MANAGED CARE March 1998. ©1998 Stezzi Communications

Arizona's highest court has ruled that utilization review decisions by health plan medical directors are medical — not insurance-- decisions and are subject to sanctions by the Board of Medical Examiners.The state Supreme Court upheld without comment a ruling last July by the Arizona Court of Appeals. Writing for the court, Judge Michael D. Ryan said that while John Murphy, M.D., medical director of Blue Cross and Blue Shield of Arizona, wasn't engaged in traditional medical practice, he still renders medical decisions. "Dr. Murphy is not a provider of insurance," Ryan wrote.

"Instead, Dr. Murphy is an employee who makes medical decisions for his employer on whether surgeries or other nonexperimental procedures are medically necessary. Such decisions are not insurance decisions but rather medical decisions."

The court decision is rooted in the care of an unnamed Arizona Blue Cross beneficiary in 1992. The patient asked Blue Cross to precertify gall bladder surgery her physician had requested. Murphy refused, saying the surgery wasn't medically necessary. The patient's surgeon, David C. Johnson, M.D., protested, and Murphy offered to forward the matter to a third party for review at Blue Cross's expense.

However, Johnson and the patient refused and the operation was performed. Blue Cross eventually paid for the operation after post-surgical pathology reports indicated the gall bladder should have been removed. The patient complained to the Arizona Department of Insurance but was rebuffed because Murphy didn't violate state insurance laws. Johnson then asked the Board of Medical Examiners to investigate what he called Murphy's unprofessional conduct and medical incompetence, say court documents.

The medical board sent Murphy a "letter of concern" in 1994. Murphy sued the board, saying the medical examiners had no authority to punish him for insurance decisions. The appellate court ruled the director practiced medicine in denying the coverage, and became subject to the medical board's jurisdiction when he substituted his medical judgment for the judgments of the patient's physicians.

The American Association of Health Plans and the Health Insurance Association of America filed a joint friend-of-the-court brief with the Supreme Court in support of the Blues. The trade groups said that medical directors are "agents of the companies that hire them," and suggested that if medical boards interfere in the precertification process, health plans will stop precertifying procedures, leaving patients in the dark about whether a procedure will be covered until after the fact.

While the decision does not bind courts outside of Arizona, it gives medical boards nationwide "greater comfort'' in punishing health plan medical directors, said James R. Winn, M.D., executive vice president of the Federation of State Medical Boards of the United States Inc. in Euless, Texas.

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.