Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-28T05:14:17.022Z Has data issue: false hasContentIssue false
  • English
  • Français

Procedural Protections for Patients in Capitated Health Plans

Published online by Cambridge University Press:  24 February 2021

Eleanor D. Kinney
Eleanor D. Kinney*
Affiliation:
The Center for Law and Health, Indiana University School of Law—Indianapolis, Duke University, Duke University, University of North Carolina at Chapel Hill
Get access Rights & Permissions [Opens in a new window]

Extract

In the American health care system, payers are rapidly moving toward the use of capitation as the preferred method for paying for health care services for sponsored patients. n capitation, the payer pays a provider organization a set rate per patient to care for a group of patients. The provider organization assumes the risk of the actual costs of caring for these covered lives. The theory of capitation is that providers, by assuming risk, will have incentives to contain their costs.

The provider entity that provides the care can take many corporate forms. A capitated provider can be a small group of physicians with admitting privileges at a single hospital or a complex integrated delivery network comprised of hospitals, physicians, and other health care professionals and institutions with integrated case management and data systems. Currently such integrated delivery networks assume a variety of organizational forms, ranging from traditional staff model health maintenance organizations (HMOs) in which physicians are employees of the health plan to physician hospital organizations (PHOs) in which physicians and hospitals join together for purposes of contracting with payers. Hospitals and physicians belonging to their medical staffs are motivated to form integrated delivery networks or other consolidated business organizations in order to contract with payers that seek providers willing to accept financial risk for the care of sponsored patients. Providers join such arrangements out of fear of losing patients if they do not.

Type
Articles
Information
American Journal of Law & Medicine , Volume 22 , Issue 2-3: Health Care Capitated Payment Systems , 1996 , pp. 301 - 330
Copyright
Copyright © American Society of Law, Medicine and Ethics and Boston University 1996

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 See Burns, Lawton R. & Thorpe, Darrell P. Trends and Models in Physician-Hospital Organization, Health Care Mgmt. Rev., Fall 1993, at 7, 9Google ScholarPubMed; Hitchner, Carl E. et al., Integrated Delivery Systems: A Survey of Organizational Models, 29 Wake Forest L. Rev. 273, 274 (1994)Google Scholar.

2 Hitchner et al., supra note 1, at 273.

3 See A Health Care Quality Improvement System for Medicaid Managed Care—A Guide for States, 767 Medicare & Medicaid Guide (CCH) ¶ 41,669, at 37,136 (July 6, 1993)Google Scholar. See infra notes 37-40 and accompanying text.

4 H.R. 3600, 103d Cong., 1st Sess. (1993).

5 See H.R. 2524, 104th Cong., 1st Sess. (1995).

6 Office of the President, President’s Medicare Proposal Draft 17 (1995) (unpublished, on file with author).

7 See infra notes 49-50 and accompanying text.

8 HMO Survey Shows Falling Rates in 1995: Length of Stay, Costs Also Decline, 2 Capitation & Risk Cont., Dec. 1995, at 4-5Google Scholar.

9 Levit, Katharine R. et al., National Health Expenditures, 1993, Health Care Fin. Rev., Fall 1994, at 247, 247Google ScholarPubMed.

10 See, e.g., The Economics of Nonprofit Institutions: Studies in Structure and Policy 4-12 (Susan Rose-Ackerman ed., 1986); Yoder, Sunny G., Economic Theories of For-Profit and Not-for-Profit Organizations, in For-Profit Enterprise in Health Care 19, 19 (Gray, Bradford H. ed., 1986)Google Scholar.

11 Social Security Amendments of 1965, Pub. L. No. 89-97, 79 Stat. 286 (codified as amended at 42 U.S.C. §§ 1395-1395ccc (Medicare) and §§ 1396-1396u (Medicaid) (1994)).

12 For reviews of the early history of federal health insurance programs and the efforts of federal policy makers to minimize the disruptive effect of these programs in the private health care system, see generally Feder, Judith M., Medicare: The Politics of Federal Hospital Insurance (1977)Google Scholar; Law, Sylvia A., Blue Cross: What Went Wrong? (1974)Google Scholar; Somers, Herman M. & Somers, Anne R., Medicare and The Hospitals: Issues and Prospects (1967)Google Scholar.

13 See Bovbjerg, Randall R. et al., U.S. Health Care Coverage and Costs: Historical Development and Choices for the 1990s, 21 J.L. Med. & Ethics 141, 151 (1993)CrossRefGoogle ScholarPubMed (citing U.S. Dep't of Commerce data).

14 Levit et al., supra note 9, at 248 (Figure 1).

15 Pub. L. No. 93-406, 88 Stat. 829 (1974) (codified as amended at 29 U.S.C. §§ 1101-1461 (1994)).

16 Bovbjerg et al., supra note 13, at 148 (Table 3).

17 See Fox, Daniel M. & Schaffer, Daniel C., Health Policy and ERISA: Interest Groups and Semipreemption, 14 J. Health Pol. Pol'y & L. 239 (1989)CrossRefGoogle ScholarPubMed.

18 29 U.S.C. § 1144(1994).

19 Id. § 1144(b)(2)(A), (c)(2).

20 See Jensen, Gail A. & Gabel, Jon R., The Erosion of Purchased Health Insurance, 25 INQUIRY 328, 328-29 (1988)Google ScholarPubMed (addressing market effects). See generally Bobinski, Mary Anne, Unhealthy Federalism: Barriers to Increasing Health Care Access for the Uninsured, 24 U.C. Davis L. Rev. 255, 296-97 (1990Google Scholar) (discussing generally the dislocation in the health insurance market that ERISA causes).

21 See Mathews v. Eldridge, 424 U.S. 319, 339-49 (1976) (establishing analysis for procedural due process requirements); Goldberg v. Kelly, 397 U.S. 254, 267 (1970) (ruling that welfare benefits constitute a protected interest); Shapiro v. Thompson, 394 U.S. 618, 627 (1969) (beneficiaries have an entitlement interest in government programs).

22 See supra note 21. For discussions of general theoretical issues related to procedural due process protections in the formative years of due process jurisprudence, see generally Friendly, Henry, Some Kind of Hearing, 123 U. Pa. L. Rev. 1267 (1975)CrossRefGoogle Scholar; Tribe, Lawrence, Structural Due Process, 10 Harv. C.R.-C.L. L. Rev. 269 (1975)Google Scholar; Van Alstyne, William, Cracks in the “New Property”: Adjudicative Due Process in the Administrative State, 62 Cornell L. Rev. 445 (1976)Google Scholar.

23 See infra notes 184-87 and accompanying text.

24 See infra notes 120-30 and accompanying text.

25 See, e.g., O'Bannon v. Town Court Nursing Ctr., 447 U.S. 773, 778 (1980) (denying the nursing home a derivative right to a pre-decertification hearing based on the rights of the residents to receive Medicare benefits); see also St. Francis Hosp. Ctr. v. Heckler, 714 F.2d 872 (7th Cir. 1983), cert. denied, 465 U.S. 1022 (1984); Geriatrics, Inc. v. Harris, 640 F.2d 262 (10th Cir.), cert. denied, 454 U.S. 832 (1981).

26 See Kinney, Eleanor D., The Medicare Appeals System for Coverage and Payment Disputes: Achieving Fairness in a Time of Constraint, 1 Admin. L.J. 1, 82-84 (1986Google Scholar) [hereinafter Kinney, The Medicare Appeals System]; Kinney, Eleanor D., Rule and Policy Making for the Medicaid Program: A Challenge to Federalism, 51 Ohio St. L.J. 855Google Scholar, 885-97 n.77 (cases dealing with the availability of judicial review) & n.173 (cases dealing with the notice requirement of a hearing required by 42 U.S.C. § 1369(a)(3) & 42 C.F.R. § 431.205(1990)).

27 See Bi-Metallic Investment Co. v. Colorado, 239 U.S. 441, 441 (1915), followed in United States v. Florida East Coast Railway, 410 U.S. 224, 245-46 (1973); Alaska Airlines v. CAB, 545 F.2d 194, 200-01 (D.C. Cir. 1976).

28 WILLIAM T. MAYTON & ALFRED C. AMAN, JR., Administrative Law § 7.1 (1993); Bernard Schwartz, Administrative Law §§ 5.6-5.7 (3d ed. 1991).

29 5 U.S.C. §551(4) (1988).

30 See Greenfield, Sheldon et al., Variations in Resource Utilization Among Medical Specialties and Systems of Care: Results from the Medical Outcomes Study, 267 Jama 1624 (1992)CrossRefGoogle ScholarPubMed; Miller, Robert H. & Luft, Harold S., Managed Care Plan Performance Since 1980: A Literature Review, 271 Jama 1512, 1513 (1994)CrossRefGoogle Scholar.

31 Federal HMO Act of 1973, Pub, L. No. 93-222, 87 Stat. 914 (codified as amended at 42 U.S.C. §§ 300e to 300e-l (1994)).

32 I.R.C. § 162(n) (1994) (tax benefits of using federally qualified HMOs).

33 HMO Amendments of 1988, Pub. L. No. 100-517, §§ 4(b), 7(a)(1)-(2), 7(b), 102 Stat. 2578, 2580 (codified as amended at 42 U.S.C.A. 300e-9 (West Supp. 1995)); see Federal HMO Qualification Requirements, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) ¶ 1000, at 1000:1 (June 1994).

34 See Enthoven, Alain C., The History and Principles of Managed Competition, Health Aff., 1993 Supp., at 24, 25CrossRefGoogle ScholarPubMed.

35 See Enthoven, Alain C., Health Plan: The Only Practical Solution to The Soaring Costs of Medical Care 110-13 (1980)Google Scholar; Havighurst, Clark C., Deregulating The Health Care Industry (1982)Google Scholar; National Health Insurance: What Now, What Later, What Never? (Mark V. Pauly ed., 1980).

36 See supra note 35 and accompanying text.

37 Omnibus Budget Reconciliation Act of 1981, Pub. L. No. 97-35, § 2175, 95 Stat. 357, 809 (codified as amended at 42 U.S.C. § 1396n (1994)).

38 Iglehart, John K., Medicaid and Managed Care, 332 New Eng. J. Med. 1727, 1727 (1995)CrossRefGoogle ScholarPubMed.

39 Overview to Federal Health Care Contracting Requirements, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) 1200, at 1200:3 (Nov. 1995).

40 Id.

41 Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, § 114, 96 Stat. 324, 341 (1982) (codified as amended in 42 U.S.C. §§ 1395l, 1395mm (1994)); see Iglehart, John K., Medicare Turns to HMOs, 312 New Eng. J. Med. 132, 133 (1985)CrossRefGoogle ScholarPubMed.

42 42 U.S.C. §§ 1395l, 1395mm (1994); see Overview to Federal Health Care Contracting Requirements, supra note 39, at 1200:3.

43 See Minority Staff of Senate Special Comm. on Aging, 100th Cong., 1st Sess., Medicare and HMOs: A First Look, With Disturbing Findings (Comm. Print 1987); General Accounting Office, Medicare: Physician Incentive Payments By Prepaid Health Plans Could Lower Quality of Care, GAO/HRD-89-29, at 10-11 (Dec. 1988); cf. Retchin, Sheldon M. et al., How the Elderly Fare in HMOs: Outcomes from the Medicare Competition Demonstrations, 27 Health Serv. Res. 651, 665 (1992)Google ScholarPubMed.

44 Pear, Robert, Medicare to Stop Pushing Patients to Enter H.M.O.’s, N.Y. Times, Dec. 27, 1993, at A1.Google Scholar

45 Office of Research & Demonstrations, Health Care Fin. Admin., Dep't of Health & Human Servs., Medicare & Medicaid Statistical Supplement, Health Care Fin. Rev. 24 (1995).

46 See Enthoven, supra note 34, at 45-46.

47 See generally H.R. 3600, supra note 4.

48 Id. §1351.

49 See supra note 43 and accompanying text.

50 As of December 1995, about 250 managed care organizations had contracted with the Medicare program on a risk, prepayment, or demonstration model—a 40% increase from 1994. Freeman, Beth, The Financial and Operational Mechanics of Medicare Risk Contracting, 2 Capitation & Risk Cont., Nov. 1995, at 1Google Scholar, 1.

51 See generally Rodwin, Marc A., Consumer Protection and Managed Care: Issues, Reform Proposals, and Trade-Offs, 32 Hous. L. Rev. 1319 (1996)Google Scholar (excellent review of regulatory regimes for health plans in United States).

52 Provider Service Networks: States Grapple with New Regulatory Challenges, State Initiatives in Health Reform, Nov.-Dec. 1995, at 1Google Scholar, 15.

53 See infra notes 103-05 and accompanying text.

54 See infra notes 61-89 and accompanying text.

55 See infra notes 90-133 and accompanying text.

56 See infra notes 134-205 and accompanying text.

57 See infra notes 206-15 and accompanying text.

58 Keeton, Robert E. & Widiss, Alan I., Insurance Law: A Guide to Fundamental Principles, Legal Doctrines, and Commercial Practices § 6.2 (1988)Google Scholar.

59 See supra notes 18-20 and accompanying text.

60 15 U.S.C. §§ 1011-1015(1994).

61 See Abraham, Kenneth S., Insurance Law and Regulation: Cases and Materials 96 (2d ed. 1995)Google Scholar; DAY, JOHN G., Economic Regulation of Insurance in The United States 33, 51 (1970)Google Scholar; Kimball, Spencer L., The Purpose of Insurance Regulation: A Preliminary Inquiry in the Theory of Insurance Law, 45 Minn. L. Rev. 471, 472, 482 (1961)Google Scholar.

62 See Shickich, Barbara A., Legal Characteristics of the Health Maintenance Organization, in Healthcare Facilities Law: Critical Issues for Hospitals, HMOS, and Extended Care Facilities 1051, 1071 (Dellinger, Anne M. ed., 1991)Google Scholar.

63 National Association of Insurance Commissioners, Model HMO Act, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) ¶ 3071, at 3000.101-.138 (Aug. 1995) [hereinafter NAIC, Model HMO Act]. See generally Shickich, supra note 62, at 1079 (listing applicable state statutes).

64 State requirements, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) 3000, at 3000:2 (Jan. 1996) [hereinafter State Requirements]; see Stayn, Susan J., Securing Access to Care in Health Maintenance Organizations: Toward a Uniform Model of Grievance and Appeal Procedures, 94 Colum. L. Rev. 1674, 1702-06 (1994)CrossRefGoogle Scholar.

65 NAIC, Model HMO Act, supra note 63, § 13, at 3000:114 - :117.

66 See infra notes 68-74 and accompanying text.

67 See infra notes 75-83 and accompanying text.

68 NAIC, Model HMO Act, supra note 63, § 8, at 8000: 111.

69 Id. § 10, at 3000:113.

70 Stayn, supra note 64, at 1704 & n.206.

71 NAIC, Model HMO Act, supra note 63, § 8A(3), at 3000:110 -: 111.

72 Id. §8A(2), at 3000:110.

73 National Association of Insurance Commissioners, Model HMO Act Regulations § 6, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) ¶ 3072, at 3000:164-:170 (Aug. 1995) [hereinafter NAIC, Model HMO Regulations].

74 NAIC, Model HMO Act, supra note 63, § 8B, at 3000:111.

75 Id. § 11, at 3000:113.

76 Id.

77 NAIC, Model HMO Regulations § 6K, supra note 73, at 3000:167.

78 Id.

79 Stayn, supra note 64, at 1702-03 & n.203.

80 Id. at 1703&n.204.

81 Id. at 1703&n.205.

82 For a review of tort and other theories on consumer suits against health plans, see, e.g., Bearden, Diane J. & Maedgen, Brian J., Emerging Theories of Liability in the Managed Health Care Industry, 47 Baylor L. Rev. 285 (1995)Google Scholar; Glenn, Sharon M., Tort Liability of Integrated Health Care Delivery Systems: Beyond Enterprise Liability, 29 Wake Forest L. Rev. 305, 332-37 (1994)Google Scholar; cf. Chittenden, William A. III, Malpractice Liability and Managed Health Care: History and Prognosis, 26 Tort & Ins. L.J. 451 (1991)Google Scholar.

83 NAIC, Model HMO Act, supra note 63, § 20(D)(2)(c), at 3000:123, § 25(C)(2), at 3000:126.

84 See generally Sanders, Sheva J., Regulating Managed Care Plans Under Current Law: A Radical Reversion to Established Doctrine, 20 Hofstra L. Rev. 73, 108-16 (1991)Google Scholar (noting that managed care plans are moving away “from legal and ethical norms governing the practice of medicine”).

85 State Requirements, supra note 64, at 3000:2; see also Provider Services Networks, supra note 52, at 2.

86 State requirements, supra note 64, at 3000:2; see also Provider Services Networks, supra note 52, at 2-3.

87 National Association of Insurance Commissioners, Draft Bulletin on State Regulation of Physician- Hospital Organizations and Other Risk-Bearing Provider Organizations, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) ¶ 3087, at 3000.441-.451 (Aug. 1995) [hereinafter NAIC, Draft Bulletin].

88 Id. at 3000:443 (citing Professional Lens Plan, Inc. v. Department of Ins., 387 So. 2d 548 (Fla. 1980)).

89 Provider Service Networks, supra note 52, at 4.

90 See supra note 52 and accompanying text.

91 29 U.S.C. § 1002(1) (1994).

92 See Ed Miniat, Inc. v. Globe Life Ins. Group, Inc., 805 F.2d 732, 739 (7th Cir. 1986) (When a contract grants an insurer discretionary authority, even though the contract itself is a product of arms-length bargaining, the insurer may be a fiduciary under ERISA. The insurer which issued a retirement life reserve insurance policy to corporate employers was a fiduciary of employee benefit plans.), cert. denied, 482 U.S. 915 (1987); Donovan v. Dillingham, 688 F.2d 1367, 1370 (11th Cir. 1982) (ERISA controls the trustees of a multiple-employer insurance trust which had as its stated purpose the security of group health insurance for subscribing members at a more favorable rate than that offered directly by insurers and whose members had established or maintained employee welfare benefit plans); JAIME R. EBENSTEIN & MARK E. SCHMIDTKE, ERISA Litigation Primer—1994 3-7 (1994).

93 29 U.S.C. § 1144(a), (b) (1994).

94 471 U.S. 724, 758(1985).

95 Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91 (1983); accord McCann v. H&H Music Co., 946 F.2d 401, 406 (5th Cir. 1991), cert. denied, 506 U.S. 981 (1992); see Pettit, Jeffrey R., Help! We've Fallen and We Can't Get Up: The Problems Families Face Because of Employment-Based Health Insurance, 46 Vand. L. Rev. 779, 791 (1993)Google Scholar; Widiss, Alan I. & Gostin, Larry, What’s Wrong with the ERISA ‘Vacuum’?: The Case Against Unrestricted Freedom for Employers to Terminate Employee Health Care Plans and to Decide What Coverage Is to Be Provided When Risk Retention Plans Are Established for Health Care, 41 Drake L. Rev. 635, 638 (1992)Google Scholar.

96 440 U.S. 205 (1979).

97 458 U.S. 119 (1982).

98 Id. at 129.

99 See id.; Royal Drug Co., 440 U.S. at 210.

100 Pireno, 458 U.S. at 133-34; Royal Drug Co., 440 U.S. at 231.

101 Metropolitan Life Ins. Co. v. Taylor, 471 U.S. 724, 740 (1985).

102 481 U.S. 41,57(1987).

103 29 U.S.C. § 1132(a) (1994).

104 Dedeaux, 481 U.S. at 53-54.

105 Id. at 54; accord Mass. Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985) (ruling that ERISA’s breach of fiduciary duty provision provides no express authority for the award of punitive damages).

106 115 S. Ct. 1671, 1676-83 (1995).

107 Id. at 1683.

108 National Association of Insurance Commissioners, NAIC White Paper, ERISA: A Call for Reform, Recommendations of the National Association of Insurance Commissioners 3 (1995) (unpublished, on file with author) [hereinafter NAIC, White Paper].

109 Id. at 5-7.

110 See infra notes 126-30 and accompanying text.

111 29 U.S.C. §§ 1021-1031 (1994). See generally Ebenstein & Schmidtke, supra note 92, at 29-37 (ERISA’s reporting and disclosure requirements address the perceived abuses by plans prior to ERISA’s enactment. They ensure that plan participants are apprised of their rights and are provided with benefit information).

112 Id. § 1021(a)(1).

113 Id. § 1022(a)(1).

114 Id. § 1024(b).

115 NAIC, White Paper, supra note 108, at 12-13.

116 29 U.S.C. § 1023(a) (1994).

117 Id. § 1023(b).

118 Id.

119 Id. § 1022(a)(1).

120 29 C.F.R. § 2560.503-1 (1994).

121 29 U.S.C. § 1133 (1994); see Pilot Life Ins. v. Dedeaux, 481 U.S. 41, 53 (1987).

122 29 C.F.R. § 2560.503-l(b)-(c) (1994). See generally Ebenstein & Schmidtke, supra note 92, at 33-34 (A period beyond 90 days after the receipt of claims by the plan is deemed unreasonable unless special circumstances require an extension. In no event may the extension exceed 180 days from receipt of a claim).

123 29 C.F.R. § 2560.503-l(g) (1994).

124 See infra note 135 and accompanying text.

125 29 C.F.R. § 2560.503-1(j) (1994).

126 NAIC, White Paper, supra note 108, at 9.

127 Id.

128 Id.

129 Id. at 9-10 (quoting Pension and Welfare Benefits Admin., U.S. Dep't of Labor, Task Force on Assistance to The Public 1-2 (1992)).

130 NAIC, White Paper, supra note 108, at 10.

131 ERISA § 501 authorizes criminal penalties for violations of its reporting and disclosure provisions. 29 U.S.C. § 1131 (1994).

132 Id. § 1132(a); see Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989) (ruling that federal district courts review plan denials under § 503 using a de novo rather than arbitrary and capricious standard of review). See generally Ebenstein & Schmidtke, supra note 92, at 39-46 (discussing the causes of action and remedies of ERISA’s civil enforcement scheme).

133 29 U.S.C.§ 1133(1994).

134 See generally Kinney, Eleanor D., Private Accreditation as a Substitute for Direct Government Regulation in Public Health Insurance Programs: When is it Appropriate?, 57 Law & Contemp. Probs. 47 (1994)CrossRefGoogle ScholarPubMed (describing the general regulation of health care organizations participating in the Medicare and Medicaid programs).

135 See infra note 152 and accompanying text. See generally Shickich, supra note 62, at 1098.

136 42 U.S.C. § 300e-10 (1994).

137 Id. § 300e-(9)(a) (1994).

138 See infra notes 160-63 and accompanying text.

139 42 U.S.C. § 300e(b) (1994); 42 C.F.R. § 417.104(3) (1995).

140 42 C.F.R. § 417.104(c) (1995).

141 Id. §§417.124, .126, .155.

142 See supra notes 68-74 and accompanying text.

143 See infra notes 151-56, 189-94 and accompanying text.

144 42 U.S.C. § 300e(c)(5) (1994); 42 C.F.R. §§ 417.142(a), .143(b)(2) (1995); see Stayn, supra note 64, at 1702.

145 42 U.S.C. § 300e(c)(5) (1994).

146 42 C.F.R. § 417.124(g) (1995).

147 Id.

148 Stayn, supra note 64, at 1702.

149 See supra note 58 and accompanying text.

150 See supra note 59 and accompanying text.

151 See Kinney, Eleanor D., Medicare Managed Care from the Beneficiary’s Perspective, 24 Seton Hall L. Rev. 101 (1996)Google Scholar [hereinafter Kinney, Medicare Managed Care] (reviewing the history of the Medicare HMO program).

152 42 U.S.C. § 1395mm (1994); 42 C.F.R. §§ 417.400-.418 (1995).

153 42 U.S.C. § 1395mm(f)-(g) (1994).

154 Id. § 1395mm(b)(2).

155 Id. §§ 1320c-l to -12. See generally Jost, Timothy S., Administfative Law Issues Involving the Medicare Utilization and Quality Control Peer Review Organizations (PRO) Program: Analysis and Recommendations, 50 Ohio St. L.J. 1 (1989)Google Scholar (discussing the Medicare Utilization Review and Peer Review programs).

156 U.S. General Accounting Office, Medicare: PRO Review Does Not Assure Quality of Care Provided By Risk HMOS, GAO/HRD-91-48, at 17-29 (March 1991).

157 See Kinney, Medicaid Managed Care, supra note 151.

158 Stayn, supra note 64, at 1687 (citing LOUIS W. SULLIVAN, Department of Health and Human Services, Disenrollment Experience in The Medicare HMO and CMP Risk Program: 1985 to 1988 Final Report, at ii, 43 (1990)); see also Retchin et al., supra note 43, at 662.

159 Pear, supra note 44.

160 See supra note 41 and accompanying text.

161 Freeman, Beth, The Financial and Operational Mechanics of Medicare Risk Contracting, Capitation & Risk Cont., Dec. 1995, at 1Google Scholar, 1.

162 See 42 C.F.R. § 417.584(a) (1994).

163 See id. § 417.401; Stayn, supra note 64, at 1685.

164 42 U.S.C. § 1395mm(a)(1)(C) (1994).

165 Id. § 1395mm(a)(1)(A).

166 Id. § 1395(a)(F)(1).

167 42 C.F.R. § 417.428(1) (1994).

168 Id. §417.428(5).

169 42 U.S.C. § 1395mm(c)(5) (1994); 42 C.F.R. §§ 417.600-.638 (1994); see Stayn, supra note 64, at 1691; Kinney, Medicare Managed Care, supra note 151.

170 42 C.F.R. § 604(a)(1)(ii) (1995).

171 Id. § 417.606(a).

172 Id. § 417.608(a).

173 Id. § 417.608(b)(1)(2).

174 Id. § 417.612.

175 Id. § 417.605.

176 Id. § 417.620(a).

177 Id. § 417.620(b).

178 Levy v. Bowen, No. 88-3271 DT, 1989 WL 136292 at *2 (CD. Cal. June 20, 1989), discussed in Stayn, supra note 64, at 1694 n.135.

179 Kinney, Eleanor D., Protecting Consumers and Providers Under Health Reform: An Overview of the Major Administrative Law Issues, 5 Health Matrix 83, 99-102 (1995)Google ScholarPubMed [hereinafter Kinney, Protecting Consumers and Providers].

180 Medicare HMO’s and Quality Assurance: Unfulfilled Promises: Hearings Before the Senate Special Comm. on Aging, 102d Cong., 1st Sess. (1991) [hereinafter Medicare HMO’s and Quality Assurance]; Medicare HMO Risk-Contractor Program: Hearings before the House Subcomm. on Health and the Environment, 102d Cong., 1st Sess. (1991) [hereinafter Medicare HMO Risk-Contractor Program].

181 Stayn, supra note 64, at 1685-90. See generally Kinney, Medicare Managed Care, supra note 151.

182 [1989 Transfer Binder] Medicare & Medicaid Guide (CCH) 37,809 (CD. Cal. 1989).

183 [1995-2 Transfer Binder] Medicare & Medicaid Guide (CCH) 43,523 (D. Ariz. 1995).

184 42 U.S.C. § 1395ff(b)(1)-(2) (1994); 42 C.F.R. § 417.630 (1995).

185 42 C.F.R. § 417.632(c)(2) (1995).

186 Id. §417.636.

187 See Kinney, The Medicare Appeals System, supra note 26, at 84-95 (1986).

188 42 U.S.C. § 1395ff(1994).

189 Id. § 1396n(b), (0, (h).

190 See supra notes 37-40 and accompanying text.

191 42 U.S.C. § 1395b(m)(1)(A) (1994).

192 42 C.F.R. §§ 434.20-.67 (1994).

193 42 U.S.C. § 1396b(m)(2)(A)(ii) (1994).

194 Id. § 1396b(m)(1)(A)(i).

195 42 C.F.R. § 434.23 (1995).

196 Id. § 434.36.

197 Id.

198 42 U.S.C. § 1396a(a)(3) (1994); 42 C.F.R. §§ 431.200-.250 (1994); see Kinney, Protecting Consumers and Providers, supra note 179, at 103.

199 42 C.F.R. §434.32(1994).

200 Id.

201 See supra note 198 and accompanying text.

202 Health Care Financing Administration, A Health Care Quality Improvement System for Medicaid Managed Care—A Guide for States, reprinted in [Mar.-Nov. 1993 Transfer Binder] Medicare & Medicaid Guide (CCH) ¶ 41,669, at 37,142 (July 6, 1993).

203 See Kinney, Protecting Consumers and Providers, supra note 179, at 103, 104-06.

204 Civil Rights Act of 1871 § 1, 42 U.S.C. § 1983 (1994).

205 496 U.S. 498, 509-10 (1990); see also Kinney, Protecting Consumers and Providers, supra note 179, at 104-08.

206 Managed Health Care Association, The Employer Perspective on Managed Care Accreditation (1994).

207 Observations and Analysis: Accreditation and Credentialing Requirements, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) ¶ 2430, at 2400:85 (Nov. 1994).

208 National Committee for Quality Assurance, 1995 Standards for Accreditation of Managed Care Organizations, reprinted in Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) ¶ 2415, at 2400:55-59 (July 1995).

209 Accreditation and Credentialing Requirements, Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) 2400, at 2400:2 (Dec. 1995) [hereinafter Credentialing Requirements].

210 Id.

211 Joint Commission on the Accreditation of Healthcare Organizations, 1994 Health Care Network Standards, reprinted in Health Plan Requirements Guide for Managed Care & Other Health Plans (Atl. Info. Serv., Inc.) 2418, at 2400:69-72 (Oct. 1994).

212 Credentialing Requirements, supra note 209, at 2400:2.

213 See supra note 208 and accompanying text.

214 See supra note 211 and accompanying text.

215 See supra notes 208, 211 and accompanying text.

216 See Larson, Erik, The Soul of an HMO, Time, Jan. 22, 1996, at 44Google ScholarPubMed; see also Brink, Susan, How Your HMO Could Hurt You, U.S. News & World Rep., Jan. 15, 1996, at 62Google Scholar; Castro, Janice, Condition: Critical, Time, Nov. 25, 1991, at 34Google ScholarPubMed; Evans, M. Stanton & Kline, Malcolm A., The Trouble with HMOs, Consumers' Res. Mag., July 1995, at 10Google Scholar; Haney, Daniel Q. & Bayles, Fred, Paying a Price for Cost-Conscious HMOs Medicine, L.A. Times, Jan. 28, 1990, at 3Google Scholar; More Trouble with Managed Care; Unethical Practices of Health Maintenance Organizations, Consumers' Res. Mag., Sept. 1995, at 20Google Scholar; Pear, Robert, H.M.O.’s Refusing Emergency Claims, Hospitals Assert, N.Y. Times, July 9, 1995, at A1Google Scholar; Spragins, Ellyn E., Beware Your HMO, Newsweek, Oct. 23, 1995, at 54.Google ScholarPubMed

217 Kreier, Rachel, N. Y. Suit Fights Increasingly Common HMO “Gag Rules,” Am. Med. News, Dec. 11, 1995, at 8.Google Scholar

218 American Medical Association, AMA Calls on Managed Care Providers to Cancel Gag Clauses and Submit Contracts for Ethical Review, News Release (Jan. 23, 1996).

219 See Hillman, Alan L., Financial Incentives for Physicians in HMOs: Is There a Conflict of Interest?, 317 New Eng. J. Med. 1743, 1744 (1987)CrossRefGoogle Scholar.

220 See generally Council on Ethical and Judicial Affairs, Am. Medical Ass'n, Ethical Issues in Man aged Care, 273 Jama 330 (1995)Google Scholar; Emanuel, Ezekiel J. & Dubler, Nancy N., Preserving the Physician-Patient Relationship in the Era of Managed Care, 273 Jama 323, 325 (1992)CrossRefGoogle Scholar; Emanuel, Ezekiel J. & Emanuel, Linda L., What Is Accountability in Health Care?, 124 Annals Internal Med. 229, 233-34 (1996)CrossRefGoogle ScholarPubMed (arguing that health care features different models of accountability, and that the political model, in which physicians and patients interact as citizen-members, operates within managed care plans); Orentlicher, David, Health Care Reform and the Patient-Physician Relationship, 5 Health Matrix 141, 176-79 (1995)Google ScholarPubMed; Orentlicher, David, Paying Physicians to Do Less: Financial Incentives to Limit Care, 30 U. Rich. L. Rev. 155 (1996)Google Scholar (arguing that government should limit financial incentives but not prohibit them); Rodwin, Marc A., Conflicts in Managed Care, 332 New Eng. J. Med. 604, 605 (1995)CrossRefGoogle ScholarPubMed; Rodwin, Marc A., Strains in the Fiduciary Metaphor: Divided Physician Loyalties and Obligations in a Changing Health Care System, 21 Am. J.L. & Med. 241, 253 (1995)Google Scholar (noting that in the changing medical field the fiduciary metaphor may no longer be appropriate for physicians as they serve interests beyond those of their individual patients).

221 See Greaney, Thomas L., Competitive Reform in Health Care: The Vulnerable Revolution, 5 Yale J. on Reg. 178, 187-88 (1988)Google Scholar; Jordan, Karen A., Managed Competition and Limited Choice of Providers: Countering Negative Perceptions Through a Responsibility to Select Quality Network Physicians, 27 Ariz. St. L.J. 875, 915(1996)Google Scholar.

222 See supra note 30 and accompanying text.

223 See, e.g., Fox v. Health Net, No. 21962 (Super. Ct. Riverside County. Cal. Dec. 28, 1993) (trial court jury awarded $77 million to patient who was denied experimental bone marrow transplant by HMO); Williams v. HealthAmerica, 535 N.E.2d 717 (Ohio App. 1987) (insured raised material issues of fact as to whether HMO provided full information regarding its grievance procedure after a physician refused to refer insured to a specialist); see also Bearden & Maedgen, supra note 82, at 335-36.

224 See supra note 27 and accompanying text.

225 See supra notes 28-29 and accompanying text.

226 Administrative Procedure Act § 2(c), 5 U.S.C. § 551(4) (1994).

227 See supra notes 27-29 and accompanying text.

228 See, e.g., Association of Nat'l Advertisers v. FTC, 627 F.2d 1151, 1170 (1979).

229 See supra notes 68-74, 111-19, 141-43, 167-68, 196-97 and accompanying text.

230 See supra notes 139-40, 160-66, 195 and accompanying text.

231 Abraham, supra note 61, at 120-21.

232 Id.

233 Id.

234 Id. at 111.

235 Id.

236 42 U.S.C. §§ 1395ww (regulating hospital payment rates), 1395w-l (regulating physician payment rates) (1994).

237 See id.

238 See Kinney, Eleanor D., Making Hard Choices Under the Medicare Prospective Payment System: One Administrative Model for Allocating Medical Resources Under a Government Health Insurance Program, 19 Ind. L. Rev. 1151, 1170(1986)Google Scholar.

239 See generally Kinney, Eleanor D., Rule and Policy Making Under Health Care Reform, 47 Admin. L. Rev. 403, 420-22 (1995)Google Scholar (listing the elements which policymakers should consider when promulgating rules).

240 See, e.g., Eddy, David M. & Billings, John, The Quality of Medical Evidence: Implications for Quality of Care, Health Aff., Spring 1988, at 19CrossRefGoogle ScholarPubMed, 19; Wennberg, John E., Improving the Medical Decision- Making Process, Health Aff., Spring 1988, at 99, 99CrossRefGoogle ScholarPubMed; see also Epstein, Arnold M., The Outcomes Movement—Will It Get Us Where We Want to Go?, 323 New Eng. J. Med. 266 (1990)CrossRefGoogle ScholarPubMed (discussing the viability of using outcomes research to develop standards of medical treatment).

241 See Havighurst, Clark C., Health Care Choices: Private Contracts as Instruments of Health Reform 231 (1995)Google Scholar; Havighurst, Clark C., Practice Guidelines for Medical Care: The Policy Rationale, 34 St. Louis U. L.J. 777, 801 (1990)Google Scholar.

242 See supra text accompanying note 229.

243 See generally Bloom, Alan et al., Alternative Dispute Resolution in Health Care, 16 Whittier L. Rev. 61 (1995)Google Scholar; Dauer, Edward A. et al., Strategies and Tools for Cost-Effective Dispute Management, 11 Alternatives to High Cost Litig. 154 (1993)CrossRefGoogle Scholar (examining the use of alternative dispute resolution (ADR) in malpractice cases); Kroeker, Mark R., Finding the Parameters: The Scope of Arbitration Agreements in Medical Service Contracts in California, 1994 J. Disp. Resol. 159Google Scholar (examining patient/physician ADR contract); Meili, Stephen & Packard, Tamara, Alternative Dispute Resolution in a New Health Care System: Will it Work for Everyone?, 10 Ohio. St. J. on Disp. Resol. 23 (1994)Google Scholar.

244 See Fondacaro, Mark R., Toward a Synthesis of Law and Social Science: Due Process and Procedural Justice in the Context of National Health Care Reform, 72 Denv. U. L. Rev. 303, 347-57 (1995)Google Scholar; Jost, Timothy S., Administrative Adjudication Under Health Care Reform, 47 Admin. L. Rev. 425, 433-38 (1995)Google Scholar; Kinney, Protecting Consumers and Providers, supra note 179, at 125-36; Rosenblatt, Rand E., Equality, Entitlement, and National Health Care Reform: The Challenge of Managed Competition and Man aged Care, 60 Brook. L. Rev. 105, 123-37 (1994)Google Scholar; see also Berthgold, Linda A. & Sage, William M., Nat'l Inst, for Health Care Mgmt., Medical Necessity, Experimental Treatment and Coverage Determinations: Lessons From National Health Care Reform 20 (1994)Google Scholar (discussing procedures for appeals of coverage decisions).

245 See generally Elliot, Amy E., Arbitration and Managed Care: Will Consumers Suffer if the Two Are Combined?, 10 Ohio St. J. on Disp. Resol. 417 (1995)Google Scholar; Leone, Armond Jr., As Health Care Enterprise Liability Expands: Is ADR the Rx for Malpractice?, 49 Disp. Resol. J. 7 (1994)Google Scholar; Metzloff, Thomas B., Alternative Dispute Resolution Strategies in Medical Malpractice, 9 Alaska L. Rev. 429 (1992)Google Scholar; Schor, Neil D., Health Care Providers and Alternative Dispute Resolution: Needed Medicine to Combat Medical Malpractice Claims, 4 Ohio St. J. ON Disp. Resol. 65 (1988)Google Scholar.

246 See, e.g., Goldberg, Stephen B. et al., Dispute Resolution: Negotiations, Mediation, and Other Processes (2d ed. 1992)Google Scholar; National Institute for Dispute Resolution, Paths to Justice, Major Public Policy Issues of Dispute Resolution: Report of The ad Hoc Panel on Dispute Resolution and Public Policy (1983); Edwards, Harry T., Alternative Dispute Resolution: Panacea or Anathema?, 99 Harv. L. Rev. 668 (1986)CrossRefGoogle Scholar; Harter, Philip J., Dispute Resolution and Administrative Law: The History, Needs, and Future of a Complex Relationship, 29 Vill. L. Rev. 1393 (1983-1984)Google Scholar; Harter, Philip J., Points on a Continuum: Dispute Resolution Procedures and the Administrative Process, 1 Admin. L.J. 141 (1987).Google Scholar

247 See generally Handler, Joel F., Protecting The Social Service Client: Legal and Structural Controls on Official Discretion (1979)CrossRefGoogle Scholar; Mashaw, Jerry L., Due Process in The ad Ministrative State (1985)Google Scholar; Farina, Cynthia R., Conceiving Due Process, 3 Yale J.L. & Feminism 189 (1991)Google Scholar; Mashaw, Jerry L., Administrative Due Process: The Quest for a Dignitary Theory, 61 B.U. L. Rev. 885 (1981)Google Scholar; Poythress, Norman G., Procedural Preferences, Perceptions of Fairness, and Compliance with Outcomes, 18 Law & Hum. Behav. 361 (1994)CrossRefGoogle Scholar; Summers, Robert S., Evaluating and Improving Legal Processes—A Plea for “Process Values,” 60 Cornell L. Rev. 1 (1974)Google Scholar; Thibaut, John & Walker, Laurens, A Theory of Procedure, 66 Cal. L. Rev. 541 (1978)CrossRefGoogle Scholar; Tyler, Tom R., What is Procedural Justice?: Criteria Used by Citizens to Assess the Fairness of Legal Procedures, 22 Law & Soc'y Rev. 103 (1988)CrossRefGoogle Scholar.

248 See generally Thibaut, John & Walker, Laurens, Procedural Justice: A Psychological Analysis (1975)Google Scholar; Thibaut, John et al., Procedural Justice as Fairness, 26 Stan. L. Rev. 1271 (1974)CrossRefGoogle Scholar; Thibaut & Walker, supra note 247; Walker, Laurens et al., The Relation Between Procedural and Distributive Justice, 65 Va. L. Rev. 1401 (1979)CrossRefGoogle Scholar.

249 Thibaut & Walker, supra note 247, at 541.

250 Id.

251 Id. at 541-42.

252 Id. at 542.

253 Id. at 545-46.

254 Id. at 546.

255 Id. at 551 (citing Walker, Laurens et al., Reactions of Participants and Observers to Modes of Adjudication, 4 J. Applied Soc. Psychol. 295 (1974))CrossRefGoogle Scholar.

256 Id. at 546-47.

257 397 U.S. 254(1970).

258 See, e.g., Friendly, supra note 22, at 1268, 1279-95; Tribe, supra note 22, at 314-21; Van Alstyne, supra note 22, at 473-76.

259 424 U.S. 319, 341-49 (1976).

260 Id.; see also Mashaw, Jerry L., The Supreme Court’s Due Process Calculus for Administrative Adjudication in Mathews v. Eldridge: Three Factors in Search of a Theory of Value, 44 U. Chi. L. Rev. 28 (1976)CrossRefGoogle Scholar.

261 See, e.g., Mashaw, Jerry L., Administrative Due Process: The Quest for a Dignitary Theory, 61 B.U. L. Rev. 885, 885-86 (1981)Google Scholar; Rubin, Edward L., Due Process and the Administrative State, 72 Cal. L. Rev. 1044, 1044-45 (1984)CrossRefGoogle Scholar; Saphire, Richard B., Specifying Due Process Values: Toward a More Responsive Approach to Procedural Protection, 127 U. Pa. L. Rev. 111, 113-14 (1978)CrossRefGoogle Scholar. See generally Farina, supra note 247, at 197-237 (an excellent discussion of the critiques of due process theory since Mathews v. Eldridge).

262 See supra notes 248-58 and accompanying text.

263 Kinney, Protecting Consumers and Providers, supra note 179, at 129-30.

264 See supra notes 217-18 and accompanying text.

265 See supra notes 240-42 and accompanying text.

266 456 U.S. 188, 195-96 (1982).

267 Kroeker, supra note 243, at 159-60; Meili & Packard, supra note 243, at 24-25; cf. Elliot, supra note 245, at 419-26; Lu, Elaine, Recent Development: The Potential Effect of Managed Competition in Health Care on Provider Liability and Patient Autonomy, 30 Harv. J. on Legis. 519 (1993)Google Scholar.

268 See supra note 78 and accompanying text.

269 See, e.g., Brunet, Edward, Questioning the Quality of Alternative Dispute Resolution, 62 Tulane L. Rev. 1 (1987)Google Scholar; Delgado, Richard et al., Fairness and Formality: Minimizing the Risk of Prejudice in Alternative Dispute Resolution, 1985 Wis. L. Rev. 1359Google Scholar; Hermann, Michele G., The Dangers of ADR: A Three- Tiered System of Justice, 3 J. Contemp. Legal Issues 117 (1989-1990)Google Scholar; Meili & Packard, supra note 243; Resnik, Judith, Many Doors? Closing Doors? Alternative Dispute Resolution and Adjudication, 10 Ohio St. J. on Disp. Resol. 211 (1995)Google Scholar.

270 See supra notes 243-45 and accompanying text.

271 See Havighurst, supra note 241, at 200-21; Meili & Packard, supra note 243, at 26-27.

272 Bloom et al., supra note 243, at 61, 82.

273 See, e.g., Havighurst, supra note 241, at 200-15; Hall, Mark A. & Anderson, Gerald F., Health Insurers’ Assessment of Medical Necessity, 140 U. Pa. L. Rev. 1637, 1663-83 (1993)CrossRefGoogle Scholar.

274 See, e.g., Huber, Peter W., Liability: The Legal Revolution and Its Consequences 100-05 (1988)Google Scholar; Hensler, Deborah R., Science in the Court: Is There a Role for Alternative Dispute Resolution? Law & Contemp. Probs., Summer 1991, at 171, 172-78CrossRefGoogle Scholar.

275 Rosenblatt, Rand E., The Courts, Health Care Reform, and the Reconstruction of American Social Legislation, 18 J. Health Pol. Pol'y & L. 439, 444-49 (1993)CrossRefGoogle ScholarPubMed; see Payton, Sallyanne, Medical Rationing and the Allocation of Adjudicatory Responsibility Under Comprehensive Health Care Reform in the 103rd Congress: An Administrative Lawyer’s Postmortem, 47 Admin. L. Rev. 381, 396 (1995)Google Scholar.

276 Abraham, Kenneth S., Distributing Risk: Insurance, Legal Theory, and Public Policy 101-32 (1986)CrossRefGoogle Scholar; Keeton & Widlss, supra note 58, § 6.3(a)(2), at 628-30.

277 See supra note 223 and accompanying text.

278 Bernard Schwartz, Administrative Law § 8.1, at 470 (3d ed. 1991).

279 See Hall & Anderson, supra note 273, at 1698-704.

280 See supra note 188 and accompanying text.

281 See generally JUDITH K. MINTEL, Insurance Rate Litigation (1983) (surveying judicial treatment of insurance rate regulation).

282 See supra note 236 and accompanying text.

283 42 U.S.C. §§ 1395l, 1395ww (1994).

284 See supra note 237 and accompanying text.

285 Restatement (Second) of Contracts §§ 231-234 (1973).

286 H.R. 3600, supra note 4, §§ 5201-5243; see Kinney, Protecting Consumers and Providers, supra note 179, at 127-28.