Contracts typically give doctors authority to exercise medical discretion within the contract's parameters. Patients in turn are seen to be held hostage to the managed care organization's cost-cutting. Here's a common example. Suppose the managed care organization provides no direct medical services. It merely signs up members and pays for its members' services.
Physicians provide services through a contract with the managed care organization.
The contract is a capitation agreement that sets up a withhold or provides a bonus for limiting care. The patient requests treatment, the organization rejects the request, the doctor doesn't provide the treatment for that reason, and the patient is injured or dies. The doctor failed to provide the care, not the managed care organization, and the doctor was solely liable. But not any more. Lawyers are hailing managed care organizations into court because capitation contracts permit those organizations to control doctors' discretion.