State's high court rules health plans cannot negligently delegate payment responsibility November 21, 2016 Managed Care Amicus Briefs, California Supreme Court, Health Net, Legal Advocacy 0 The California Supreme Court today ruled that health plans cannot absolve themselves of the responsibility to pay claims for emergency care by noncontracted providers by negligently delegating that responsibility to a risk-bearing organization that it knows—or should have known—to be financially insolvent. "Today's ruling is a huge victory for physicians," said Francisco Silva, Senior Vice President and General Counsel for the California Medical Association (CMA). "California's high court is unequivocally telling health plans they cannot get away with this morally blameworthy behavior. They cannot irresponsibly delegate risk and leave physicians unpaid for services provided in good faith to their enrollees." CMA filed an amicus brief in this case, Centinela Freeman Emergency Medical Assocs. v. Health Net et al., on behalf of a broad coalition of out-of-network health care providers who were left unpaid for emergency medical care when La Vida Independent Practice Association (IPA) went bankrupt in 2010. The IPA, a risk-bearing organization (RBO) that provided health care coverage to hundreds of thousands of patients in Southern California, was contracted by HealthNet and six other health plans to pay insurance claims to providers. Existing law insulates health plans from payment responsibility for medical claims once they enter into a delegation arrangement with an RBO. Notwithstanding such law, the providers in Centinela sought reimbursement from the health plans on the theory that they negligently delegated to La Vida, because they continued to send patients to the IPA when they knew or should have known of its financial distress and impending insolvency. CMA's amicus briefs urged a fair and just interpretation of provisions within the Knox-Keene Act that permit health plans to delegate payment responsibility to risk-bearing organizations. CMA recognizes the viability of the delegation model and accepts that, generally, health plans are absolved of liability after they delegate to an RBO. When health plans delegate negligently, however, CMA believes they must be held accountable for their own misconduct—and the California Supreme Court agrees. "We conclude that a health care service plan may be liable to noncontracting emergency service providers for negligently delegating its financial responsibility to an IPA or other contracting medical provider group that it knew or should have known would not be able to pay for emergency service and care provided to the health plan's enrollees," the court wrote in its ruling. "We further conclude that…a health care service plan may be liable to noncontracting emergency service providers for negligently continuing or renewing a delegation contract with an IPA when it knows or should know that there can be no reasonable expectation that its delegate will be able to reimburse noncontracting emergency service providers for their covered claims." “Imposing a duty on plans to act reasonably in choosing an IPA or other RBO will promote a healthy functioning of the managed health care model endorsed by the Knox-Keene Act. Indeed, a requirement that health care service plans reasonably select financially solvent delegates will more likely result in timely processing and ultimate payment of covered emergency service claims, which will in turn support the continuing availability and provision of such emergency services.” Contact: CMA Center for Legal Affairs, (800) 786-4262 or legalinfo@cmanet.org. Comments are closed.
