AMA Journal of Ethics®

Illuminating the art of medicine

Journal of Ethics Header

AMA Journal of Ethics®

Illuminating the art of medicine

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 what the AMA Code of Medical Ethics says about this topic in Opinion 8.054 Financial incentives and the practice of medicine. American Medical Association. Code of Medical Ethics 2008-2009 Edition. Chicago, IL: American Medical Association; 2008:223-225.

Related Articles

Abstract are searchable on PubMed abstracts of the following peer-reviewed journal articles:

  • Miller TE, Horowitz CR. Disclosing doctors' incentives: will consumers understand and value the information? Health Aff (Millwood). 2000;19(4):149-55.
  • Hall MA, Kidd KE, Dugan E. Disclosure of physician incentives: do practices satisfy purposes? Health Aff (Millwood). 2000;19(4):156-64.
  • Miller TE, Sage WM. Disclosing physician financial incentives. JAMA. 1999; 28(15):1424-30.
  • Noone GC, Ubel PA. Managed care organizations should not disclose their physicians' financial incentives. Am J Manag Care. 1997; 3(1):159-60.
  • Morreim EH. To tell the truth: disclosing the incentives and limits of managed care. Am J Manag Care. 1997; 3(1):35-43.
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