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

admit them, MCOs compete for patients directly by convincing employers to lock
their employees into the MCOs plan. The MCO controls directly who can treat the
patients and what can be done to them. The MCO needs some physicians to care for
the patients, and many MCOs have obtained these physicians by buying their
practices. Since MCOs reduce the care that patients receive, an MCO-dominated
community needs relatively fewer physicians than it did when the patients had
traditional health insurance. This ensures a surplus of physicians and limits the
physicians’ bargaining power. The objective of the MCO is to reduce the number of
physicians to the minimum necessary to care for the patients, and to ensure that the
physicians it retains deliver the most cost-effective/cheap care. [Blum JD. The
evolution of physician credentialing into managed care selective contracting. Am J
Law Med. 1996;22:173–203.]
The strategy is simple: hire or contract with more physicians than you need, then do
not renew the contracts of the ones that spend the most resources on patient care. As
long as the MCO–physician contracts are terminable at will, the physicians have no
recourse. Any physicians who resist cost-cutting strategies that they believe
compromise patient care are dropped from the plan. Their only protections are state
laws such as the “any willing provider” law that forces MCOs to deal with all
physicians in the community.
2. Due Process and HCQIA
Some physicians have sued plans for deselection, claiming their due process rights
were denied because they were not given the same procedure as would be applicable
in medical staff peer review proceedings. These cases failed because
nongovernmental hospitals do not have to provide due process as a matter of right.
They are only required to provide whatever due process they contract for in their
medical staff bylaws. Hospitals provide extensive due process because they want to
be able to claim immunity under HCQIA. MCOs, as insurers, are not subject to
antitrust lawsuits, and are much harder to attack under the other theories used to
attack peer review determinations. This means that they do not need the immunity
provided by HCQIA so they have no need to provide the due process necessary to
qualify for its protections. The courts also rejected claims that HCQIA itself created a
cause of action for physicians denied due process, holding that it has no purpose
beyond providing immunity for properly conducting peer review.
3. Public Policy Claims
Most states have some kind of doctrine to prevent employers from firing employees
or terminating contractors when doing so would violate public policy. This includes
any firings that would violate other statutes, such as the civil rights laws. It also
includes situations where the employee was fired for trying to prevent the employer
from breaking the law or endangering the public health. The protections are generally
very limited and few employees can establish the facts necessary to use them. Some
physicians have used this doctrine to attack deselection that is based on refusing to
455