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Health Care Reform:

Health Insurance & Affordable Care Act

WebMD Health News

Aetna HMO Settlement Could Bring Broad Changes

April 12, 2000 (Washington) -- Medical and consumer groups praised a settlement between Aetna U.S. Healthcare and the state of Texas that they say could help curtail HMOs' use of financial incentives to pressure doctors to withhold treatment from patients.

Aetna, the nation's largest health care company, says it is considering extending the provisions of the Texas deal to its other health insurance plans around the country.

On Tuesday, the two sides settled a lawsuit that the Texas Attorney General's Office brought against Aetna over practices that are considered standard in the HMO industry.

The part of the deal that is drawing the most attention is a change in the incentive scheme for doctors who care for the 2.4 million Texans covered under Aetna managed care plans. No longer can these physicians get bonuses for withholding treatment; they also will not be penalized for providing necessary care. HMOs often operate under a set per-patient budget, which critics say creates a conflict of interest for physicians.

The agreement was voluntary, and Aetna U.S. Healthcare was not found guilty of any wrongdoing.

"I think we would always be concerned about trying to regulate through lawsuit ... but if you look at many elements of this agreement, they parallel directions that the industry has been moving in," Susan Pisano, a spokeswoman for the American Association of Health Plans, an HMO lobby, tells WebMD.

Thomas Reardon, MD, president of the American Medical Association (AMA), said in a statement that the AMA hopes the agreement will encourage Aetna and other insurance companies to make "needed improvements" in all their voluntary contracts. The nonprofit Consumers Union group also weighed in in favor of the settlement, saying it could set national HMO standards.

"I think this is the single most decisive intervention by a regulator to deal with the use of financial incentives to press physicians to withhold treatment," Gregg Bloche, MD, JD tells WebMD. Bloche, co-director of the Georgetown/Johns Hopkins Program on Law and Public Policy, says the new approach doesn't rule out the idea of financial incentives, but tries to reach a compromise. Doctors in plans with fewer than 100 HMO patients can now receive fees for individual services rather than following strict per-patient budgets.

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