Ethics in Managed Care

The 1992-93 debate over health care reform made clear the inevitability of fundamental changes in the financing and delivery of health care. The necessity of such changes is widely accepted. The shape and scope of the changes are, however, the subject of intense disagreement. The demise of the Clinton proposals, which advocated a strong role for government, left the field of health care reform wide open to the private sector. Insurance companies and other health care corporations responded rapidly and aggressively, developing and marketing new models of health care delivery. The evolution of these models, collectively referred to as "managed care," is corporatizing the American health care system.

As transformation of this industry progresses, corporate business values, such as efficiency, cost-reduction, inventory management, competition and profit, are influencing the traditional medical ethics and values of the solo practitioner -- the one-on-one doctor patient relationship and fee-for-service payment. The shift in values and structure of the health care system is inherently neither bad nor good. In fact, in a system where demand seems infinite and resources are finite, such shifts are both necessary and desirable.1

The painful truth is that our health care system can no longer accommodate unlimited demand for medical services. We can no longer pretend to offer the maximum benefits of technology to all comers. We have come to accept that cost matters as much as access and quality. Managed care organizations (MCOs) of various sizes and types are bringing the principles and values of business into the front ranks of health care delivery. The MCOs are reducing costs by standardizing, regulating and streamlining the supply side (providers), and by reducing demand and controlling access on the buyers side (patients).

Medicine and business have always been somewhat uneasy partners. Most physicians have also been, to one degree or another, businessmen who were well paid for their professional services. Now, however, business and health are intertwined in new ways. Instead of the business aspects being controlled by physicians, the medical aspects are now often controlled by managers, accountants, and actuaries. The values and ethical principles of business and medicine have evolved largely separate and distinct from each other. Now that the lines of distinction are blurring, conflicts are inevitable.1, 2, 3

Principles of Bioethics

There are four major principles of bioethics: autonomy, beneficence, justice, and medicine as a social good. It is useful to consider them when examining the ethics of providing patient care in a managed care system.4

Autonomy is the principle of self-rule or self-determination. To be truly autonomous, a person must be capable of making reasoned decisions. They must also be informed of the consequences, risks, and costs of their decisions. In medicine, the principle of autonomy applies to both the patient and the provider. However, the patient-centered ethics embraced by American society commonly place a higher moral value on the self-determination of the patient.

Beneficence implies that providers are ethically and morally bound to act in the best interest of the patient. The provider's first responsibility and role is that of patient advocate.

Justice means, in essence, that patients in similar circumstances receive similar care. This is the principle that drives the concept of equal access to care. Justice also refers to the fair distribution of benefits, risks, and costs across society.

Medicine as a social good is a principle that focuses on the health needs of society rather than the individual. It encompasses not only public health, but also medical education, medical research, and the dissemination of medical knowledge.

Changes in Health Care Delivery

The co-mingling of business and medical values is changing the types of services and the way in which they are delivered. This merger is changing the very roots of the system, including the fundamental relationships between patient, provider and third-party payer, and even the motivation for providing (or not providing) a particular service. The following are some of the more significant of these fundamental changes.

In many cases the vendor of health care is no longer a private physician or group of providers, but rather a large, usually for-profit, corporation.1

In a system based on managed care, the patient's choice of provider usually is much more limited than under a traditional fee-for-service structure. In fee-for-service systems, patients could choose nearly any provider or self-refer to specialists if they wished. Now many coverage arrangements are negotiated between employers or unions and MCOs. Patients must choose from a list of providers who have contracted with the new "vendor" (MCO) and agreed to a pre-determined payment rate. In most managed care plans the patient, in order to see a specialist, must be referred by the primary care provider (i.e., gatekeeper) or the visit is not covered by the plan.1, 2

Providers are also faced with new limitations under managed care plans. They are often not involved in the negotiations between the MCO and the employer (or union) defining the package of services to be provided and the price to be paid for the services. The specialists to whom a provider may refer a patient are often limited to a defined group who are employed by, or under contract to, the MCO.3

The responsibility of the vendor is no longer exclusively (or, arguably, even primarily) to the patient, but also to shareholders and/or partners.1, 2

The focus of service delivery and assessment of outcomes has shifted from individuals to "populations."3

Profitability and survival depend on controlling demand and limiting access to more expensive procedures, drugs, and specialists. Motivation has shifted from "do more" to "do less."1

Decisions about diagnostic and therapeutic interventions are no longer made exclusively between provider and patient. Plans and MCOs may exclude some options all together. Clinical guidelines are widely imposed and are often formulated with extensive input from financial managers, risk managers, pharmaceutical contractors, etc.3, 5, 6

Distribution of revenues has changed. Money which previously went to the provider, or back into the health care system to fund research, education, or charity care, now flows to investors, corporate officers, or to marketing of the health plan.1, 2

These changes are not cosmetic, but rather are intrinsic alterations in the relationships and motivations that are at the core of the U.S. health care system. They serve as the basis for some of the very significant benefits of managed care, as well as for some of the conflicts of values and ethics.

Areas of Conflict

Autonomy: Since humans are largely social, communal creatures, it is rarely possible to be totally autonomous. To the degree that a person chooses to participate in a social group or organization, that individual may give up an element of autonomy in order to participate more fully in the functioning of the group. That also holds true for providers and patients who choose to participate in managed care plans. Some autonomy is sacrificed to realize the benefits of group participation.4 For example, a patient may have a "menu" of three choices of treatment options rather than eight or ten. A provider may have a limited formulary rather than carte blanche prescription choices. However, both patient and provider retain important elements of the principle of autonomy. Information is critical to autonomous decision making. Patient autonomy is threatened when MCOs don't provide adequate information at the time of enrollment regarding actual benefits, exclusions, referral policies, choice of provider, appeals process, etc.2, 5 Advertising may mislead on issues of quality or coverage. Providers have been penalized by MCOs for providing information on treatment options not covered by the plan to patients (the infamous "gag-clause").2 Clinical guidelines or disease management protocols may interfere with both patient and provider autonomy by limiting choices more on a financial basis than on one of efficacy.6 Conflicts in the area of autonomy have been frequent and serious enough to prompt federal and state legislative intervention, as well as careful scrutiny by MCO professional and accreditation organizations.7, 8

Beneficence: Many, if not most, MCOs reward providers for conserving patient care dollars. This means that the less spent on patient care, the more the provider and the MCO profit. It is no accident that the percentage of premium dollars actually spent on patient care is referred to as the "medical loss ratio."1 The reality is that the provider controls much of the expenditure of MCO funds. Providers who want their plan (or themselves) to do well financially may find themselves with divided allegiance to the health of the MCO vs. the health of the patient.2, 4

Justice: This principle is enhanced under managed care to the extent that the same basic set of services is made available to all enrollees. It is violated when MCOs exclude sick, elderly, or at-risk groups in order to minimize expenditures. Justice is also violated when inappropriate or excessive care is provided to a patient(s) to the detriment of others in like circumstances.4

Medicine as a social good: The beneficial give-and-take between medicine and society is most vulnerable to conflict of values under managed care. Industry wide, non-profit hospitals, with their implicit obligation for community service and charity care, are being bought by for-profit organizations that may feel no such obligation.4 Medical schools, residencies, and PA education programs are suffering as teaching hospitals and programs are purchased, closed, or trimmed to bare-bones operations in order to remain competitive with the leaner and better capitalized MCOs.7 Research funds in private foundations and teaching institutions are threatened. Research data from MCOs and their affiliated corporations are treated as proprietary. Data may be as closely guarded as an industrial secret useful in gaining a competitive advantage.

Areas of Benefit

A fair examination of values and ethics in managed care reveals many real and potential benefits as well as conflicts. Careful management, efficient staffing and purchasing, etc., often result in lower consumer costs. Increased utilization of primary care physicians and PAs may make health care more accessible. Emphasis on standardization and quality control may improve the consistency of quality health care.9 The most effective way to reduce demand for acute health services is to improve preventive and wellness services. While some element of individual autonomy may be reduced, patients and providers often have the opportunity to participate in the development of standards, rules, guidelines, and appeals within the managed care plan.3, 5

Providers in MCOs must continue to adhere to the principle of beneficence in dealing with their patients. Now, however, they must also consider the well-being of other plan members (as well as the plan itself) when deciding on the utilization of collective resources. The core responsibility to act as advocate for one's patient does not extend to actions that have a negative overall impact on the health or well-being of others.

Prudent utilization and equitable distribution of resources should, in theory, make more basic educational and preventive services available to a larger number of patients. To the extent that money is saved by efficient practices, MCOs have the potential to channel more funds to underserved or at-risk populations. If, and when, MCOs utilize portions of their profits in this way, the ethical principles of justice and social good will be enhanced.4, 5

Summary and Recommendations

Managed care has brought sweeping and fundamental changes to U.S. health care. The basic relationships and motivations within the health care system have changed. However, the underlying ethical principles remain the same. The use of these principles as guidelines and yardsticks may be more important than ever as the pace of change increases. These ethical tenets apply equally to each of the participants in the health care equation; the provider, the patient, and the payer (MCO). Each of these parties has a responsibility to apply the principles of ethics in interactions with the others. The American Academy of Physician Assistants believes that those responsibilities include the following:

Providers

The ethical PA:

acts always in the best interest of his or her patient and as an advocate for his or her patient when necessary.

respects patient autonomy and enhances it by informing and educating the patient regarding prevention, diagnosis, and treatment. This free exchange of information should never be restricted by the MCO.

informs the patient of financial incentives to limit care.

investigates the values and performance of an MCO before contracting with it. Providers should contract with ethical MCOs that respect the values of both provider and patient.

uses the resources of the MCO in a fair and efficient way.

avoids arrangements for financial incentives that conflict, or appear to conflict, with the patient's best interest.

actively participates in activities or committees within the MCO that enhance the quality of service, such as policy making boards, peer review, clinical guideline development, quality assurance, credentialing, medical appeals, etc.

promotes and encourages preventive services and wellness programs as effective methods to improve quality and reduce cost.

Patients

The responsible patient:

is informed about the basic elements of the MCO, including coverage limits, exclusions, etc. He or she regularly utilizes information resources made available by the provider and/or MCO.

initiates positive changes in life style when necessary, such as smoking cessation, weight loss, exercise, diet, etc.

complies, as much as possible, with treatment regimens.

has realistic expectations of the health care system. The patient understands that many minor illnesses and injuries can be effectively and safely managed at home.

participates in governance and quality improvement efforts in the MCO when able to do so.

is honest with his or her provider and the MCO regarding his or her health status, habits, risk factors, past history, etc.

Managed Care Organizations

The ethical MCO:

is truthful and honest in advertising and marketing.

discloses all pertinent data regarding the provisions of the plan to purchasers and patients prior to enrollment.

does not restrict providers from disclosing all pertinent information regarding diagnostic and treatment options to patients, regardless of whether these options are covered under the patient's plan.

maintains a fair and equitable review process for patients who wish to appeal denial of services.

maintains a fair and non-punitive method for provider profiling, peer review and evaluation.

maintains an ethics committee or other mechanism to discuss and resolve conflicts of ethics and values that may arise within the MCO.

develops clinical guidelines and pathways with input from appropriate providers, based on sound medical practices and outcomes as well as on efficiency and cost-containment.

participates in systematic external programs of review and accreditation, such as the National Committee on Quality Assurance (NCQA), to allow some element of plan-to-plan comparison by consumers and to assure the public of the MCO's compliance with minimum standards of performance.

conducts ongoing internal research and review as part of a comprehensive process of quality management. Such reviews should include both clinical and financial measures of performance.

directs a significant portion of the plan's profits back into the support of such critically important, non-corporate endeavors as medical education, basic science and clinical research, and health care for the needy.

References
  1. Kassirer JP. Managed care and the morality of the market place. N Engl J Med 1995; 333:50-52.
  2. Yarmolinsky A. Supporting the patient. N Engl. J. Med 1995;332:602-3.
  3. Fleck LM, Squier M. Facing the ethical challenges of managed care. Fam Pract Management. 1995; October:49-55.
  4. Committee on Ethics, American College of Obstetricians and Gynecologists. Physician responsibility under managed care. ACOG Committee Opinion 170. Washington, DC: ACOG, 1996.
  5. Sorum PC. Ethical decision making in managed care. Arch Intern Med 1996;156:2038-40.
  6. Loewy EH. Guidelines, managed care and ethics. Arch Intern Med. 1996;156:2038-40.
  7. Moskowitz D. NCQA: Setting the standard in setting the standards. Medicine and Health 1996; September 2:1-24.
  8. Reichard J. AAHP's "Patients First"campaign as legislative deterrent: will it work? Medicine and Health 1996; December 23:2.
  9. Vladek BC. Managed care and quality. JAMA 1995;273:1483.

Policy Brief: Ethics in Managed Care

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Last Revised: 4/2/02