Managed Care

During the past two years, some physician and consumer advocacy groups have charged that health maintenance organizations (HMO) impose contractual limitations--known as "gag" clauses--that restrict doctors from presenting to patients all treatment options, including those available outside the HMO. The controversy has prompted many states to ban gag clauses from managed care contracts. Of the 529 HMOs that GAO studied, none used contract clauses that specifically restricted doctors from discussing all appropriate medical options with their patients. Two-thirds of responding plans did have a nondisparagement, nonsolicitation, or confidentiality clause that some physicians might interpret as limiting communication about all treatment options. However, it appears that such provisions are not likely to have a significant impact on physician behavior. Physicians told GAO that they often do not carefully read all of their contracts with HMOs. They maintain that they freely communicate with their patients because habitual practice, professional ethics, and fear of medical liability are stronger influences on their behavior than are contract requirements. However, the power of HMOs in the health care market is increasing, and their ability to terminate physicians' contracts can bring significant pressure to bear on physicians to modify their practice patterns or discussions with patients.

GAO noted that: (1) the managed care industry, physicians, and health care attorneys have different views regarding contract language that could limit a physician's ability to advise patients of all medically appropriate treatment options; (2) there is general agreement that a clause that prohibits discussion of procedures or providers not covered by the plan, and, to a lesser extent, one that requires physicians to consult with the plan before discussing treatment options with enrollees, is a gag clause; (3) however, some physicians and health care lawyers believe that other clauses could restrict the information and advice that physicians provide about a patient's medical options; (4) other physician groups, lawyers, and the HMO industry disagree that such clauses limit medical communication and contend that these are standard contract clauses designed and used only to protect HMOs' business interests; (5) of the 529 HMOs in GAO's study, none used contract clauses that specifically restricted physicians from discussing all appropriate medical options with their patients; (6) two-thirds of responding plans and 60 percent of the contracts submitted had a nondisparagement, nonsolicitation, or confidentiality clause that could be interpreted by physicians as limiting communication about all treatment options; (7) contracts with such business clauses often contained anti-gag language stating that the contract or a specific provision should not be construed as restricting physician medical advice to patients or generally encouraging open communication; (8) of those contracts with one or more of these business clauses, anti-gag language was found in 67 percent of them; (9) this combination could mitigate the potential for business clauses to be read by physicians as limiting discussion of a patient's treatment options; (10) it appears that HMO contract provisions that may be interpreted as limiting the medical information that physicians may provide patients are not likely to have a significant impact on physician practice; (11) physicians GAO interviewed maintained that they freely communicate with their patients regarding all medically appropriate care because habitual practice, professional ethics, and fear of medical liability are stronger influences on their behavior than contract requirements; and (12) physicians also pointed out that the increasing power of HMOs in the health care marketplace and their ability to terminate physician contracts can bring significant pressure to bear on physicians to modify their practice patterns or discussions with patients, without relying on the clauses discussed above.