Health plans are turning to the courts for help against state medical boards' efforts to hold medical directors accountable for their decisions.
In Texas, UnitedHealthcare has sued the state board of medical examiners for attempting to discipline one of its medical directors. A hearing was held in Northern District Court of Texas in early June, and the judge gave no indication when she would rule.
The dispute in Texas isn't the first case of its kind--an Arizona court three years ago ruled the state's medical board can hold a medical director accountable--and it likely won't be the last.
Fifteen states require medical directors to be physicians and hold a license in the state in which they're making decisions. And one, Vermont, requires that if medical directors are physicians, they must hold a Vermont license. Nine states require the medical director to hold a license from any state. The remaining 25 states have no rules or laws regarding medical directors and licenses.
Some states that have unsuccessfully tried to get a law passed have obtained opinions from their state attorney general clarifying their authority to regulate the medical directors.
There is no law in Texas; a medical board position paper issued several years ago states that anyone who makes decisions affecting the care of patients must hold a state medical license or be subject to the board's disciplinary proceedings. The board investigates complaints from patients or others. Whether or not this can be enforced is at the heart of the lawsuit in Texas.
"The regulation of medical decisionmaking is within a state's traditional authority to regulate matters relating to healthcare," Texas' attorney general wrote. "The board has a duty to determine what decisions require the exercise of medical judgment and to regulate those that do."
The issue in the Texas case isn't whether the physician holds an active medical license. The issue is whether the board has the authority to discipline the physician medical director for what board members view as inadequate medical care.
The Texas case centers around a 13-year-old boy with a complicated medical history. When he was ready to be discharged following a lengthy hospital stay in 1998, his physician prescribed at-home ventilator treatment requiring a skilled technician. United's medical director determined it wasn't covered under the mother's policy and rejected the request. The boy, who later died from an unrelated complication, eventually got the treatment under his father's policy.
The parents filed a complaint with the Texas medical board, and an investigation by board members found the medical director had exercised medical judgment that "failed to meet the appropriate standard of care," according to court papers.
Board members recommended that the matter be handled through an agreed settlement in which both parties stipulate to facts and agree to steps the physician must follow. In this case, the medical director was ordered to attend classes on respirator use.
However, United filed suit against the Texas board, challenging its authority to regulate the medical director's behavior and hold him accountable. The nation's second-largest insurer contends this was a coverage decision, not a medical necessity one. United in 1998 made medical necessity decisions, but in November eliminated its medical necessity requirement in many cases.
The medical director is identified in court papers only as John Doe, M.D.
However other documents and publications have identified him as David William Ellis, M.D. United officials declined to name the medical director.
United spokesman Roger Cruzan says it's important to note this case doesn't have to do with denial of coverage.
It isn't appropriate for medical boards to become involved in the regulation of employee benefits, Cruzan says. It's a case of the board trying to get involved in what is and isn't covered by certain health plans, Cruzan says.
The Texas medical board and the attorney general say it's more than that. Ellis made a medical decision, one that wasn't appropriate, they say. And he should be held accountable to the licensing authority in the state in which the enrollee lives, they say.
"Nothing is more critical to the regulations of healthcare than the regulation of medical decisionmaking," Texas Attorney General John Cornyn wrote in his brief. "(Ellis) cannot be relieved of his duties as a physician by merely claiming his medical judgment was exercised in connection with a benefit determination when that benefit determination includes the exercise of medical judgment."
Medical boards such as Texas have overstepped their authority in regulating coverage decisions, says Susan Pisano, spokesperson for the American Association of Health Plans.
"There is a difference between what a medical director does and what a practicing physician does--there's the one-to-one relationship, that care is provided."
That really isn't a difference, says James Winn, M.D., executive vice president of the Federation of State Medical Boards. The main difference is that the practicing physician has more knowledge of the patients' conditions, he says.
"When medical directors make decisions regarding the type of care, the duration of treatment . . . the federation believes it's a medical decision, not an insurance decision," Winn says, adding the laws aren't attempts to regulate managed care companies.
A coverage decision, he says, is simply whether a health plan covers a particular procedure and what type of reimbursement will be provided. Health plans' medical directors are deciding whether patients should be admitted and whether they need surgery, decisions which are medical, Winn says.
"The medical boards are simply saying that the medical director, as is every other licensed physician, has to be accountable for their medical decisionmaking," Winn says.
The federation wants state medical boards to push for legislation requiring medical directors to hold licenses in their states.
In July 1997, the Arizona Court of Appeals ruled the state Board of Medical Examiners had the jurisdiction to investigate complaints against health plan medical directors.
A medical director for Blue Cross Blue Shield of Arizona was issued a letter of concern in 1994 regarding "an inappropriate medical decision which could have caused harm to a patient," according to reports and court papers. The medical director had denied authorization for a patient's gall bladder surgery.
The Blues and the physician claimed the board was acting outside its authority. But the court ruled against them, saying the board was acting appropriately.
The Arizona board investigated and subsequently disciplined the medical director under the state's unprofessional conduct statute.
Although Arizona board officials haven't pushed for a law specifically granting them authority to investigate medical directors, other states have. California and Vermont have recently passed laws granting medical boards specific authority to hold health plan medical directors accountable.
The Minnesota Board of Medical Practice has several times unsuccessfully attempted to have utilization review be defined as medical practice, says executive director Robert Leach. During this year's legislative session, the bill didn't make it out of committee.
"What we're saying is that our legislation is related to covered services only," Leach says. "These are not contractual disputes. We're talking about the courses of treatment covered by the plan that are denied. We're asking that the primary decisionmaker, the medical director, be licensed in the state."
Board members have gotten complaints about medical directors who aren't based in Minnesota, Leach says. "That's the issue we're trying to address," he says. "If we're going to hold the treating physician in Minnesota to a certain standard, it doesn't seem in the patients' best interest that a physician (making a decision) should not be held to the same standard."