Course Authors
Maxwell J. Mehlman, J.D.
Mr. Mehlman reports no commercial conflict of interest.
Estimated course time: 1 hour(s).
Albert Einstein College of Medicine – Montefiore Medical Center designates this enduring material activity for a maximum of 1.0 AMA PRA Category 1 Credit(s)™. Physicians should claim only the credit commensurate with the extent of their participation in the activity.
In support of improving patient care, this activity has been planned and implemented by Albert Einstein College of Medicine-Montefiore Medical Center and InterMDnet. Albert Einstein College of Medicine – Montefiore Medical Center is jointly accredited by the Accreditation Council for Continuing Medical Education (ACCME), the Accreditation Council for Pharmacy Education (ACPE), and the American Nurses Credentialing Center (ANCC), to provide continuing education for the healthcare team.
Upon completion of this Cyberounds®, you should be able to:
Alert colleagues to the risk of liability for failing to disclose to patients financial incentives created by managed care plans
Discuss the implications of this disclosure for their interactions with patients
Evaluate the merits of this disclosure requirement.
An Illinois court recently ruled that a physician could be liable to a patient for breach of fiduciary duty for failing to disclose a compensation arrangement with the patient's HMO that created incentives for the doctor to limit the patient's care [Neade v. Portes, 710 N.E.2d 418 (Ill. 1999)].
Other cases have recognized that the health plan may have a duty to disclose financial incentive arrangements to enrollees [e.g., Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997)], but this is the first case to hold that a physician can be liable for not informing a patient about such incentives. An earlier case, Moore v. Regents of Univ. of Calif., 793 P.2d 479 (Cal. 1990), had held that physicians could be liable for breach of fiduciary duty for failing to disclose that they intended to commercialize a cell line from the patient's cancer cells but this did not involve the physician's relationship with a health plan.
It is especially important to note that the plaintiff in Neade was seeking to hold the physician liable for a breach of fiduciary duty and not just for negligence for failing to obtain the patient's informed consent to treatment. An earlier case, D.A.B. v. Brown, 570 N.W.2d 168 (Minn. App. 1997), had held that a physician could be sued for negligent medical malpractice for failing to disclose to patients a "kickback arrangement" with the distributor of human growth hormone but not for breach of fiduciary duty. The difference is significant because a plaintiff may recover punitive damages for breach of fiduciary duty but not for ordinary malpractice. (In addition, in the D.A.B. case, a claim for ordinary malpractice was barred by the statute of limitations.) Thus, a physician found liable for breach of fiduciary duty can be looking at paying a substantial amount of damages and for a type of damages that her malpractice insurance may not cover.
Aside from being a potential source of broadened physician liability, Neade raises a fundamental question: What is the utility of disclosing these financial incentives to patients? Insofar as disclosing financial incentives is deemed part of obtaining the patient's informed consent, the objective might be the same as that which underlies informed consent generally: to enable the patient to make an informed choice about whether or not to proceed with the proposed course of treatment. But how would this work in practice? And is disclosure of the physician's financial incentives really helpful to patients?
One possible answer is that a requirement that physician must disclose her financial incentives to withhold care will make physicians tell the patient about alternatives to the proposed course of treatment, including alternatives that may be contrary to the physician's financial self-interest. But traditional informed consent rules already require the physician to disclose all reasonable alternatives. A plaintiff who can show that a physician withheld material information because of the physician's financial self-interest should recover punitive damages under classic informed consent doctrine (the ill-reasoned D.A.B. case notwithstanding).
Another possible rationale for disclosure is that it will lead physicians to avoid entering into arrangements that would be embarrassing to disclose, thereby protecting patients from suffering poor quality care as a result of inappropriate physician incentive arrangements. But this assumes that physicians have sufficient bargaining power to negotiate proper incentive arrangements with health plans or refuse to sign up with plans that have improper arrangements. Neither is likely to be the case. Moreover, if the objective of disclosure is to outlaw inappropriate incentive arrangements, why rely on a roundabout disclosure mechanism to do so rather than just adopting laws that prohibit these arrangements outright?
Perhaps the goal of disclosure is to educate patients so that they can switch to health plans that do not impose improper incentive arrangements on physicians. But patients, increasingly, have little choice among plans, particularly when health coverage is obtained from their employers.
This leaves the objective of encouraging patients to question their physicians' judgment, for example, by more frequently seeking second opinions. This sounds good in principal but it comes at a hefty price: a likely loss of trust in the patient-physician relationship. As a practical matter, loss of trust is likely to lead to more malpractice suits, since studies show that patients are more likely to sue doctors with whom they have poor relationships.(1)
But distrust also may impose significant costs to the patient in terms of emotional distress. Imagine the reaction of the patient - especially one who is seriously ill - when the physician recommends a course of treatment and then adds: "By the way, your managed care plan gives me a bonus the less care I provide you." Presumably, the physician goes on to assure the patient that the prospect of a bonus will not interfere with the physician's judgment but what is the patient to think? Of course, the physician is merely describing the reality of managed care incentive arrangements. But, perhaps, this information, more properly, should come from the plan itself, rather than from the physician.
Still, there are those who will say that patient skepticism - let's call it "healthy distrust" - is necessary in the world of managed care, even if it comes at the price of distrusting physicians. And there is another somewhat paradoxical possibility: that by disclosing a conflict of interest, a physician will make her patients trust her all the more. This theory holds that the patient will value the physician's honesty so much so that it will outweigh the destructive impact on trust of what the physician is actually saying. If this is true, an interesting question is whether it remains true if the disclosure is made because the law requires it, rather than voluntarily.