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What standard for the standard HMO gatekeeper?

In 1998, the United States devoted 14% of its Gross National Product (GNP) to health care, twice what it spent on national defense. (1) It is estimated that the U.S. will expend over 1.7 trillion dollars or over 18% of the GNP on health care this year. (2) Nevertheless, as many as 40- million people or 15% of the U.S. population enjoy no health care coverage, (3) many of whom are children, within family units with at least one full time employed member.

In addition, the U.S. expends more of its financial resources on health care than any other country; out-spending Canada. Germany, and Japan by at least 40%. (4) Yet, these countries are capable of affording universal health care coverage for their respective citizens. (5)

Moreover, today, approximately two-thirds of those who enjoy health insurance coverage secure such coverage through their employers. (6) Such coverage is increasingly expensive for employers. In 1965, employee health care costs consumed only 8% of pre-tax employer profit. By 1989, that percentage had grown to 56% and it is estimated to reach 74% by the year 2000. (7)

How the U.S. health care system is the world's most expensive and yet fails to cover such a significant portion of its population, is the subject of much speculation. One suspected causal antecedent is waste. It is estimated that as much as 25% of the U.S. health care allowance may be consumed through waste, one form of which is unnecessary administrative costs. (8) Another reported form of waste is unnecessary medical procedures and underutilized facilities. (9) Without significant difference in the quality of care, the U.S. spends much more per citizen than does Canada. (10) It is estimated that the recapture of the wasted quarter of the health care budget would be sufficient to cover the 15% of the U.S. population who are without insurance. (11) Some believe that this might be accomplished simply through the employment of a single payer system. (12)

A second suspected factor contributing to the high and escalating cost of U.S. health care is medical malpractice. It is estimated by the American Medical Association that unnecessary medical treatment ordered as defensive medicine, (13) i.e., medical care prescribed not for medical reasons but solely to avoid malpractice claims, may add as much as $15 billion per year to the cost of health care. (14) Some have maintained that defensive medicine not only contributes to the rising cost of health care, but that the excess medical services actually influence the medical standard of care in a fashion that runs counter to many cost-containment measures. (15) It is, of course, quite true that the extent and influence of defensive medicine has been solidly questioned as of late. For example, it has been suggested that the extent of actual medical malpractice far exceeds the number of malpractice suits and that malpractice premiums show little verisimilitude to the number of malpractice claims. (16)

A third and arguably significant contributing factor to the high and ever rising cost of health care is health-care-provider financial self-aggrandizement. (17) Where physicians control referrals and may augment their financial income through such, they generally will. Perhaps more than fear of malpractice, physician financial interest in down-stream health care providers tends to excite unnecessary referrals. (18)

Other factors, such as the advancement and proiiferation of technology, demographic changes in the U.S., and rising professional incomes, appear to contribute (some more than others) to the crisis in U.S. health care. (19)

One extremely popular and effective method of containing health care costs while also affording a wide range of service for an ever increasing yet specified range of the population is managed care. Managed care is generally characterized as an integrated health care delivery and health care financing system. The fully integrated managed care system is a cost-containment strategy that, at least in principle, is intended to eliminate unnecessary service (i.e., waste); by eliminating or reducing over-utilization of medical resources through the alteration of practitioner and provider incentives.

The forms of Managed Care are varied but, in general, all offer more or less prepaid, preauthorized health care conjoined with cost incentives designed to reduce health care spending. (20) Indeed, according to the industry's own definition, "Managed Care alters the decision making of Physicians and Hospitals by interjecting a complex system of financial incentives, penalties, and administrative procedures into the doctor-patient relationship." (21)

The least radical Managed Care manifestation is the Preferred Provider Organization (PPO) which contracts with Providers and Practitioners to provide discounted, fee-for-service health care to enrollees. The Exclusive Provider Organization (EPO) differs from the PPO in that the EPO enrollees are not financially covered when they receive health care attention from non-contracted Providers or Practitioners.

The more radical form of Managed Care Network is the Health Maintenance Organization (HMO). The variety of HMOs is considerable. For example, staff model HMOs employ practitioners at a certain location while group and network model HMOs contract with pre-existing professional corporations or partnerships to provide health care to enrollees. Individual Practice Associations (IPA-HMOs) are arrangements whereby the HMO contracts with an IPA, which in turn contracts with individual practitioners to provide health care to HMO enrollees.

Managed Care Organizations, particularly HMOs, employ a combination of incentives to promote reductions in medical care utilization. Perhaps most importantly, HMOs are paid and frequently pay contract practitioners in a fashion that at least partially shifts the financial risk from the payer of health care to the provider and the practitioner. For example, unlike a traditional fee-for-service payment method, which essentially encourages increases in the volume of services, HMOs and at times the contracted practitioner, are paid on a capitated basis. (22) A capitation payment system discourages the utilization of health care services by initially presenting the HMO with a fixed amount for each enrollee for a given period. With a reduction in the fixed financial amount with each increase in the volume of services, there will be a trend toward under-utilization.

HMOs employ additional cost containment measures that have proved generally effective yet somewhat troublesome. For instance, HMOs frequently withhold a certain portion of the practitioner's income (usually around 20%) until the end of the year at which time the withheld portion is returned to the practitioner if, but only if, the HMO is not functioning at an economic loss. (23) Additionally, in order to cover HMO referrals to specialists (who are more likely to be paid on a fee-for-service basis) the HMO will create a referral fund. Yet, in order to discourage referrals to specialists, the HMO will generally offer contracted general practitioners a percentage of the unused funds at the end of the year. (24)

One of the more controversial HMO cost containment measures is the employment of gag orders. (25) Such orders, secured through HMO-practitioner contracts, proscribe practitioner disclosures to enrollees concerning medical options not offered by the HMO and about more expensive medical alternatives to those the HMO is presently recommending. Gag orders have also been used to require practitioner silence about both practitioner incentives and gag orders themselves.

Perhaps besides paying practitioners on a capitated basis, the most efficacious HMO method of abating resource utilization and thereby costs, is the employment of the so-called "gatekeeper." The gatekeeper, generally a general practitioner or primary care physician, is responsible for managing the HMO's health care financial resources by, among other duties, determining the proper allocation of said resources to enrollees. Gatekeepers determine the distribution of services to the enrollee, e.g., whether a referral to a specialist is appropriate for the enrollee. Gatekeepers, frequently paid on a capitated basis, can also be subject to all the above-mentioned cost incentives.

Notwithstanding the healthcare dangers of under-utilization, the cost savings afforded by Managed Care Networks, in general and HMOs in particular, have proved exceptionally enticing to payers in the health care market. It is estimated that HMOs now account for over half of all privately insured individuals. (26)

Nevertheless, not all of the empirical studies of HMO health care delivery and enrollee satisfaction have been complimentary. The empirical evidence concerning the effective delivery of quality health care by HMOs is, at best inconclusive and/or equivocal. (27) Thus, the purpose of this note shall be to explicate and examine this problem and, at least some of its ramifications. To that end, section II shall be devoted to the delineation of the contingent conditions for the problem and its development. In section III, the problem shall be discussed and various arguments for its resolution addressed.


Three models have served to determine the standard of due care for practitioners and providers of health care. The strict and similar locality rules would set the standard of due care owed by practitioners and providers to patients at the level demonstrated by other reasonable and prudent practitioners and providers within that particular or similar locality, respectively. The national standard would fix the standard of due care by the reasonable and prudent practitioner and provider in the national theatre.

In favor of the generally accepted national standard of due care, courts have noted that national standards for medical education, accreditation, and certification give a national flavor to medical care, irrespective of the particular locality of implementation. (28)

The national standard does, however, acknowledge resource limitations of a particular locality. Concerns of a particular locality may modify the national standard when those concerns are circumscribed in terms of physical resources. Given that "ought" implies "can," a health care practitioner can not be held liable for failing to perform a particular service if the physical prerequisites for said performance are absent.

Aside from the physical resource limitation on the practitioner and provider, it has been considered an accepted principle of the medical profession that once a person is accepted as a patient, then "whether the patient be a pauper or a millionaire, whether he be treated gratuitously or for reward, the physician owes him precisely the same measure of duty and the same degree of skill and care." (29)

This principle has, in the face of medical cost containment, been somewhat modified of late. Professor E. Haavi Morreim has distinguished between the standard of medical expertise on the one hand, and the standard of resource use, on the other.30 The former, according to Morreim, is that which is owed equally to all parties accepted as patients or enrollees. The latter, however, like the physical resource limitation upon the accepted standard of care, is determined not only by what is physically available but, because the practitioner is in no lawful position to misappropriate another's property, is determined by what is financially covered by the patient's heath care payer. That is to say, physicians are generally excused at law from breaches of the accepted standard of care when due to no fault of their own, but due to the unavailability of necessary physical resources. As a continuation of this general law principle, Morreim contends that practitioners are in no position to extend physical resources to pat ients or enrollees when those resources are physically available but not financially covered by the health care consumer's health insurance. The physician, after all, is not possessed with the necessary property right in the health care resource to enable her to merely appropriate the provider's resources on behalf of the enrollee, in spite of the practitioner's obligations to the enrollee. In other words, if the enrollee's medical needs required medical skill and care commensurate with the recognized standard of care, the physician is duty bound to exercise such skill and care. However, if the enrollee's medical needs require access to available physical and medical resources which in the particular enrollee's case, have not and will not be paid for, then the physician is not only not obligated but is entitled to appropriate those resources for the enrollee. This is argued to be appropriate notwithstanding that the use of said resources might be required by the standard of care. Thus, given two identical pat ients with identical problems but with very different health care payers, identical physician responses might constitute a breach of the duty of due care in the one case, but not in the other. That is, the standard of medical care is bifurcated into two distinct areas, the skill and abilities of the physician, on the one hand, and the physical and medical resources, on the other. While the former remains constant, the latter shifts according to the patient's health insurance. If the patient is covered by a fee-for-service insurance plan, then the medical skill and care that is owed the patient will be the same as that owed the enrollee in a capitated HMO. But what is owed the fee-for-service patient concerning medical resources may differ greatly from what is owed the enrollee in a capitated HMO.

A classic illustration of Morreim's position is Wickline v. State of California. (31) In Wickline, the plaintiff brought an action for negligence against her third party payer, California's cooperative, state and federal program of medical assistance to the indigent, namely, Medi-Cal. The plaintiff was diagnosed as suffering from Leriche's Syndrome which, in the patient's case, required surgery to eliminate the obstructions of her distal aorta. The Medi-Cal program requires prospective utilization review of all cases covered. Without prospective utilization review approval, the proposed medical intervention would not be authorized and, therefore, not covered. The plaintiff's physician made the required request for surgery and for ten days of subsequent hospitalization. Said request was approved by Medi-Cal. After successful surgery, the plaintiff encountered problems, prompting her physician to request an eight-day extension of hospitalization. With the physician's explanation for the needed extension, the Me di-Cal medical review consultant allowed only a four-day extension. The plaintiff's physician reluctantly acquiesced and discharged the plaintiff on the fourteenth day. The plaintiff developed further problems and subsequently lost her leg above the knee.

The issues contested in Wickline might well be argued to illustrate Morriem's distinction between the practitioner's covered skill and care on the one hand, and medical resources, on the other. In Wickline, the surgeon's skill was appraised against the national standard of care used to judge all surgeons performing said medical intervention. Yet, it was the plaintiff's health insurance (Medi-Cal) that set the range of medical resources owed the plaintiff at fourteen days. Arguably, fee-for-service health plan might well have set the obligation to the tune of eighteen days. Consequently, the absence of physical resources would excuse the practitioner's failure to employ such resources, as required; so also should the physically available but financially unavailable resources excuse the practitioner's failure to employ such resource, as required.

Morreim's point is that since financial unavailability should be legally and ethically treated like physical unavailability, the duty owed by the health practitioner must be modified by what the health care payer, rightly or wrongly, has made financially available. If Morreim is correct that there obtains a difference between the skill and care a patient may legally expect from her physician on the one hand and the health care coverage she can expect from her health care payer on the other, then the physician's liability for malpractice would only arise when both the payer covered the service and the physician exercised her skill in a substandard fashion. Nevertheless, according to Morreim, the health care practitioner owes the full measure of her skill and care to the patient for those medical services that are covered, Liability against a practitioner is possible, but predicated upon the physical and economic actuality of the medical services themselves.


As managed care organizations, in general, and HMOs in particular, strive to abate the rising cost of health care, the role of practitioner incentives is increasingly valued. Indeed, as noted above, one prodigiously popular incentive is the possibility of the gatekeeper profit sharing the remaining referral funds. But if such incentives are indeed effective and specialists are not addressing enrollee medical problems, who is?

In an interesting and illustrative case, Chapel v. Allison. (12) the plaintiff-patient sought medical care from a general practitioner who treated the plaintiff but who failed to refer the plaintiff to a specialist. When the plaintiff's injury failed to properly heal, he brought suit against the physician. One of the issues confronting the Montana Supreme Court was whether to hold the general practitioner to the standard of care of a general practitioner or to the standard of care of a specialist. The Montana court acknowledged the general, common law rule that a general practitioner who voluntarily assumes the duties of a specialist will be held to the standard of care of the specialist. (33) The Montana Supreme Court, confronted with a general practitioner in a rural area treating a patient suffering from a problem that was permissibly but not exclusively within the domain of the specialist, held the general practitioner to the national standard of care of other rural, general practitioners.

The above noted general, common law rule and the holding of the Montana Supreme Court pose an interesting extension of Morriem's argument. The gatekeeper incentive not to refer to a specialist leaves the gatekeeper to either refer the enrollee to a specialist, perform the required service herself, or do nothing. If the gatekeeper fails to perform the service because of negative utilization review, then according to Morreim, there could be no gatekeeper liability. If the gatekeeper does nothing because of avarice, then the gatekeeper may have been either professionally unethical, (34) committed the intentional tort of inflicting severe emotional distress by acts outrageous and in the extreme, through abandonment (35) and/or negligent in at least not referring the enrollee to a specialist. If, however, the gatekeeper successfully addresses the enrollee's medical problem, then potential legal problems will be circumvented. But if the gatekeeper addresses the enrollee's medical problem and does so in such a fashi on as to inspire enrollee litigation, then what standard of care is the gatekeeper to be held, that of the reasonable and prudent general practitioner or that of the reasonable and prudent specialist?

If the gatekeeper is motivated to assume the specialist's duties simply out of economic rapacity, then it would appear that the standard for judging gatekeeper negligence would be set at the specialist level. If held to the specialist's level of due care, the heightened sense of liability might contravene the gatekeeper's economic impetus not to refer to the specialist those enrollees for whom a specialist's attention would be appropriate. The increase in referrals caused thereby might well reduce the economic effectiveness of the HMO. If the gatekeeper, held to the specialist's standard of care, continued to withhold referrals, she might well suffer an increased level of liability, and thereby, potentially reduce the economic efficiency of the HMO. Either way, holding the gatekeeper to the standard of due care of the specialists may well have a negative effect upon HMO economic efficiency.

In order to abate this effect, it might be argued, pace Morriem, that not only what is physically owed a patient may be modified by physical availability and the patient's financial coverage but also that the quality of skilled professional services may be likewise modified by the patient's financial coverage. This relatively unexpected extension of Morriem's important point would render the oddity that with the same general practitioner, the same patient, and the same patient problems addressed exactly the same way, might well constitute malpractice in a fee-for-service arrangement and yet non-negligent service in an HMO.

In support, it has been noted that the differing duties owed by the same party to a second party depending on the second party's status is nicely illustrated in the law of torts concerning the duties owed by owners and occupiers of land toward others. (36) Traditionally, the owner or occupier of land owed only a duty not to wantonly or intentionally harm the uninvited party, i.e., the trespasser. The invited social guest, i.e., the licensee, is owed a warning of dangers known by the occupier of land. Finally, the so-called "invitee" enjoys a right to be informed about all known dangers and those dangers discoverable through reasonable diligence. (37) Accordingly, the person who does not enjoy health insurance is not owed any health care coverage and is, therefore, like a trespasser. The enrollee in a managed care organization like an HMO is on par with the licensee while the patient in a fee-for-service plan is like the invitee.

In fact, the same argument might be made about various areas of law. Contract law and legislation are two areas of law where duties owed and rights enjoyed would be dependent upon mutual agreement or governmental proclamation, respectively. The contractual status of one party, for instance, may alter or dictate the contractual duties that a second party suffers to the first. One without a ticket will not be able to see the performance while one with balcony ticket seats will not enjoy the view of the performance enjoyed by one with "front row, center" ticket seats. Legislation may expressly alter duties suffered by various parties to others in terms of recognized status. There are health care statutes that reduce the standard of physician culpability for some practitioner's acts for particular patients. For example, Oregon's Death With Dignity Act (38) shields physicians from tort liability for mistakes about their patient's needs for psychological consultation so long as the mistake was made in good faith.

Nevertheless it might be counted that there is a significant difference between the relevant parties in the three examples, on the one hand and the HMO enrollee, on the other. It could be contended that while the three examples, i.e., tort obligations suffered by occupiers of land, contract obligations, and differing duties suffered by statute, all allow for differences in obligations owed because of party status, the differences are publicly known, and explicit. But in the case of HMO gatekeepers performing procedures generally reserved for specialists, the relevant information is not public knowledge and generally not even known by enrollees. In fact, without fear of embellishment, it might be argued that enrollees believe, based upon presentations about the elimination of "unnecessary fat" and cost benefits of "prophylactic treatment," that they are receiving the same quality, necessary medical care received by patients in a fee-for-service plan. Thus, the problem with the argued analogies is that, unlike the respective parties in the other examples, the HMO enrollee has been given information that would suggest that he will receive the same quality health care as that acquired in a fee-for-service plan. It is not as if the licensee has been told, in ambiguous language, that he will be treated like the invitee. But with phrases like: "medically necessary services" and "quality health care." the HMO enrollee has been told that he will received none of the "fat" but will receive non-negligent care and the same quality of care as that received by the fee-for-service beneficiary. Arguably, the important difference between the represented parties in the proposed analogical examples and the HMO enrollee is not that the former group has information while the latter has none, but rather that unlike the former group, the latter group has misinformation, cured only through the promulgation of additional true and detailed information.

More important, perhaps, is the dissimilar legal positions enjoyed by the owner of land, on the one hand and the gatekeeper in the HMO, on the other. In the former case, the land belongs to neither the trespasser, the licensee, nor the invitee. The land belongs to the owner and the other parties' status on the owner's land is determined by the owner. In the latter case, while the allocation of the referral fund is determined by the gatekeeper, the referral fund, at least for the express purpose of covering referrals, belongs to the enrollee; not the gatekeeper. In principle, the HMO enrollee enjoys an undivided interest in the whole of the fund. The gatekeeper serves as a trustee of said fund for the benefit of the enrollee. The gatekeeper's acquisition of a proprietary interest in any portion of the referral fund in the face of her fiduciary obligation to the enrollee constitutes a conflict of interest not duplicated in any of the various land-owner relations.

Might the problem be eliminated through an expanded version of informed consent? Might the enrollee simply be informed of and give consent to the HMO's plan to have the gatekeeper engage not only in normal gatekeeping services but also to undertake many medical interventions reserved to specialists and yet be held to the standard of due care of a general practitioner? After all, as in the tort, the contract and legislative examples above, with sufficient information, the enrollee would be cured of mistaken beliefs and be in a position to give full consent.

This suggestion would not be like securing consent from enrollees for gatekeeper negligence or obtaining from enrollees a waiver of gatekeeper liability. The HMO's informing the enrollees that general practitioners will be held to the standard of due care of other reasonable, prudent general practitioners even when said practitioner engages in specialists' activities, would not violate the age old proscription against seeking consent for professional negligence, (39) as what is being consented to is the reduced standard of due care for what constitutes negligence.

It is quite true that inasmuch as the vast plurality of private health insurance is secured through the beneficiary's employer, the information that the HMO gatekeeper will be held to the standard of care of the reasonable, prudent general practitioner rather than that of the specialists when engaged in specialists activities, will be financially important to the purchaser of employee health insurance. It will be of medical importance to the HMO enrollee. Such an informed consent requirement concerning the HMO's gatekeeper liability is in accord with a trend in informed consent cases requiring that more information be disclosed than that of mere diagnosis, proposed intervention with risks, alternatives with risks, and probable prognosis. (40) Disclosure of information deemed relevant but collateral to the general medical information, e.g., economic incentives for practitioners (41) and practitioner variation, (42) has recently been included as information owed to patients. In addition, the disclosure about th e appropriate standards of care is information more specific than the amorphous disclosure that the HMO is designed to offer only "efficient," necessary," "quality" health care. The former description is specific enough to provide for both meaningful, informed consent while also legally protecting enrollees from harm due to actual breaches of the general practitioner duty of due care. Non-the less, this information is most important in the decision of what health care payer to choose, a decision usually made by one who will not actually utilize health care, i.e., the employer. The employee-enrollee is generally not a party to this decision notwithstanding that the employee-enrollee is the beneficiary of the decision.


If the above is not spurious, then as the absence of medical resources may excuse a physician's failure to conform her behavior to the accepted standard, so the financial absence to cover otherwise present medical resources, may either excuse practitioner failure to confer such resources or set the standard of what resources are due. It has been argued that, initial problems notwithstanding, it would follow from the above that given the absence of financial coverage, the skill and quality of practitioner care owed certain consumers of health care may be less than what is owed to other health care consumers who could afford a higher level of skill. It has not been argued that the professional principle, that the same skill and duty owed to one is owed to all accepted as patients, has now become declasse. Rather, it has been maintained only that if physical absence can be argued to alter the professional duty owed to a patient regarding those physical resources and if what is arguably covered by "physical absen ce" includes both nonexistent resources and existent but financially unavailable resources, then "resources" may also include a physician's skill level of care.

It has also been noted that at least the purchaser and perhaps the consumer of health care might easily be informed, prior to enrollment, that the gatekeeper would be held to the standard of due care of a general practitioner even when assuming specialists' activities. However, neither purchaser nor consumer will find out what constitutes "medical necessity" in the abstract prior to enrollment. They will discover this only after the fact; subsequent to enrollment.

Given the professionally acknowledged difference between general practitioner and specialists; given also that certain medical problems are exclusively within the domain of specialists and with which the general practitioner is not sufficiently skilled to deal, there is a dilemma. If the gatekeeper is held to the standard of care of the specialists, there will be a likely increase in the number of successful malpractice claims with a corresponding decrease in economic efficiency of the HMO. If the gatekeeper is not held to standard of care of the specialists when assuming specialists activities, then the economic efficiency of the HMO, and financial benefits for the gatekeeper will be maintained but at the probable cost of long term increases in enrollee mortality and morbidity rates. The latter horn of the dilemma has been argued to follow from the physical and economic exceptions to the accepted standard of due care. The former horn of the dilemma appears to contravene the cost containment measures of most managed care organizations.

The author would like to express his appreciation to Ms. Jennifer Lisa Hayden and Ms. Diana B. Dail for their extremely valuable assistance.


(1.) Barry T. Nace and Larry S. Stewart, "Straight Talk on Medical Malpractice," The Association of Trial Lawyers of America Report, 3 (February, 1994). See also, Mark Hall, Ira Ellwood, and Daniel Strouse, Health Care Law and Ethics, 2nd edition, Chapter la. (West Publishing, 1999).

(2.) Health Lawyers News Report 3 (1993): Hall et. al., supra note 1. See also Lawrence Gostin, "Securing Health or Just Health Care? The Effect of the Health Care System on the Health of America" 39 Saint Louis University Law Review (No. 1) 7 (1994). Reprinted in Contemporary Issues in Bioethics, 5th edition, edited by Tom Beauchamp and Leroy Walters (Wadsworth, 1999).

(3.) Charles T. Dougherty, "An Axiology for National Health Insurance," 20 Law, Medicine and Health Care 82 (1992); Hall, et. al., supra note 1 at b.

(4.) Robert Blank, "Rationing Medicine: A Comparative Analysis," 21 Western State University Law Review (No. 1), Fall 1993; Gostin, supra note 2.

(5.) Hall, et al., supra note 1 at b.

(6.) Mark A. Rothstein, "Discrimination Based on Genetic Information" 33 Jurimetrics 13, 14 (1992).

(7.) Id.

(8.) Joseph A. Califano, "Rationing Health Care: The Unnecessary Solution," 140 University of Pennsylvania Law Review, 1525 (1992); Goston, supra note 2.

(9.) Hall, et. al., supra note 1.

(10.) Eileen P. Flynn, issues in Health Care Ethics, Chapter 17 (Prentice Hall, 2000); Hall, et. al., supra note 1.

(11.) Id.

(12.) Flynn, supra note 10.

(13.) Edward B. Hirshfield, "Should Ethical and Legal Standards for Physicians be Changed to Accommodate New Models for Rationing and Health Care?" 140 University of Pennsylvania Law Review 1809 (1992); Hall, et. al., supra note 1; William Sage, Kathleen Hastings, and Robert Berenson, "Enterprise Liability for Medical Malpractice and Health Care Quality Improvement," XX American Journal of Law and Medicine (No.s 1 & 2) 1994.

(14.) ABA, Special Committee on Medical Professional Liability, "Medical Malpractice: Perceptions and Misperceptions" Endnote 4. American Bar Association, (March, 1993).

(15.) Helling v. Carey, 519 P.2d. 981 (WA 1974).

(16.) Nace and Stewart, supra note 1, at 7; Rand Rosenblat, Sylvia Law, and Sara Rosenbaum, Law and the Health Care System, Chapter 3a (University Casebook Series, 1997), (Referencing the 1991 Harvard Study).

(17.) Daniel Callahan, "Symbols, Rationality and Justice: Rationing Health Care," 18 American Journal of Law and Medicine 1 (1992); Marc Rodwin, Medicine, Money and Morals, Chapter 1 (Oxford, 1993). See also, Joanne Brant, "Physician Owned Pharmacies: Lawful Business Ventures or Illegal Business Interests" 4 The Journal of Pharmacy and Law (No. 1), 1994-1995.

(18.) Jean M. Mitchell and Jonathan T. Sunshine, "Consequences of Physicians' Ownership of Health Care Facilities -- Joint Ventures in Radiation Therapy," 327 New England Journal of Medicine 1497 (1992). Brant, supra note 17.

(19.) Rosenblat, et. al., supra note 16 at Introduction B.

(20.) Vickie Y. Brown and Barbara R. Hartung, "Managed Care at the Crossroads: Can Managed Care Organizations Service Governmental Regulations?" 7 Annals of Heath Law 25 (1998).

(21.) Linda Penno, "Managed Care and the Corporate Practice of Medicine" Trial 18 (February, 2000).

(22.) Barry R. Furrow, Thomas L. Greaney, Sandra H. Johnson, Timothy S. Jost, and Robert L. Schwartz, Health Law (Hornbook) Chapter 8 (West Publishing, 1995, 1998). Network HMOs generally allow contracted physicians coverage for services performed for enrollees by non-contracting practitioners and providers. Point of Service plans (POS), like HMOs, employ gatekeepers but like PPOs, allow partial financial coverage for services performed for enrollees by non-contracting practitioners and providers. See Christopher Kerns and Carol J. Gerner, Heath Care Liability Desk Book. Chapter 1 (Clark, Boardman, and Callaghan, 1995). The term "Capitation Payment" was coined by health policy analyst, Paul Ellwood; Hall, et. al., supra note 1. See also, Barbara A. Shickich, "Legal Characteristics of the Health Maintenance Organization." in Health Care Facilities Law, (Chapter 16) edited by Anne M. Dellinger (Little. Brown, and Co. 1991).

(23.) Rodwin, supra note 17 at Chapter 5. (Rodwin discusses various HMO incentive plans). See also [section] 8.03 of the American Medical Association Code of Medical Ethics (1994).

(24.) Rodwin, supra note 17 at Chapter 5. See also; Berenson. "In a Doctor's Vallet" New Republic, 11, 12 (May 18, 1987). Reprinted in Clark C. Havinghurst, Health Core Law and Policy, Chapter 10A (Foundation Press, 1988). "Here's how it works. As a private practitioner. I contract with the HMO to provide services to enrollees who select me as their primary care physician gatekeeper." I get a monthly fee, called a 'capitation' (payment by the head), for each HMO enrollee who signs on with me. The capitation payment averages about ten dollars a month, with some variation based on the age and sex of the enrollee. Whether the enrollee comes in once during the year or 20 times, my payment from the HMO remains constant at ten dollars a month for that person. It is all supposed to average our.

Now comes the 'risk' part. For every ten dollars in capitation I receive, the HMO sets aside another $40 or so in a separate account. This account pays the hospital bills, fees for specialist care, laboratory and X-rays, and other services performed outside of my office. Every time one of the patients on my panel receives a specialty service, my separate account is debited. But I am the one who decides if they need this special attention. As gatekeeper. I must give permission for all non-emergency referrals.

The HMO audits my account annually. If it shows a surplus, I receive a bonus, usually 30 percent to 50 percent of the total surplus in my account. If it shows a deficit, I have to forfeit a portion of my monthly capitations as much as 25-percent. In essence, I am paying for part of every specialty consultation, every hospital day, every ancillary service that the patient receives. The economic incentives are clear: keep the patient away from consultants, out of the hospital, and out of the office.

The rewards are breathtaking. The capitation income of a full-time HMO practice with 1,500 enrollees would total $180,000 a year, out of which office overhead of perhaps $80,000 must be paid. A forfeit of 25 percent would result in a loss of $45,000. But a surplus account could generate a bonus of as much as $20,000 or $30,000 or more. Thus, under a typical HMO risk payment system, take-home annual income might vary by $65,000 or more."

(25.) Julia A. Martin and Lisa K. Bjerknes, "The Legal and Ethical Implications of Gag Clauses in Physician Contracts," XXII (No. 4) American Journal of Law and Medicine 433 (1996). See also, furrow, et. al., supra, note 27.

(26.) Hall, et, al., supra note I.

(27.) Penno, supra note 21.

(28.) See 6-5-484 (AL. 1975, 1999). The health care practitioner and provider is each held to the same standard of care that other respective practitioners and providers in the community or neighborhood is held. From the plain language of the statute, it would appear that practitioners and providers are judged by the strict locality rule. But, as the notes clearly show, the word "community" and "neighborhood" are terms of national scope. Henson v. Mobile Infirmary Ass'n., 646 So. 2d 559 (AL 1994) and Dr.s Lane, Bryant, Eubanks. and Dulaney v. Ottis, 412 So. 2d 254 (AL 1982).

(29.) Becker v. Janinski, 15 N.Y.S. 675, at 677 (NY, 1891). See also. Barry Furrow, "The Ethics of Cost Containment: Bureaucratic Medicine and the Doctor as Patient-Advocate." 3 Notre Dame Journal of Law, Ethics and Public Policy 187 (1988).

(30.) E. Haavi Morreim, Balancing Act 88, 116 (Kluwer Academic Publishers, 1991). See also E. Haavi Morreim, "Cost Constraints as a Malpractice Defense" 18 Hastings Center Report 5 (February-March, 1988); E. Haavi Morreim, "Redefining Quality by Reassigning Responsibility," XX (No I & 2)

American Journal of Law and Medicine 79 (1994). Id. Morreim's argued position is not clearly distinguished between the enrollee's health insurance determining the duty owed by the practitioner to the enrollee and the enrollee's health insurance serving as an affirmative defense to the argued breach of an independent standard of due care.

(31.) Wickline v. State of California, 239 (Cal. Rptr. 810 {1986} reviewed dismissed 741 P. 2d 613 (CA 1987).

(32.) Chapel v. Allison, 785 P.2d 204 (MT 1990).

(33.) Larseh v. Yelle, 246 NW 2d 841, 845 (MN 1976). "If...the general practitioner ... undertakes to treat when lie should refer to a specialist, he will be held to that standard of care required of a specialist."

(34.) New physicians take the oath of Hippocrates "to follow that method of treatment which, according to my ability and judgment, I consider for the benefit of my patient, and abstain from whatever is deleterious and mischievous." Reported in Penno, supra note 21.

(35.) A classic abandonment case is Rock Hill v. Pollard, 485 P. 2d 28 (OR 1970).

(36.) Bernard Friedland. "Managed Care and the Expanding Scope of Primary Care Physicians' Duties: A Proposal to Redefine Explicitly the Standard of Care," 26 (No. 2) The Journal of Law. Medicine and Ethics, 100 (Summer, 1998).

(37.) W. Page Keeton, Dan. B. Dobbs, Robert E. Keeton, and David G. Owen, Prosser and Keeton on Torts 5t edition Chapter 10. (Hombook) (West Publishing, 1984).

(38.) Oregon Rev. Stat. [section] 127.800 (1995, 1998).

(39.) Tunkl v. Regents of University of California, 383 P. 2d 441 (CA 1963).

(40.) Hall et. al., supra note I at Chapter 2B. See also, Paul S. Appelbaum, Charles W. Lidz, and Alan Meisel, Informed Consent: Legnl Theory and Clinical Practice, Part II (Oxford University Press, 1987), Ruth R. Faven, Tom L. Beauchamp, and Nancy M. King, A History and Theory of Informed Consent, Parts I and 11 (Oxford University Press 1986), Robert M. Veatch, "Abandoning Informed Consent," 25 (No. 2) Hastings Center Report 6 (March-April. 1995), Edward P. Richards and Katharine C. Rathburn, Law and the Physician, A Practical Guide, Chapters 11-14 (Little, Brown and Company 1993). Clifton Perry, "Conflicts of Interests and the Physician's Duty to Inform" 96 (No. 4) The American Journal of Medicine 375 (April, 1994). For a surprising note on the power of informed consent with the use of placebos, see Margaret Talbot, "The Placebo Prescription, The New York Times Magazine 3 at 39 (January 9, 2000).

(41.) See: Moore v. Regents of University of California, 793 P.2d 479 (CA 1990) and Shea v. Esenten, 107 F. 3d 625 (8th 1997).

(42.) See: Johnson v. Kokemoor, 545 NW 2d 495 (WI 1996).
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Author:Perry, Clifton B.
Publication:Journal of the Alabama Academy of Science
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Date:Jul 1, 2001
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