HMO ‘Gag Clauses’ on Doctors Spur Protest

The Santa Monica oncologist thought she was being a strong advocate for her patient.

In May, she referred the patient--a Los Angeles woman in her mid-40s who was rapidly losing her battle with metastatic colon cancer--to a Johns Hopkins University specialist using an experimental drug that had proven effective with similar cancers. It was, in the doctor’s view, perhaps the best chance of extending the woman’s life.

But the patient’s managed care group had a different view of the oncologist: It saw a doctor who said too much and broke the rules. She received a reproachful letter from the managed care group, stating that the Johns Hopkins specialist was not “in network” and that the patient should not have been referred there.

“This occurrence,” the letter also warned, “has been noted in the computer and a future occurrence may result in suspension of referral privilege or, in an extreme case, a recommendation for termination.”

The letter is contained in a malpractice lawsuit filed recently by the patient and her husband against her doctors and an HMO. Even though the patient’s HMO refused to pay for the experimental treatment, the woman decided to go to the Johns Hopkins specialist anyway for the drug treatment.

Doctors in California and nationwide are protesting managed care company practices that they contend impede their ability to have candid discussions with patients about treatment options. These restrictions, doctors complain, prevent them from criticizing HMOs, or their physician-headed medical groups, and from discussing HMO payment practices that encourage doctors to save money by limiting care.

Patients often are unaware of these policies--dubbed “gag clauses” by medical groups--because some managed care contracts prohibit physicians from talking about them. But well-orchestrated efforts by the American Medical Assn. and other medical groups to publicize these policies have heightened public awareness.

In Sacramento, state lawmakers have introduced five bills that would restrict gag clauses. And consumer groups and labor unions, including the California Nurses Assn., are trying to qualify two initiatives for the November election ballot that would prohibit gag clauses and regulate a host of other managed care practices.

Anti-gag clause legislation is pending in at least six other states and Congress.

And last month, the federal government mandated that managed care plans serving Medicare and Medicaid patients reveal any arrangements in which doctors may face financial pressures to limit services or referrals to specialists.

But managed care officials see the onslaught of legislation as a “public relations ploy” by medical groups unhappy with the growing influence of managed care over their profession.

“We say there are no gag rules,” said Myra Snyder, executive director of the California Assn. of HMOs. “To have five bills on something that doesn’t exist is pretty interesting.”

Moreover, Snyder added, “I can’t imagine a doctor making a decision because they are worried about something a health plan might say. Doctors go to bat against the plans to advocate for patients all the time.”

Even so, the issue has become a public relations nightmare for the industry, and some major health plans have scrambled to remove the controversial language from physician contracts.

Although the California Medical Assn. has been lobbying against gag clauses for a year or so, the issue erupted onto the national scene after Harvard University medical professor David U. Himmelstein appeared on the “Donahue” television show and criticized the gag clause in his HMO contract. He accused HMOs of using improper financial incentives for doctors and then barring doctors from discussing them with patients.

Three days later, Himmelstein said, he received a letter from U.S. Healthcare, one of the nation’s largest HMOs, eliminating him from its provider network. The HMO gave no reason for sending the letter, but Himmelstein, a primary care doctor and leading advocate for a national health plan, says he knows what provoked it.

“Every doctor who works with an HMO knows you are in trouble if you criticize,” he said.

U.S. Healthcare last month revised its physician contract, replacing clauses that restricted what doctors could say with ones that “encourage” open communication with patients.

But gag rules do much more than prevent doctors from criticizing a managed care company, physicians and consumer groups claim. In their most controversial form, gag clauses explicitly prohibit doctors from telling their patients the full range of treatment options, although such clauses are rare.

Doctors say gag clauses can work in more subtle ways. For example, a doctor may prescribe a particular procedure or medication because he or she knows the HMO will cover the treatment. If other options exist, but are not covered by the HMO, the physician may be reluctant to divulge that for fear of casting the HMO in a poor light.

So-called “disparagement clauses” prohibiting doctors from criticizing the managed care firm are “increasingly common due to the economic pressures . . . and more HMOs are using them,” said a health care attorney with a prominent San Francisco law firm that prepares physician contracts for insurers and medical groups. Often, these disparagement clauses are included in contracts that give the managed care firm the right to fire a doctor, without cause, on 30- or 60-day notice.

Some argue that disparagement clauses are a common way for businesses to protect their legitimate interests, by insisting that employees not bad-mouth them publicly.

“If [health care reform] is going to work, these doctors have to learn how to voice their concerns within a corporate structure,” said Ellen Moskowitz, a bioethicist with the Hastings Center, a think tank in Briarcliff Manor, N.Y. “I think too many doctors have the notion that having a moral obligation to protect the reputation of the company you work for is foreign and strange. But it is possible to meet that obligation and still act responsibly.”

Others insist that even as health care converts from a cottage industry to big business, it must not forget the essential importance of the doctor-patient relationship. For that reason, they say, the ordinary rules of business do not always apply.

“We’re dealing with medicine,” said Margaret E. O’Kane, president of the National Committee for Quality Assurance, an influential Washington-based accrediting organization for HMOs. “The patient’s trust relationship with the doctor is so critical.”

Some contend, however, that anything that inhibits doctors from freely discussing a patient’s treatment can undermine trust between patient and doctor.

By their very nature, gag clauses may prevent patients from knowing whether they have had a candid discussion with their physician, says Dr. Jennifer Reifel, a fellow at UCLA Medical Center.

“It’s difficult for patients to find out that they weren’t told something,” she said. “Usually it’s fairly hard to document. And managed care makes it very hard for you to get a second opinion.”

Traditionally, doctors have regarded their autonomy to make medical decisions as sacred. But many managed care companies--in an effort to contain costs--require doctors to seek approval for treatments, sometimes from nonphysicians. Incensed by these and other managed care rules, many doctors have focused their frustration on gag rules.

Dr. William P. Duffy, an orthopedic surgeon who has operated a bustling practice just blocks from the Capitol in Sacramento, gives lawmakers who seek his services an earful of harsh opinions on managed care. Duffy also says he advises his patients whenever he believes an insurer is putting financial concerns ahead of patient care.

“They are trying to eliminate the doctor’s ability to talk to the patient,” Duffy said. “For example, say the doctor knows [the insurer] will deny a diagnostic test.

“The doctor is making a decision on the basis of money. I hear it all the time from other doctors, ‘I can’t order an MRI scan, Dr. Duffy, they’ll ding me for that.’ Well, I’m too old to ding.”

But Duffy is not too old to be punished. He says that Foundation Health Plan, one of the state’s largest HMOs, recently refused to renew his longtime contract because he has taken his complaints about managed care public.

“Doctors have a moral responsibility to protect the patient’s interest,” Duffy said. “All the old-time doctors live by this. But the system has conned other doctors into thinking they won’t make any money unless they sign a contract.”

According to a spokesman for Foundation Health Plan, it is likely that Duffy was dropped as part of a companywide effort to reduce the number of specialists in the network.

Nevertheless, the state Department of Corporations this year asked Foundation Health to remove language in provider contracts requiring providers and the plan to “portray each other in a positive light to beneficiaries/members and the public.”

A spokesman for the department, which regulates HMOs, said Foundation is the only California health plan that has been asked to remove a gag clause.

“We certainly never intended that any of this contract language be interpreted as a limitation on the provider’s ability to talk to a patient about health care matters,” said Kurt Davis, a Foundation Health spokesman. “What we were requesting through this language was some business etiquette; asking that if providers have concerns about business matters, that they come talk to us about them.”

Davis said the plan is instituting new language in contracts “that specifically states that nothing in the contract should be interpreted as a limitation on the providers’ right or obligation to discuss health care matters with a patient.”

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Registered nurses, too, say they have felt the squeeze of gag rules. Although they rarely sign contracts that contain gag clauses, employee handbooks often forbid nurses from making disparaging public remarks.

In 1994, two nurses were reprimanded and one was fired after they criticized their company, Alta Bates Medical Center in Berkeley, in a newspaper story. The nurses charged that a restructuring of jobs at the medical center was eroding care and endangering patients’ lives.

But the California Nurses Assn. fought back, filing a class-action lawsuit that, among other points, alleges that the nurses’ freedom-of-speech rights were violated. The trial is set to begin in the fall.

Marilyn Pons, one of the litigants, says the nurses tried to voice their concerns privately to hospital administrators but were ignored.

“They would ignore our suggestions,” she said. “It was like talking to a brick wall.”

But nurses are bound by the tenets of their license to be advocates for the patient, Pons says. And that means doing whatever is necessary to put the patient first.

“The hospital was letting [employees] go and not replacing them,” Pons said. “Every day it got harder. I began to lie awake at night and wonder if I had forgotten something important and maybe endangered a patient. No matter how hard you worked, you couldn’t do a good job. I would tell patients, ‘I’m sorry this happened.’ ”

Pons was never reprimanded but finally resigned in protest in January. Alta Bates administrators say that nurses have never been prevented from speaking freely to patients.

“Nurses are patient advocates. We don’t have a gag rule on what they can say to the patients,” said Carolyn Kemp, a spokeswoman for Alta Bates. Moreover, she added, the hospital’s restructuring has resulted in high patient satisfaction.

“Much of this [CNA lawsuit] is a . . . thinly veiled job protection issue. Alta Bates would do nothing to compromise patient care,” she said.

Nevertheless, patients may be unsettled by the idea that the fine print of a business contract may be influencing what their doctor says to them in the privacy of the examination room.

“Educated patients are starting to wonder, ‘Do I have to be suspicious of anything my doctor says? Should I ask to see my doctor’s contract with the HMO? Should I ask, “Are you hiding something?” ’ The answer to all those questions is yes,” said Sara Nichols, the Washington director of Physicians for a National Health Program.

“Ultimately, the only answer will be the rights of the patient have to be put ahead of the bottom line.”

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Doctors Fight Back

Physician gag orders have become the hot-button issue for the American Medical Assn. over the past few months, and doctors have been the strongest supporters of several bills pending in the California Legislature. Here is a rundown of the bills:

* AB 3013 and 2669: These very similar bills, sponsored by Assemblywoman Barbara Alby (R-Fair Oaks) and former Assemblyman (now state Sen.) Byron Sher (D-Stanford), would prohibit a health insurance plan or affiliated medical group from including in contracts any provisions that “interfere with the ability of a physician and surgeon to communicate with patients regarding their health care,” including information about treatment options and other medical coverage arrangements.

* SB 1805: Sponsored by Sen. Herschel Rosenthal (D-Los Angeles), this bill would prohibit HMOs and some disability insurers from preventing doctors from disclosing to patients information that the doctor determines is “relevant to the patient’s care.” It would also prohibit HMOs and other insurers from taking disciplinary action against a doctor for advocating on behalf of a patient.

* AB 2067: Sponsored by Assemblywoman Barbara Friedman (D-North Hollywood), this bill is similar to SB 1805. It would prohibit HMOs and insurers from “discharging, demoting, terminating a contract” or imposing other sanctions on doctors, nurses and other health care providers for advocating on behalf of a patient.

* SB 1847: This bill, introduced by Sen. Newton Russell (R-Glendale), would ban health care organizations from restricting or prohibiting doctors from disclosing to patients any information dealing with medical treatment options or alternative therapies, or the processes for deciding whether services will be authorized or denied.