Virtual Mentor. January 2001, Volume 3, Number 1.

Cases in Law and Ethics

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Financial Incentives in Managed Care

A case that explores the impact of financial incentives from insurance companies on the patient-physician relationship and whether or not they should be disclosed to a patient.

Kayhan Parsi, JD, PhD

Mr. Nelson presents to Dr. Porter's office complaining of bitemporal headaches for a couple of weeks. A medical history reveals that Mr. Nelson has been experiencing difficulties and stress in his marriage, and a complete neurological physical exam is nonfocal. Based on his evaluation, Dr. Porter believes that the headaches are stress-related and can be managed by NSAID pain relievers and stress management. Mr. Nelson, however, believes that his headaches may have a more serious etiology and would like a CAT scan to rule out anything of greater concern. Mr. Nelson has read in the news that some health plans use financial incentives that reward physicians who save the plan money by ordering fewer expensive tests. Mr. Nelson asks Dr. Porter: "Are you not ordering the CAT scan because it is too expensive to get?"

Some have advocated that disclosure of financial incentives be considered a part of the informed consent process. Should physicians be legally required to disclose this information. See Neade v. Portes.

Beyond the legal judgment on the matter, does Dr. Porter have an ethical obligation to disclose any financial incentives to Mr. Nelson? See the AMA Code of Medical Ethics, E-8.054, "Financial Incentives and the Practice of Medicine."

 See also, the following articles.  Abstract are searchable on PubMed abstracts of the following peer-reviewed journal articles:

Disclosing Doctors' Incentives: Will Consumers Understand and Value the Information?
Miller TE, Horowitz CR, Health Aff (Millwood)   2000 Jul-Aug;19(4):149-55

Disclosure of Physician Incentives: Do Practices Satisfy Purposes?
Hall MA, Kidd KE, Dugan E  Health Aff (Millwood)  2000 Jul-Aug;19(4):156-64

Disclosing Physician Financial Incentives
Miller TE, Sage WM, JAMA   1999 Apr 21; 28(15):1424-30

Managed Care Organizations Should Not Disclose Their Physicians' Financial Incentives
Noone GC, Ubel PA, Am J Manag Care   1997 Jan; 3(1):159-60

To Tell the Truth: Disclosing the Incentives and Limits of Managed Care
Morreim EH, Am J Manag Care   1997 Jan; 3(1):35-43