Public Health Law Map - Beta 5 - Medical and Public Health Law Site

locations, or by not following the letter of the law as regards the documentation
required for proper supervision, the NPP will be engaged in the unauthorized practice
of medicine. The medical director with the responsibility for supervising the medical
personnel could then be charged with the crime of aiding in the unauthorized practice
of medicine, or could lose his or her license to practice medicine in the state. Given
the unpopularity of MCOs in many communities, it is not unreasonable to expect that
a prosecutor would find such a prosecution politically attractive, especially if there
were a well-publicized death or injury at the plan due to improper supervision,
perhaps of a triage nurse.
As discussed earlier in this section, most states criminalize the bribery of physicians
as a breach of the physician’s fiduciary duty. A medical director engaged in any
patient care–related decision making that violates those laws could be prosecuted
under these laws, as could the plan administrators who set up the improper
incentives. Since ERISA does not preempt state criminal law proceedings, this could
be another attractive avenue for a prosecutor or medical licensing board attempting
to meet a public call for action against overreaching MCOs.
H. Business Risks in Dealing with MCOS
MCOs pose many new business risks that most physicians are unaware of. Those who
appreciate the risks generally do not have the tools to evaluate them. Physician
contracts with MCOs, which frequently contain indemnification and capitation
agreements, can make individual physicians liable for the managed care organization’s
medical malpractice costs and other litigation or regulatory risks.
1. Deselection from the MCO
An MCO’s ultimate threat to a physician is deselection—being bounced from the
plan. Legally, deselection is no different from being denied medical staff privileges
at a hospital. The difference is the economic incentive. Traditionally, hospitals
benefited from additional staff members. Each physician was a potential source of
admissions to the hospital. Most of the cases involving improper termination of
medical staff privileges arose from a group of physician competitors who captured
the hospital’s medical staff credentialing process. [Patrick.] While hospitals might
deselect physicians to maintain the quality of medical care, they had no incentive to
reduce their physician staff. [Bryan v. James E. Holmes Reg’l Med. Ctr., 33 F.3d
1318 (11th Cir. 1994).]
In MCOs that employ physicians, each additional physician over the minimum
needed to do the work is just more overhead. Even in MCOs that contract with
individual physicians and pay only for services provided, additional physicians raise
the overhead because they require additional case managers to oversee them.
MCOs are in a stronger bargaining position than physicians because the United
States has an excess of physicians. Many specialties have more practitioners than can
keep busy doing only specialty practice. Nongovernmental MCOs have only
423