Medi-Cal Managed Care: Who Is Responsible When Your Care Is Denied?
When a Medi-Cal managed care member is denied a requested treatment, procedure, medication, referral, or other healthcare service, figuring out who is responsible can be almost as difficult as challenging the denial itself. The patient may be told that the decision came from the medical group. The medical group may say the health plan made the decision. The health plan may point to a delegated utilization management organization or another entity.
Meanwhile, the patient still needs the treatment.
Medi-Cal managed care involves multiple layers of responsibility, including the California Department of Health Care Services (DHCS), managed care plans, medical groups, independent practice associations (IPAs), primary care physicians, specialists, hospitals, pharmacies, utilization management organizations, and other delegated entities. Understanding the relationship among these organizations can be difficult even for people who work in healthcare.
For patients facing a serious denial, trying to sort all of this out alone may not be the best approach. Speaking with an insurance lawyer can help identify who made the decision, what legal and contractual obligations apply, what appeal rights are available, and whether the circumstances may support a claim for damages or other legal relief.
At Gianelli & Morris, we represent California policyholders and health plan members facing wrongful denials and bad faith insurance practices. When a Medi-Cal managed care member is passed from one organization to another after a denial, our attorneys can examine the entire structure rather than simply accepting one organization’s explanation that someone else is responsible.
How Medi-Cal Managed Care Works
Medi-Cal is California’s Medicaid program. Although Medi-Cal can operate through fee-for-service arrangements, most Medi-Cal beneficiaries receive at least some services through managed care. Under managed care, DHCS contracts with managed care plans to arrange healthcare services for enrolled members.
The managed care plan is therefore a central part of the system. But the plan may not personally perform every function involved in delivering or authorizing care. A plan may contract with medical groups or IPAs that organize physician services. It may delegate utilization management or authorization functions to another organization. A primary care physician may evaluate the patient’s condition and request a referral or authorization. A specialist may provide the medical justification for a particular treatment. A hospital or other provider may submit documentation supporting the request.
The result is a system with several distinct layers of responsibility. DHCS recognizes that managed care plans may delegate certain duties, including utilization management, credentialing, and claims processing, to subcontractors or downstream subcontractors. At the same time, the managed care plan remains accountable for compliance with applicable state and federal requirements.
For a patient, this distinction is important. A denial does not necessarily become someone else’s problem simply because the health plan delegated part of the decision-making process.
What Does DHCS Do?
DHCS is the state agency responsible for administering Medi-Cal. Among other responsibilities, DHCS contracts with managed care plans and establishes requirements governing their operation. This does not mean DHCS personally decides whether every Medi-Cal member should receive a particular MRI, surgery, specialist referral, medication, or other service. Those medical and utilization management decisions generally occur within the managed care system.
DHCS nevertheless has an important oversight role. Its managed care contracts establish requirements that plans must follow, and DHCS monitors compliance with those requirements. DHCS also provides administrative avenues through which Medi-Cal members can challenge adverse decisions, including the State Fair Hearing process.
This is one reason it can be valuable to have an attorney review a denial. A lawyer can help determine whether the dispute belongs primarily with the managed care plan, a delegated medical group, DHCS, another regulatory agency, or potentially more than one entity.
What Does the Managed Care Plan Do?
The managed care plan is generally the organization with which the Medi-Cal member is enrolled. Depending on the plan and the service involved, the plan may directly administer a particular function or may delegate some responsibilities to another entity. The plan remains important when care is denied.
California law provides an important protection when a health plan delegates responsibilities. Health and Safety Code section 1367 provides that a health plan’s obligations under the Knox-Keene Health Care Service Plan Act are not waived simply because the plan delegates required services to medical groups, IPAs, or other contracting entities. California’s utilization review law likewise applies to health plans and entities with which they contract for utilization review or utilization management functions.
In practical terms, this means that “the medical group made the decision” is not necessarily a sufficient answer to a patient who has been denied care. The precise legal responsibility will depend on the particular managed care arrangement and the facts surrounding the denial. That is precisely the type of issue an insurance lawyer can investigate.
What Is a Medical Group or IPA?
A medical group is an organization of physicians who work together to provide care to patients. An independent practice association, or IPA, is another type of organization through which physicians may contract with health plans. In a Medi-Cal managed care arrangement, a member’s primary care physician may belong to a particular medical group or IPA. That organization may have responsibility for coordinating certain physician services, referrals, authorizations, or other functions.
This can create an especially frustrating situation for Medi-Cal patients. The doctor may say: “I requested the referral, but the medical group denied it.” The medical group may respond: “The health plan controls your benefits.” The health plan may then say: “Your medical group is responsible for authorization.”
These statements may reflect the parties’ contractual relationships, but they do not necessarily answer the patient’s most important question: Who is responsible for making sure I can obtain medically necessary covered care?
A patient should not have to become an expert in managed care contracting to obtain an answer. When a denial is important enough to affect a patient’s health, consulting an attorney can be a much more productive response than spending days or weeks being transferred between organizations.
What Does the Primary Care Physician Do?
The primary care physician is often the patient’s entry point into the managed care system. The PCP may evaluate the patient’s condition, recommend treatment, submit a referral to a specialist, request authorization for a procedure, or provide supporting medical records. A PCP does not ordinarily have unilateral authority to require a health plan to pay for every treatment the physician recommends.
Nevertheless, the PCP’s medical judgment can be extremely important when a denial is based on medical necessity. The treating physician may be able to explain why the requested service is appropriate, why alternative treatments are inadequate, and why delaying care could harm the patient. If a denial is based on medical necessity, an insurance lawyer can also help determine whether the insurer or delegated entity actually conducted the type of medical review required by California law.
Delegated Entities: Where Things Become Especially Complicated
Managed care plans can delegate significant administrative and clinical functions to other organizations. A plan may delegate utilization management to a medical group, for example. A medical group may use another organization for certain administrative functions. Other arrangements may involve subcontractors, downstream subcontractors, pharmacy benefit administrators, or specialized entities.
This creates another reason why patients should consider obtaining legal assistance after a significant denial. The question is not simply which entity sent the denial letter. An attorney may need to determine who actually made the determination, who was contractually responsible for the function, what standards governed the decision, whether the health plan properly supervised its delegated entity, and whether the patient’s legal rights were violated. That analysis may not be apparent from the denial letter itself.
A Denial Does Not Become Proper Simply Because Someone Else Made It
One of the most important concepts for Medi-Cal members to understand is that delegation does not automatically make a denial lawful. Suppose a patient needs a complex procedure. The patient’s physician requests authorization. The medical group denies the request, stating that the service is not medically necessary. The patient contacts the health plan and is told that the medical group is responsible for utilization management. The existence of a delegation agreement does not answer whether the medical necessity determination was properly made.
California law establishes requirements governing utilization review decisions and timely access to covered healthcare services. Health and Safety Code section 1367.03, for example, addresses timely access to care and expressly provides that a health plan’s obligations are not waived when it delegates activities to provider groups or other contracting entities.
That makes legal review particularly important when the denial concerns medically necessary treatment. The question is not merely who signed the denial letter. The question is whether the denial was lawful and whether the entities involved fulfilled their respective obligations.
What Should a Medi-Cal Member Do After a Denial?
A written Notice of Action or other formal denial notice is an important starting point. It should identify the service that was denied, the reason for the denial, and information concerning available appeal rights. Medi-Cal members have administrative remedies that may include an appeal through the managed care plan, a State Fair Hearing, or, depending on the circumstances, an Independent Medical Review. DHCS currently provides specific deadlines and procedures governing these processes.
But having an appeal right does not mean that handling the case without legal assistance is necessarily the best strategy. The appropriate response depends heavily on the reason for the denial, the urgency of the treatment, the identity of the decision-maker, the medical evidence, the member’s history, and the applicable coverage and regulatory requirements.
An insurance lawyer can review the denial before the patient commits to a particular course of action. The attorney may identify errors in the denial, determine whether additional medical evidence is needed, assess whether the denial appears unreasonable, and advise the patient about which administrative or legal remedy is most appropriate.
Independent Medical Review May Also Be Available
Depending on the plan and nature of the denial, a Medi-Cal member may have access to an Independent Medical Review through the DMHC. IMR can be particularly important when the dispute concerns medical necessity or whether a treatment is experimental or investigational. But not every Medi-Cal member or every denial qualifies for an IMR. The particular plan, service, licensing status, and procedural history matter. There may also be interaction between an IMR and a State Fair Hearing. Because pursuing one remedy can affect the availability or timing of another, a patient should consider obtaining legal advice before choosing among potentially overlapping review procedures.
An insurance lawyer can evaluate the denial and help determine whether an IMR, administrative appeal, State Fair Hearing, regulatory complaint, or potential litigation makes sense under the circumstances.
What If the Denial Was Made by a Medical Group?
A patient should not assume that being told “the medical group denied it” means the health plan has no responsibility. California’s statutory framework expressly addresses delegated functions. A health plan’s statutory obligations are not necessarily eliminated when it delegates responsibilities to a medical group, IPA, or another contracting entity. At the same time, it would be an oversimplification to say that every error by a medical group automatically makes the health plan legally responsible. The contracts, statutes, regulations, delegated functions, and facts all matter. That is another reason to involve counsel. The patient does not need to determine the ultimate allocation of liability before speaking with an insurance lawyer. Determining who may be legally responsible is part of the attorney’s job.
When a Denial May Raise Bad Faith Concerns
Medi-Cal managed care disputes can involve different legal theories, and not every wrongful denial necessarily creates a traditional insurance bad faith claim. Nevertheless, unreasonable conduct by a managed care plan or delegated entity can raise serious legal and regulatory concerns. Examples may include repeatedly denying medically necessary care without meaningfully reviewing the patient’s medical records, requesting documentation that the plan already possesses, relying on outdated criteria, or ignoring substantial medical evidence supporting treatment. The potential consequences can be substantial. A denial may result in delayed cancer treatment, deterioration of a chronic condition, an avoidable hospitalization, significant out-of-pocket expenses, or other harm.
When a denial has caused serious harm or appears to involve unreasonable claims handling, a patient should not assume that an administrative appeal is the only possible remedy. Consulting an insurance lawyer can help determine whether the circumstances support a broader legal claim.
The Patient Should Not Have to Be the Referee
The complexity of Medi-Cal managed care may make sense from an administrative perspective. Different entities perform different functions, and managed care depends on contracts and delegated responsibilities to coordinate healthcare. But the complexity becomes a serious problem when responsibility for a denial is passed from one organization to another.
The patient should not have to determine whether the denial came from the managed care plan, medical group, IPA, utilization management vendor, PCP, specialist, or another delegated entity before being able to challenge it. This is precisely why contacting an insurance lawyer may be one of the most appropriate responses to a significant Medi-Cal managed care denial. An attorney can investigate the denial from the patient’s perspective rather than from the perspective of whichever organization happens to be answering the telephone. The attorney can identify the relevant entities, examine the denial and supporting medical evidence, determine what rights and remedies may apply, and help the patient avoid pursuing the wrong remedy or allowing important deadlines to expire.
Administrative appeals can be important. So can State Fair Hearings, IMRs, regulatory complaints, and other procedures. But choosing among them requires an understanding of the underlying dispute.
Frequently Asked Questions
Who is responsible when a Medi-Cal managed care plan denies treatment?
Responsibility depends on the circumstances and the specific function that was delegated. The managed care plan may have delegated utilization management or authorization functions to a medical group or another entity, but delegation does not automatically eliminate the plan’s regulatory obligations.
Can a medical group deny a Medi-Cal patient’s treatment?
A medical group or IPA may be delegated authority to make certain utilization management or authorization decisions. However, the decision must comply with applicable Medi-Cal requirements and California law. If the denial is significant, consulting an insurance lawyer can help determine whether the medical group and/or health plan may be responsible.
How do I appeal a Medi-Cal managed care denial?
Medi-Cal members may have several potential avenues for challenging a denial, including an appeal through the managed care plan, a State Fair Hearing, or an Independent Medical Review in qualifying circumstances. Because the appropriate remedy depends on the nature of the denial, patients may benefit from consulting an insurance lawyer before deciding how to proceed.
Can I get an Independent Medical Review for a Medi-Cal denial?
Potentially. IMR availability depends on the plan, type of denial, and other eligibility requirements. An insurance lawyer can help determine whether IMR is available and whether it is the best option for challenging the particular denial.
What if my health plan says the medical group is responsible for my denial?
That does not necessarily mean you have no remedy against the health plan. California law recognizes that a plan may remain subject to legal obligations even when it delegates functions to a medical group, IPA, or other contracting entity. An attorney can examine the circumstances and determine which entities may be legally responsible.
Contact Gianelli & Morris
A Medi-Cal managed care denial can be confusing because there may be several organizations involved—and each may have a different explanation for why the requested care was not approved. But you do not have to determine which entity is responsible before seeking legal help. If your health plan or medical group has denied medically necessary care, particularly if the denial involves serious or worsening medical consequences, contacting an experienced insurance lawyer promptly may be one of the most important steps you can take. Waiting while different organizations point fingers at one another can cost valuable time and may allow appeal or other legal deadlines to pass.
At Gianelli & Morris, we represent California policyholders and health plan members facing wrongful denials, unreasonable delays, and other unfair insurance practices. Our attorneys can examine the circumstances surrounding a Medi-Cal managed care denial, identify the entities involved, evaluate the available remedies, and determine whether the conduct may support an insurance bad faith claim or other legal action.
If your Medi-Cal managed care coverage has been denied and you are being sent from one organization to another, contact Gianelli & Morris for a free consultation. You should not have to be the referee in a dispute between your health plan and its delegated entities while your health is at stake.
