Unmuzzling HMO Physicians

Health maintenance organizations have become the driving force behind American health care reform in recent years largely because they have been so successful at slowing the surge in health care costs.

This year, however, increasing scrutiny has been directed at one of the cost-cutting methods the HMOs have employed--rules limiting what doctors, nurses and other health care providers may tell patients about treatment options. Last week these so-called “gag rules” were a hot topic of debate at the annual convention of the American Medical Assn. This month the rules themselves may be partly gagged in California through legislative action.

State legislators are expected to move SB 1064 to the Assembly Appropriations Committee next week. SB 1064 requires HMOs to disclose to patients the incentive plans they offer physicians, thus allowing patients to determine whether their doctor’s interests are concordant with their own. A typical incentive would be a bonus to a doctor for limiting the number of patients referred to specialists.

SB 1064 ought to be passed, for it would help Californians better understand how decisions about their health care were made. At the same time, it should be pointed out that SB 1064 is tamer legislation than AB 2649, expected to be voted on by the state Senate Insurance Committee on Wednesday.

AB 2649 would require your HMO to tell you what incentive plans it uses and describe to you the financial risks your physicians face if they tell you all available treatment options. SB 1064, on the other hand, leaves it up to the HMO to disclose generally what its incentive plans are and puts the burden on the consumer to contact the HMO for details.

AB 2649 includes clear and specific disclosure requirements for HMOs to reveal their incentive plans. The rub is that the prospects of the legislation are bleak: If its language is not weakened to resemble that of SB 1064, it is expected to be vetoed by Gov. Pete Wilson.

At the national level, too, efforts to rein in HMOs have met opposition. Last week, a House subcommittee unanimously approved a compromise version of the proposed Patient Right to Know Act (HR 2976), authored by Rep. Greg Ganske (R-Iowa). While the original Ganske bill, introduced in February, prohibited health plans from taking “adverse actions” against doctors and other providers, the new version contains no such provisions. The new version also allows HMOs to deny patients access to financial information such as physician payment incentives.

The most promising state gag rule legislation put forward to date was the ill-fated AB 3226, sponsored by Assemblyman Martin Gallegos (D-Baldwin Park). AB 3226 would have required HMOs to show “just cause” for firing health care providers from HMO networks. The beauty of the Gallegos bill was that it was savvy to the new ways HMOs have learned to fashion unwritten gag rules.

Myra Snyder, executive director of the California Assn. of HMOs, says “there are no gag rules.” In a sense, she may be right, for today HMOs are less likely to require physicians to sign restrictive contracts than to simply fire them for referring too many patients to expensive specialists. Gallegos’ insistence that HMOs show “just cause” for firing would have nipped this in the bud. Because of its defeat earlier this year, however, we can only hope that today’s milder reforms will go some of the distance.