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Health Care Reform:

Health Insurance & Affordable Care Act

U.S. Supreme Court Debates Key HMO Case


While the Clinton administration strongly advocates legislation creating a bill of rights for HMO patients, it is arguing on the managed care side in this case, saying that such treatment issues can be handled by state law.

Although Herdrich won't get any more money if victorious, she still sees the purpose in the case. "Probably what we're accomplishing the most is making more and more HMO members aware that their physicians might have incentive clauses in the contracts that they hold. So that they may not have your best interests at heart," she says.

One of the vexing issues in the case is to figure out how an HMO can offer incentives without it becoming a conflict of interest. Ginzkey says it's a matter of whether the bonus creates an "undue influence" -- something that would have to be decided on a case-by-case basis.

"I don't think you should shy away from [investigating] these plans when you have, in my opinion, incentives that essentially encourage malpractice," says Ginzkey.

Gregg Bloche, MD, JD, and co-director of the Georgetown/Johns Hopkins Program on Law and Public Policy, filed a brief supporting Herdrich's case. He describes the CarleCare incentives as "crude rewards for denying care. ... These are not incentives that reward frugal practice, efficient practice. You're paid more if you deny care," he tells WebMD.

Bloche says the courts are struggling with the problem now because Congress has failed to respond to the complexities in balancing treatment and plan administration.

A decision on the case is expected by July.

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