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As health care costs and tension between doctors and insurance companies continue to increase, attorneys who represent physicians must be aware of the practice of economic credentialing: the use of economic criteria, unrelated to quality of care or professional competence, to determine a physician’s qualifications for initial or continued participation as a provider in an insurer’s network. Because of the size of health-care expenditures in the United States, it should come as no surprise that payors monitor physicians using economic criteria, particularly in such areas as the amount of time physicians spend with patients, the referral patterns to specialists, and the cost of tests/treatments physicians provide or recommend. With that information, the payors then decide whether that physician should remain in the network. Insurance companies perform this economic credentialing of physicians ostensibly to find physicians who will practice cost-effective medicine. Oftentimes, however, they use it to discipline or terminate physicians who do not meet the insurers’ unsubstantiated financial standards. Despite the impact of this financial issue on doctors, usually no one tells patients that insurers use the threat of termination to coerce physicians into certain behaviors, such as foregoing certain diagnostic tests. Even if an insurance plan does not terminate a physician, that doctor’s lawyer should be aware that insurers are developing tiered networks for participation. For example, one major national carrier has developed a multispecialty network that recognizes and rewards physicians who perform well against both a number of clinical and cost measures. At first blush, lawyers who represent physicians might believe that Texas law protects their clients who face economic credentialing by payors. Article 3.70-3C, subsection 3(h) of the Texas Insurance Code requires insurers to make a health-care provider’s economic profile and its own critieria available upon request and requires adjusting the profile for practice characteristics that may account for cost variations. But, in reality, the statute offers little protection: Neither Texas law nor any payor contract requires that a review committee have power to overturn the payor’s decision to terminate the physician for economic reasons. Also, the statute only covers preferred provider plans, not HMOs. The act only requires a payor to provide written reasons for the termination and, upon request of the physician, a reasonable review mechanism that incorporates, in an advisory role only, a three-physician review panel. The statute also provides that any recommendation of the panel shall be provided to the affected physician or practitioner and that in the event of an insurer determination contrary to any recommendation of the panel, a written explanation of the insurer’s determination also shall be provided on request to the affected physician. Essentially, this means that a physician is entitled to notice of the termination and a right to provide evidence (not necessarily a hearing) to protest that termination. But, at the end of the day, the advisory panel review of any such evidence is, in fact, only advisory. And Texas law generally doesn’t provide a litigation remedy, absent antitrust or whistle-blower allegations, for example. The California Supreme Court decided Potvin v. Metropolitan Life Ins. Co. (2000), which gives physicians there a right to a hearing based on common-law fair procedure; but, with the Texas statutory procedure for appeals noted above, the case does not offer much hope for Texas physicians in the way of remedies. Additionally, insurers can take the position that they are not profiling a provider, but rather using economic data to find areas of concern and then using further information to justify termination. For example, an insurer recently wrote in a contractual appeals proceeding that I handled: This utilization data was used to identify potential areas of concern, which then were investigated in detail through review of a sampling of [Dr. _____'s] records. It was the concerns identified through this review process, and not the utilization profile itself, that resulted in [Dr. _____'s] termination. As a result, the requirements of the Texas Insurance Code Article 3.70-3C, Section 3(h) are not applicable. Even if payors take that stance, a lawyer for a physician whose participation is terminated for economic reasons should argue to the review panel that a payor failed to disclose the standards by which one provider is compared to another or that any economic profile has not been adjusted to take into account the characteristics of his or her practice. This submission by the appealing physician may lead the review panel to conclude that any attempt by it to review the matter could result in the panel’s de facto participation in an illegal decision — based on the failure of the payor to comply with the act. If a review panel concludes that economic profiling is not an objective view, but rather an attempt by insurers to limit panel participation, an appealing physician may have a chance to reverse a payor’s decision. One small bit of good news for client physicians whose participation in insurance plans is terminated for economic reasons: The insurer cannot report the doctor to the National Practitioner Data Bank because those reports only may be made if termination is for reasons of professional competence. Scott Chase, a Dallas solo, has practiced corporate and health law for almost 30 years, including stints as general counsel for two public companies. In 2002, he was among the first 28 Texas lawyers to be board certified in health law by the Texas Board of Legal Specialization.

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