Peer review

Legal contracts are apart of everyday life and healthcare is no exception. Managed care organization (MCO) use contracts to retain the services of providers for their network. The contracts between providers and MCO’s allow the MCO to regulate and safeguard the relationship and working conditions. The security of a contract allows the MCO to reduce liability on the organization as a whole and it creates stability in the marketplace. Stability is key, because it insures the patient that if they chose a provider in an MCO they know they will be able to use that provider for the duration of their treatment. Lawsuits are not uncommon in MCO, so contracts are used to state each party’s responsibilities and will hold the liability in any malpractice and legal concern. The paper goes on to talk more in depth about the relationships of the three parties involved in the healthcare process MCO’s, providers, and patients, and how those relationship intertwine with contracts and regulations to ensure the safety and well being of all parties involved.

Managed Care Organizations is a healthcare provider, group, or organization that provides healthcare through a management system of providers. The MCO enters into contractual agreements to provide services with insurers or self-insured employers. The department of consumer and business services certifies the organizations to function in the open marketplace. Physicians, healthcare facilities, or other providers, and any combination of the three can make up the organizations. To better understand the legal issues with managed care organization (MCO) contracting, we have to breakdown the three parties involved in the marketplace. The services provided by the MCO and the providers come with many different and unique legal challenges. The MCO has a contractual legal obligation to the provider and vise versa as well as an obligation to the patient. The providers themselves also have a separate liability to the patients when they assume patient care. The correlation and association with the three parties legal obligations causes a very large strain on how MCO contract providers for their organization.

MCO’s tend to have more leverage when it comes to negotiating contracts between themselves and the providers. The MCO has created an organization that could give the providers more reach, recognition, and profit in the local marketplace with little overhead and risk placed on the provider. Providers can gain more leverage by standing out in the marketplace by creating a niche service or an already established network of referrals driving more business their way.

The contracts themselves are heavily one sided towards the MCO’s. The MCO’s make sure the contracts are highly restrictive that offer minimal protections to the providers. The MCO usually institutes reimbursements rates in their favor, a binding arbitration clause making sure the provider cannot air their grievance publicly, and even before that, they make sure the language states the provider has to exhaust all administrative appeals before arbitration. To further complicate the issue, the administrative determinations only have a very short period to offer an appeal to the ruling, further demoralizing the provider into a haste acceptance to the MCO’s ruling.

The growth of Managed care organizations to provide healthcare in United States has generated issues in litigation and new legislation related to problems in the delivery system. Abuses include the gagging of physicians from inappropriate denial of care, false claim data, economic credentialing, financial disincentives, deselecting, insurer insolvency, denial of specialty referral, providing full disclosure of medical options to patients to lack of appeal and render care. These problems have affected patients and damaged patients/physician relationship. The United States healthcare system have placed a large administrative burden on physicians. Doctors who contract with more plans report spending more time in patient care. Contracting opportunities provide significant benefits to physicians. They add costs in terms of time spent outside patient care and lower adequacy time with patients. The expansion of insurance coverage expected through the ACA is believed to be increasing the number of insurers in every state and the availability of contracting opportunities. According to Dan (2014), “Simplifications that reduce the administrative burden of contracting may improve care by optimizing allocation of physician effort.” (p. 237). The development of uniform standards for processing administrative interactions and transmitting claims can reduce the transaction costs of contracting.

The contract between a physician and managed care organization is a document that states and governs their relationship. Contractual provisions can affect practices and procedures, payment, confidential records, office organization and clinical decision making. Due to the emergence of third-party payers and managed care, new elements are introduced that require complex, structured agreements that states everything from who renders medical services, to what medical services are rendered.

Physician groups and physicians that are contracted with managed care organizations risk exposure to liabilities. Physicians need to broaden their individual insurance coverage to be safe from these liabilities. Integrated delivery systems or IDSs are affiliated entities who help physicians deal with issues regarding insurance. It is very rare that managed care organizations offer help to physicians especially when they have their own personal liability. Many managed care organizations ignore physicians’ interests. During these crises, a broader coverage is needed because of the risks relating to the following issues:

· Changing employment relationships – Physicians who provide health care services in managed care organizations usually move to larger healthcare systems. This gives rise to issue related to tail risk associated with medical malpractice claims.

· Gatekeeper responsibilities – Physicians affiliated with managed care organizations often find themselves in gatekeeper roles. Physicians may make decisions regarding benefit plan design, cost containment decisions and perform administrative tasks.

· Capitated contracts – Managed care organizations are shifting the risk of providing treatment to healthcare providers.

· Contractual liability – Physicians who contract with managed care organizations directly must check that their coverage will apply to liability under the contract. Sadly, many have excluded all coverage for contractual liability.

The provider must investigate the MCO to assess service area, solvency, market share, stability and reputation. Physicians must analyze the terms in the agreement. A provider should limit his obligation to provide covered services to the extent allowed by the provider’s organization. A provider should require MCO to disclose the applicable criteria and incorporate them in the contract. A provider should accept capitation arrangement only when there is reasonable volume of enrollees during the term of the contract. The provider must examine the insurance and indemnification provisions carefully. The provider should sign the contract and accept its terms, only after careful evaluation and review.

The science of medicine draws strength from many sources and the managed care can help produce better care (Brown, 1998, p. 42). One of the advantages of affiliating with managed care organizations is that physicians can access the organization’s insurance resources and professional risk management. The combination of resources allows the provider to access in real time vital patient information from a centralized database. The access to the electronic medical records database reduces the time and legal liability that often comes with transferring sensitive HIPPA information from one provider to another. The in provider network opens up more possibility to refer patients to receive specific medical treatment outside of their skill set, reducing medical liability to the provider.

Managed care companies drastically cut reimbursements, dictated utilization, cost physicians their patients, and arbitrarily dropped physicians from panels. Physicians work hard, but they earn less in managed care organizations. Sacrificing quality to reduce costs frustrates physicians. According to Vavala (1995), “When a (managed care or insurance) company can tell you when and where to operate, who to see, and what drugs to use, you're pretty much an employee.” (p. 7). This statement clearly shows how physicians get treated in MCO’s. Participation in managed care affects physicians’ assessment of clinical decision making. Physicians have reported less control over their work schedules and less satisfaction with their salary.

There are many different legal issues that physicians might face from managed care contracts. Legal issues can be from the physicians, patients or MCO. Contracts that don’t have enough information and means of avoidance are at a much greater risk for liabilities. Physicians need something to fall back on to, if they were to encounter anything of this sort, litigation would serve a greater purpose for this. Records and confidentiality and denial of treatment are two important challenges that physician’s might face.

Records and confidentiality is very important in managed care contracts. Confidentiality in health care refers to the obligation of professionals who have access to patient records or communication to hold that information in confidence (Prater, 2014). Medical records are the responsibility of the provider and the managed care organization. MCO’s are responsible for maintaining the patient’s records, security, and when to disclose information. The provider has to ensure that they adhere to state and federal regulations; an example of this would be HIPPA. It’s very vital that providers maintain that patient-provider relationship to keep all records and information confidential. It very important who have access to patient medical records, the records and confidentiality clause must state who able to have access of the patient’s information and how long they should have access of these medical records.

Denial of treatment is failure to provide medical treatment to a patient who requires it. Physicians have to be very mindful when doing this, especially when there is an emergency situation. Denial of treatment is considered a breach of contract and can lead to legal disputes. Physician can’t refuse treatment because of their ethnic, racial, or religious background. It’s very important that patients review what physician their seeing ahead of time so they can make sure that their insurance is covered by that particular physician. By doing this, physician won’t have to deny that patient from being seen. Patient’s insurance can be tricky when the patient has an emergency and needs to be seen and their insurance isn’t covered. There are times where people don’t have insurance at all either. When this type of situation arises, it’s important to see the patient regardless of the insurance because if something happens to that patient and the physician failed to administer treatment, that physician will be at fault.

Patients in the US have a right to access healthcare without being discriminated against. When it is comes to accessing healthcare, patients have a variety of choices to choose from. Patients first have to decide if they would like insurance. The cost of healthcare in the US is extremely high, so using insurance seems to be the logical choice. Access to a specific provider could be more difficult. If the patient were to have no insurance, they could pretty much chose any provider that will accept them and pay for services rendered. MCO’s also have a pay per service system in which the patient can chose a provider at a higher cost. Another health plan offered by MCO’s is to use providers that are in the provider network, and depending on the size of the MCO could cause issues with using a specific provider and or finding one relative to your location.

Patients play a very important role in their legal rights in a managed care organization. The doctor is responsible for rendering medical services to the patient according to the community's standards of practice, and in turn, the patient was responsible for paying the physician's usual and customary fees (Reuters, 2018). The basic legal relationship in medicine is between the physician and the patient. There are times people have serious medical conditions and have to make drastic medical decisions abruptly. Sometimes these patients aren’t even clear on the information at hand and are very vulnerable at that present time, but a decision must be made. Health care laws allow patients the right to be in control of their care. Patients have the right to have a say of who can get a copy of their medical records with their permission. Providers are required to obtain a patient’s “informed consent” before any treatment. Patients have rights to gain a copy of their medical records and the provider is responsible for keeping them private.

The legal rights between the patient and MCO are also important. Managed care organization means any entity which contracts with the Department to provide services where payment for medical services is made on a capitated basis. This means that patients have the right to be seen for emergency services, emergency medical screening examinations, and post-stabilization medical services. A patient has a right to choose the physician they want, they can request to receive information concerning their condition, they can refuse any treatment to the extent of the law, and the privacy and confidentiality of records. When a bill is released, the patient has a right to receive an explanation of that bill. An individual can purchase any health care service they choose.

A legal recourse is an action that can be taken by an individual or a corporation to attempt to remedy a legal difficulty. A lawsuit if the issue is a matter of civil law. Contracts that require mediation or arbitration before a dispute can go to court (2018, April 10). A lawsuit if the issue is a matter of civil law. Contracts that require mediation or arbitration before a dispute can go to court. There are times patients aren’t pleased with the service/care that was provided by a particular physician. So they go making false accusations to the public to try and bring that physician down. A legal recourse can aid them in situations as such.

The cost of healthcare in the US is high. One of the largest causes of high cost is a preemptive cost increase to preparation of potential litigation. The providers insurance has to charge more because their services could be used in the event of any malpractice cases between provider and patient. In turn the patient has to pay higher cost so the provider can pay their insurance. Because the costs are so high for the patient, they have to obtain insurance for them to get medical treatment at a more reasonable cost. The recommendation of this paper would be to set regulation on litigation in the US in medical malpractice cases. The government could regulate the max financial penalty awarded in the case to ease the burden on insurance, thus allowing them to lower their cost. The trickle down of cost savings could save money for patients, providers, and insurance companies a like. The regulations could go a step further by regulating max cost of procedures and medication as well. Furthermore the government needs to keep a close eye on the power of MCO’s so that they are not able to strong-arm the providers into contracts that unfairly lean in one direction.

The implementation of new regulation in the MCO marketplace would take time and a commitment from congress to bypass the big lobby donors of the MCO’s. The process would have to start with real public discussion on how MCO’s can control the marketplace reducing the competition. The discussion would make congress aware to and thus put more pressure on MCO’s with regulatory agencies already in place. The hands of the regulatory agencies will be tied up in court trying to enforce policy to these large organizations. Because of the legal challenges with taking on large conglomerates, congress will have to make laws protecting arbitration, and one-sided contracting without proper representation.

Healthcare in the US has too much money involved to keep the corporate greed away from taking advantage of legal loopholes. Companies will not negotiate a contract that does them a disservice making it even harder for them to come to an equal agreement. The regulation of how these contracts are set and put in place will do wonders for a fairly young industry to have equal growth and success. Healthcare in the US has forced the government to step in and look after patients and soon if nothing is done about these contracts, it will have to step in and ensure the providers have rights as well.

Healthcare is an industry that is susceptible to fraud; do to the dependent natured relationship between provider and patient. MCO’s contracts between providers and organizations ensure that all parties involved do the necessary requirements to treat a patient. The contracts between MCO and providers tend to lean in favor of the organization. The MCO has more power to demand certain things from the provider, because they have the patient pool that allows the money to flow into the providers. The providers do have rights, but they limit those rights when they sign away key provisions in the contracts. The patients themselves have rights as well, and thru more regulation could have more rights when it comes to litigation with MCO’s and providers.