Doctors Cannot Be Arbitrarily Excluded From Insurers’ Provider Networks
Health insurers have long used exclusion of doctors from provider networks as a means to increase their bottom line. When there are fewer doctors in a provider network, patients’ access to medical care is restricted (i.e., patients are unable to see their doctor in a timely manner resulting in either delayed medical care or no care at law). Less medical care in turn means more profits for the insurers, because insurers retain more premiums while paying out less for medical care. As a result, exclusion of doctors from provider networks directly influences insurers’ profitability.
Excluding doctors from provider networks can occurs in numerous ways, including:
· Denying a doctor’s application to join a network;
· Terminating a doctor’s contract or participation rights;
· Not renewing a doctor’s contract or right to participate; or
· Removing a doctor’s name from the insurer’s provider directory without explanation or claiming that the network is a “narrow network”.
However, in California and a majority of other states, insurers must provide fair procedure before excluding a doctor from the insurer’s provider network. “Fair Procedure” means that the insurer’s exclusion must be both substantively rational and procedurally fair.
Note: Fair procedure applies not just to individual physicians, but also to medical groups, corporations and other entities that seek participation in a provider network.
To be “procedurally fair”, the insurer must notify the physician or provider group of the reason for their exclusion and provide them with an opportunity to challenge that reason.
To be “substantively rational”, the insurer’s reason for exclusion can NOT be arbitrary, capricious, discriminatory, irrational, or contrary to public policy. There are many examples of various public policies that apply, with just two of them being discrimination or advocating for patient care.
One of the reasons for these requirements, as the California Supreme Court explained in Potvin v. Metropolitan Life, is the greater public interest that’s at stake when medical services are provided through a tripartite relationship between an insurance company, its insureds (patients), and physicians in the insurer’s provider network. Patients are less free to choose their own doctors and must obtain medical care from physicians approved by their health plan/insurer. This means that exclusion of a doctor from a provider network affects more than just the doctor’s own interests.