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New Laws Affect Managed Care,
Patient Consent
New Legislation* by Andrew A. Oppenberg, M.P.H.

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On January 1, 1997, new laws went into effect concerning managed care gag clause prohibitions and financial incentives. Additionally, there are new requirements regarding written patient consent for sperm and ova retrieval and telemedicine procedures.

Gag Clauses

According to the Business & Professional Code d2056, protection against retaliation for physicians who advocate for medically appropriate health care has been expanded to expressly prohibit anyone, including managed care plans, from restricting or in any way discouraging physicians from "communicating to a patient information in furtherance of medically appropriate health care."

Furthermore, legislation sponsored by the California Medical Association makes any contractual provision that interferes with a physician's ability to communicate with a patient regarding treatment options, alternative plans (other health plans) or other coverage arrangements void and unenforceable. The only exception applies to solicitations "for alternative coverage arrangements for the primary purpose of securing financial gain." Violation of either law by a health plan may result in disciplinary action against the plan's license.

Financial Incentives

A new law prohibits financial incentive plans that include specific payments as an inducement to deny, reduce, limit or delay specific, medically necessary and appropriate covered services to specific enrollees or groups of enrollees, whether provided by a healthcare service plan or health insurer directly or through a subcontracting physician, medical group or IPA. Capitation payments, shared risk agreements or other general payments not tied to specific medical decisions involving specific enrollees or group of enrollees with similar medical conditions are not included under this law. Additionally, health plans are now required to disclose to purchasers and enrollees their "basic method of reimbursement" and whether financial bonuses or incentives are used.

Sperm & Ova Retrieval

In response to growing public concern about the risk of misappropriation of human sperm, ova and embryos, new patient consent requirements and penalties have been added to both the California Business and Professional Code and the California Penal Code.

The law requires patient consent for any medical or surgical procedure. However, as of January 1, 1997, d2266 of the California Business and Professional Code has adopted more stringent guidelines concerning sperm or ova retrieval from a patient that will be used for a purpose other than re-implantation in the same patient or spouse of the patient. That consent must be in writing and contain the following:

1. Statement: I (name of donor), do hereby donate (type and number, if applicable, of sperm or ova) to (name of clinic or other donee) for (specific purpose).
2. A statement by the donor that specifies the disposition of any unused donated material.
3. Be signed by the patient and by the physician and surgeon who removes the sperm or ova.
4. Contain a notification to the patient that the written consent is an important document that should be retained with other vital records.

The original consent will be retained by the physician and surgeon; a copy will be given to the patient. If the removal procedure is performed in a hospital, the physician and surgeon shall also provide a copy of the consent to the hospital.

Violation of this procedure constitutes "unprofessional conduct," although d2314 does not apply. A physician and surgeon who fails, for the second time, to obtain appropriate written consent before transferring sperm or ova from the provider shall be assessed a civil penalty in an amount not less than $1,000 and not more than $5,000, plus court costs. Separate penalties and costs will be paid to each individual from whom the required consent was not obtained.

Physicians and surgeons who obtain and use sperm, ova or embryos without patient consent face even harsher penalties from the California Penal Code d367 g, which stipulates that use and implantation without authorization is a felony and "shall be punished by imprisonment in the state prison for three, four or five years; by a fine not to exceed $50,000; or by both fine and imprisonment." Written consent is not required of men who donate sperm to a licensed tissue bank.

Telemedicine

Before providing health care via telemedicine, both written and verbal informed patient consent must be obtained by the physician or other health care practitioner with ultimate authority over the case or primary diagnosis of the patient. The written consent form must document that the patient has been advised about the following issues: free choice, access to medical information, confidentiality, potential risks, consequences and benefits.

Telemedicine is defined by the California Legislature as "the practice of health care delivery, diagnosis, consultation, treatment, transfer of medical data and education using interactive audio, video or data communications." For more specific information, please see the sample consent form provided.

According to the California Business & Professions Code, there are three exceptions to the requirements for written, informed consent: in an emergency, where the patient is unable to give informed consent and the patient's representative is unavailable; where the patient is a prisoner or otherwise under the jurisdiction of the Department of Corrections; or where the patient is not directly involved in the telemedicine interaction, such as when one physician consults with another physician.

As of January 1997, out-of-state physicians licensed by the state or country in which they reside are now authorized to consult with California physicians provided they don't open an office, appoint a place to meet patients, receive calls from patients within California, give orders, or have ultimate authority over the case or primary diagnosis of a patient in California.

Health plans are required to include coverage for telemedicine services as they issue, amend or renew their contracts or policies, pursuant to new state Health & Safety Code and Insurance Code regulations. However, this does not include consultations provided by the healthcare providers by telephone or facsimile machine.

(MPT members who wish to provide telemedicine services to patients outside California should contact the MPT membership services department to avoid the trust agreement exclusion for claims arising from out-of-state medical care.)