A denial of insurance coverage for a given service may make the service unaffordable to the plan member.
If individuals forego necessary treatment or are otherwise harmed by a negligent utilization review decision, the courts may seek to make the decision-maker liable. Sometimes, courts have held either that ERISA preempts claims regarding utilization review decisions, or permit medical malpractice actions against health plan administrators under various legal threories such as agency or vicarious liability. At other times, state medical licensing boards increasingly seek to discipline health plan medical directors for such decisions.
One should also keep in mind the decision in Varol v BCBS Michigan, where the courts found the physician ethically, and legally liable for not doing what the patient needed and then pleading that the plan restricted him from doing what was, in his professional opinion, medically necessary. The treating physician is usually the ultimate decision-maker regarding what the patient needs, and if the patient decides against medical advice to take a different course of action, it should be noted in the same fashion as any other decision that is made against the professional medical advice of the treating physician. Failure to document is as if the counseling and informed consent to do otherwise had never happened. For questions, ask your professional liability carrier how you should document these instances.
About the Author: 
Maria K Todd, MHA, PhD is known around the world for her expertise and generosity in sharing ideas, techniques and practical tools with her colleagues in the industry. She is a leading health care industry consultant and described by clients and peers as a visionary and thought leader. Statistically, she is the leading trainer in managed care contracting worldwide. Since 1989, she has lectured professionally through colleges, universities, seminar companies, publishers and non-profit professional associations as well as on-site private training classes for hospitals, medical groups, offshore revenue cycle business process organizations and pharmaceutical and medical device manufacturers. In total she has delivered more than 2600 managed care training classes and seminars to over 53,000 attendees and participants. Every month the number grows higher and higher!
Conflict Disclosure: The author is a professional consultant and derives a substantial percentage of her income reviewing managed care agreements and advising hospitals, physicians and others on matters regarding managed care and contracted reimbursement. The author previously worked for a Health Plan in provider relations as a contract negotiator. The author has no other conflicts to declare. This disclosure accurate as of November 5, 2008.
Notice: Please remember that the opinions, and information contained in this document is that of the individual author. These materials (1) do not constitute legal advice; (2) do not form the basis for the creation of any relationship; and (3) should not be relied upon without seeking specific legal advice with respect to the particular facts and current state of the law applicable to any situation requiring legal advice. These materials may only be reproduced with the prior written consent of Maria Todd. These materials are provided with the understanding that the author is not rendering legal, accounting, or other professional advice or opinions on specific facts or matters, and, accordingly, such entities assume no liability whatsoever in connection with their use.
You can learn more about managed care contracting in Maria's latest book,The Managed Care Contracting Handbook, 2nd Edition (2009)
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