif.-based HMO didn't have to pay for Mr. Barnett's liver transplant. Kaiser was justified in refusing to authorize payment for the transplant because the HMO's transplant advisory board judged it to be "investigational (and) not medically appropriate because of (his) medical condition and history," according to court papers.
Physicians concluded that Mr. Barnett was unlikely to benefit from the transplant, and, in addition, there was a shortage of livers available for transplants.
"This is a very important decision. It allows a (not-for-profit HMO) to follow the advice of its physicians and allows them to make the decisions so long as they do so in a reasonable manner and in good faith," said Kennedy Richardson, a Kaiser attorney in San Francisco.
The ruling "shows that if you do things right, your decisions really aren't going to be upset by the courts," said Joseph T. Aoun, a partner at Honigman, Miller, Schwartz and Cohn in Detroit who specializes in managed-care law.
Kaiser physicians don't perform liver transplants, but the HMO pays for those it authorizes under its policies. Mr. Barnett had the transplant, which cost about $200,000, at California Pacific Medical Center, according to his attorney, Mark Rosenthal of San Francisco. Mr. Barnett "basically bankrupted himself," Mr. Rosenthal said.
Mr. Rosenthal hasn't decided whether to take the case to the U.S. Supreme Court.
A big lesson in the appeals court decision is that as hospitals and provider networks "want to garner as much of the capitation dollar as they can and become more and more like insurers," they have to make sure they can "manage that risk from a clinical perspective," Mr. Aoun said.