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This article by Barbara Fox was prepared for the November 20, 2002 edition of U.S. 1 Newspaper. All rights reserved.

Advice to Doctors

If you are a doctor — a general practitioner or

a primary care physician — and your failure to refer a patient

to a specialist results in that patient getting sicker or dying, you

can be sued — even though the HMO you work for might have discouraged

the referral. If you do refer the patient, you may have to pay for

it yourself.

Physicians can protect themselves against any potential future claims

by not allowing personal or financial interests to compromise their

sound medical judgment when making referrals and using hospital services

(U.S. 1, March 24, 1999).

Most often, these controversies result from HMO payment policies.

Most of them pay doctors a set amount per member patient per month,

no matter what services a patient might need. This is called a "capitation"

plan, and the HMO sets targets for everything from number of hospital

visits to number of prescriptions per member each month. For instance

an HMO may allocate $4.58 in radiology expenses per member each month,

or $18.01 for specialist care.

Meanwhile the HMO may withhold 20 to 30 percent of the payments and

put them in a kind of escrow, a Performance Risk Pool. At the end

of the year, if a doctor has had more than the allowed number of referrals

or hospital visits, the HMO keeps some or all of the money in the

risk pool, and if the risk pool is depleted, the HMO may even bill

the doctor for the extra.

Although it is in a physician’s financial interest to limit referrals

and treatments, if money clouds the doctor’s medical judgment, the

physician could end up in court. An example of insufficient treatment:

a man showed tell tale signs of stroke. Instead of being admitted

to the hospital for a full neurological evaluation, he was given an

outpatient CAT scan and sent home with aspirin. He died eight hours


Under state statute an HMO is prohibited from using financial incentives

to induce a health care provider to withhold covered health services

that are medically necessary. But there will be instances where your

medical decision will have an economic effect on your practice. Do

not allow economics to influence your medical judgment in any way.

Check your contract. If you are paid a "capitated"

amount, you want to know not only what percentage is withheld, but,

also, the number of other physicians included in the risk pool, and

how often the risk pools are reviewed and paid out.

Make sure stop-loss protection or reinsurance is included

in your contract. A stop-loss fund will pay for unexpectedly high

medical costs for a certain patient, so that the expenses will not

be deducted from your pool after they reach a certain amount.

Be aware of the exact language of the contract about what

services or medical treatment you must provide, and whether there

are any "carve-outs" or set fees for such services as immunizations.

Don’t assume that your patient will get adequate care

from network specialists. Find out who pays for out-of-plan services.

If needed, make the out-of-plan referral, even if you will be penalized


Always tell your patient all available treatment options,

regardless of whether that type of treatment is available under the

terms of the HMO plan. Now HMOs — attempting to protect themselves

against medical malpractice suits — often use broad contract language

stating that nothing constrains the provider’s ability to make needed


Keep a record. Write down immediately in medical records

— or dictate into a recorder while the patient is sitting there

— your suggestion that the patient undergo a certain diagnostic

test or seek treatment from a specialist, even if outside the network.

If the patient declines an option, note audibly that the patient was

advised of a recommended treatment and has declined. If there is a

lawsuit, and your recommended course of treatment is noted in your

medical records, that would be considered by the court.

Exercise your right to appeal a utilization review decision

that is adverse to the health and wellbeing of your patient. Your

patient can appeal, but you as the doctor (with the patient’s consent)

can do it too. Most appeals deal with denial of hospital days, surgical

procedures, equipment, or skilled nursing care.

Though there is no law that the doctor must appeal an adverse HMO

decision, the duty to appeal is implied by the law protecting the

doctor from the consequences of appealing.

Take time to get a thorough medical history of your patient.

Your malpractice lawyer will find it more difficult to defend you

if you were not aware of your patient’s disease or condition.

No matter what the legal system does, it pays to be nice. A

good relationship with your patient is one of the best ways to avoid

malpractice suits.

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