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XIV. Peer Review and Deselection
HIGHLIGHTS
Introduction
Peer review is governed by state and federal law.
Federal law provides protections for peer reviewers if the process meets federal
standards.
Improper peer review can result in civil and criminal liability.
Adverse peer review decisions must be reported to the National Practitioner Data
Bank.
Physicians have few rights in managed care deselection procedures.
In the 1980s, peer review of physicians for hospital medical staff privileges was the
central legal battle ground for professional review. Physicians who were denied
privileges or removed from hospital medical staffs sued, claiming unfair or illegal
treatment. Physicians who conducted the reviews demanded legal protection because of
the potential liability and costs associated with defending an action brought by a
physician denied privileges. The federal government responded with sweeping immunity
from damages in peer review–related lawsuits, effectively limiting the legal review of
these decisions, if the peer review committee complied with the due process standards of
the federal law. This has made peer review for hospital privileges less important as a
legal issue, just as deselection by managed care organizations (MCOs) rises in
importance.
Deselection is the process by which an MCO terminates a physician’s contract to provide
services. The term deselection is used, rather than peer review, because deselection is
usually done for reasons that do not implicate preserving or improving the quality of
medical care. This section reviews the law on traditional peer review, then discusses
deselection and the laws that are applicable to deselection decisions.
A. Peer Review
Hospitals conduct peer review to determine if a physician may be admitted to or can
stay on the medical staff. MCOs conduct peer review, as opposed to deselection, when
they hire a physician or terminate a physician because of problems with the quality of
care the physician provides. These reviews share many characteristics of hospital
privileges reviews. The hospital medical staff model for peer review is the best starting
point for understanding the laws governing peer review.
The law grants the professions remarkable latitude in disciplining their own, a practice
rooted in a historical context that is very different from current practice. This discretion
was often abused. Historically, it was acceptable to discriminate against practitioners
for racial, cultural, ethnic, gender, and anticompetitive reasons. The essence of peer
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