'Prudent Layperson' Gets Nod from Feds; Issue May Face Challenges
Prudent Layperson’ Gets Nod from Feds; Issue May Face Challenges
New federal health legislation expected to bring big changes to emergency medicine
The federal government has cast the die on what could be a checkered future for emergency medicine under Medicare. In one highly-charged area of new policy-making alonethe much-discussed "prudent layperson standard"an apparent victory for providers could end up being snatched away by a flurry of anticipated legal challenges.
In August, Congress and the White House signed off on a wide-ranging package of new federal health legislation. Contained in the Balanced Budget Act of 1997 are new provisions that cover a variety of emergency physician concerns, including a controversial practice expense payment system and action on a key component of the physician fee schedule.
For hospitals, there are changes too. Among them, lawmakers made good on a promise to introduce a prospective payment system to the outpatient sector. Affected by the mandate will be virtually all emergency departments (EDs) and hospital-based urgent care centers (UCCs). (For a detailed explanation of these developments, see the article on page 97.)
Standard expected to improve relations with MCOs and the ED
But, in terms of intensity, it has been the government’s endorsement of a prudent layperson standard in the budget act that has captured the most attention. The government’s decision to simplify the definition of medical necessity in EDs is expected to make life a lot easier for hospitals, say providers.
"It’s an excellent decision, one that will go a long way in leveling the playing field between [emergency] physicians and the managed care industry," says Robert W. Kottman, MD, vice chairman of emergency medicine at the five-hospital Baptist Healthcare System in San Antonio, TX. Similar views are echoing throughout the emergency medical community.
Essentially, the government’s action on the standard involves the following:
• The standard applies to patients enrolled in the newly created Medicare+Choice program, which offers beneficiaries expanded options via health maintenance, preferred provider, and provider-sponsored organizations. The provision does not apply to traditional Medicare fee-for-service plans.
• Under the new law, contracting managed care organizations (MCOs) must recognize the "prudent layperson" definition of a medical emergency. This means that in most cases, Medicare health plans would be prohibited from requiring emergency physicians to call in for authorization before the patient has been screened and stabilized. But, the regulation stops short of guaranteeing payments for any service and does not authorize post-stabilization services.
• For that, the law gives the U.S. Department of Health and Human Services (HHS) an option to develop guidelines for health plans and emergency providers to cover the authorization of post-stabilization services. But, the agency is not required to do so.
• Furthermore, the provision is not likely to affect the vast number of employer-sponsored benefit plans, which are governed by the 1974 federal Employee Retirement Insurance Security Act (ERISA). Employer-sponsored plans still comprise the majority of existing health benefits.
Legal challenges to prudent layperson’ a possibility
• The provision does establish concrete definitions. An emergency medical condition, according to the law, is one that involves acute symptoms of pain and severity. Someone with "an average knowledge of health and medicine" would consider the patient seriously at risk without immediate medical attention. The provision conforms to the decade old Emergency Medical Treatment and Active Labor Act (EMTALA), which bars providers from denying treatment on the basis of a patient’s ability to pay.
• The standard also applies to Medicaid health plan and primary care case management contracts. The implications are substantial because the majority of states currently operate managed care plans under federal waivers. And Medicaid patients rank among the top two patient groups in ED visits behind private-plan patients, according to many surveys. (For a comparison of payment sources, see the chart above.)
• For Medicaid, the provision goes into effect beginning this month. The Medicare+Choice program will be effective on June 1, 1998. By then, HHS is required to publish notification in the Federal Register outlining details of the Medicare+Choice program.
While the industry has fought long and hard for a prudent layperson standard, some in the insurance industry aren’t so sure of a clear victory. "There will be lawsuits [from both sides] over this," predicts Heidi Wagner Hayduk, JD, of McLean, VA, an analyst who advises the insurance industry on Medicare policy.
"For one thing, how do you address the potential for some patients to abuse the system? And how do you arbitrate payment denials using a layperson’s standard?" Hayduk says.
Physicians counter that the law at least takes key medical decisions out of the hands of insurers, which has been the standard’s primary goal. It also reduces the risk that patients will be stuck with a large bill, physicians say.
"If there are lawsuits over this, okaybring them on," says Todd Taylor, MD, an emergency physician with Good Samaritan Regional Medical Center in Phoenix, AZ.
For the most part, the medical community is taking a "watch-and-wait" stance on the matter. Some 18 states have already passed local prudent-layperson legislation, including California, Arizona, and Texas. Hospitals are therefore not likely to be unprepared for the federal mandate, Taylor says.
In fact, observers anticipate that similar mandates involving most private health plans could soon be on the way. "The legalities may be questioned, but as a practical matter the standard will trickle down to the commercial side sooner or later," Hayduk says.
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