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.
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.
But Bloche said there is a downside to giving doctors more flexibility in billing.
"Physicians will be able to succeed in getting higher fees from the company, and those higher fees are going to be passed on to employers and to consumers in the form of higher health care costs that don't translate into higher quality of care," he says.
The settlement calls for several other significant changes in the way Aetna U.S. Healthcare does business, including the following:
- Ensuring that doctors determine what's medically necessary for the patient, not the plan.
- Creating an ombudsman's office within Aetna to serve as the patients' advocate.
- Improving patients' access to specialists inside and outside of Aetna's network.
- Providing doctors financial incentives to offer preventive care.
- Giving consumers at least 90 days' notice if a prescription drug is being dropped from coverage.
"The agreement provides many much-needed improvements," says Texas Attorney General John Cornyn. "This agreement takes the surprises out of managed care." After taking months to negotiate, the Aetna agreement is effective immediately, the state attorney general?s office says.
Aetna U.S. Healthcare may eventually put the provisions of the agreement in place in its other plans nationwide. "The company is in the process of studying the feasibility of these new initiatives in other markets outside of Texas," Arthur Leibowitz, MD, Aetna U.S. Healthcare?s chief medical officer, says in a statement.
Texas also filed suit against the Pacificare, Humana, and NYLCare managed-care plans, and those lawsuits are still pending.
Cornyn has instructed his staff to go after similar deals with the remaining defendants. Even if other HMOs in Texas and around the country adopt similar changes, they?ll still be facing the threat of Congressional action on a "patient bill of rights," a number of class-action lawsuits, and a pending case in the U.S. Supreme Court over how HMO doctors are compensated.
One health-care expert tells WebMD that Aetna had little choice but to agree to the settlement.
"They [the HMOs] were going to lose the power to control the docs anyhow, and instead of just letting it slip away from them, they said, 'Why don't we make a public relations coup out of it?'" says Uwe Reinhardt, Ph.D., a health care economist at Princeton University.