Medicare HMOs Told They Cannot ‘Gag’ Physicians

Doctors serving 4 million Medicare patients enrolled in health maintenance organizations cannot withhold information on treatment options or medical procedures, the federal government has stated in a strongly worded directive sent to more than 300 health maintenance organizations.

Angry at HMO restrictions, sometimes called “gag clauses” that are aimed at saving money, the government wants to assure that doctors have full freedom in discussing alternate methods of care with their patients.

Since the government pays for Medicare, it has the right to make these rules directly for Medicare HMOs. But the Clinton administration wants to take a big additional step, passing a new federal law that would give extensive protection to doctors serving 50 million private patients enrolled in HMOs.

The government is “dedicated to the full health protection of all members of HMOs just as it is dedicated to the good health of all other Medicare enrollees,” Medicare spokesman Peter F. Garrett said Friday, outlining the rationale for the government action.

Legislation will be introduced next year to apply the same rule to doctors working in all private HMOs, Garrett said.

The directives were mailed to HMOs this week in an unusually forceful effort by federal officials to insulate doctors from pressure exerted by HMO management to save money by curtailing access to treatments.

“This is not new. We are reminding the health plans of existing policy,” said Garrett. “We are just being cautious.”

Nevertheless, the directive issued by the Health Care Finance Administration, which runs Medicare, to all HMOs active in the health care program for the elderly represents a loud and clear signal from Washington against stinting on health treatments.

Some doctors have complained that they would like to communicate in an unfettered way with their patients but often are restricted by HMO managers who fear that costly referrals to specialists may eat into their organizations’ revenues.

Under the government rule, federal auditors and enforcement personnel can punish HMOs if they prevent doctors from discussing all treatment options with their patients.

The Medicare rule states flatly that doctors may not withhold any advice to their patients on medical treatment choices, Garrett said.

For example, doctors must be allowed to converse freely with their patients about more costly drugs, newer therapies, alternate surgeries and referrals to more expensive specialists, according to Medicare officials.

The HMO industry’s leading trade group said late Friday that it agreed with the federal policy. The government’s actions “are completely consistent with the policy of HMOs on communication between patients and physicians on clinical issues and treatment options,” said Don White, a spokesman for the American Assn. of Health Plans, which represents the industry.

“People in Medicare HMOs have the same rights to know exactly what their treatment options are as anyone else in the Medicare program,” White said.

Medicare helps pay the health bills of 34 million Americans over the age of 65 and 4 million disabled people of all ages.

The vast majority of Medicare beneficiaries receive traditional “fee for service” medicine, which gives them the unrestricted right to go to any doctor or hospital and receive any treatment.

About 10% of Medicare participants are enrolled in HMOs, which save them money by eliminating co-payments and deductibles and offering extra benefits, such as prescription drugs, that are not covered under fee for service. In return for the extra benefits, the enrollees must receive care from doctors and hospitals in the HMO networks.

The HMOs get a fixed annual fee for each patient, equal to 95% of the average cost of caring for a Medicare enrollee in the particular geographic area. If the HMO can deliver a year’s care for less than the fixed payment from the government, it makes a profit. Patients and some doctors say that the HMOs pressure physicians to hold down spending to increase profits.

HMO enrollment is much higher than the national average in California, where about 25% of Medicare enrollees belong to HMOs; in Los Angeles County, more than one-third are HMO members.

California has a long history of involvement in managed care. The Kaiser system, for example, has served patients since the 1940s.