Insight, analysis & opinion from Joe Paduda


The ethics of clinical guidelines – the payers’ dilemma

In preparing for a talk on the ethics of comparative effectiveness I’m to give at the Geisinger Clinic in Danville PA in April, I’ve been interviewing medical directors from several health plans and workers comp insurers, along with physicians – both practicing and managing, in an effort to get their views on guidelines.
I’ve been somewhat surprised at what I’ve learned.
The real problem may not be payers’ efforts to deny medical care, but their willingness to ‘go along to get along’; to avoid making tough coverage decisions, and when in the slightest doubt, to approve the procedure/drug/treatment/therapy rather than run the risk of upsetting someone.
One would think payers would be keenly interested in supporting and using evidence-based clinical guidelines; costs would be reduced and outcomes improved, benefiting both patients and profits. And one might very well be wrong.
Payers operate in a market where public opinion matters a lot; if the payer has a negative image, it will be harder to convince employers and their employees to sign up for their health plan. It may also be harder to convince physicians and other providers to join and stay in their provider networks. And families may well be reluctant to carry an insurance card from a payer known for their tight controls on medical care.
We all know that restricting unnecessary care is not bad or immoral, but to the general public, it can certainly look like a profit-driven effort to cut costs, regardless of the effect on patients. To be sure, payers’ public efforts to terminate patients on the flimsiest of excuses and refuse coverage to anyone who might actually get sick haven’t helped their image. But the sense I get from the medical directors and practitioners I’ve spoken with is they are quite reluctant to deny treatment.
Part of this may be influenced by reality – when claims costs go up, so do premiums, and so does the health plan’s top line. There are few industries where built-in inflation results in near-double-growth same-store growth every year; health insurance is certainly one. This ‘reality’ is closely related to health plans’ motivations. Wall Street demands revenue growth, and for those health plans that are for-profit, their primary obligation is to their stockholders.
Allowing questionable treatments drives up revenues which benefits stockholders.
Of course, it isn’t anywhere near that simple or straightforward in the real world. Health plans’ profits are higher if medical costs are lower – at least over the short term. And most of the health plan execs I know are honestly trying to ensure their members get the care they need, care that they can’t afford if they approve any and all treatments no matter how ineffective.
But there is no question payers face an ethical dilemma, one complicated by patient demand, provider relations, market influences, and the obligation to their owners. (I’m not addressing the not for profits in this post)
A lot of Federal (taxpayer) dollars are going to be spent on comparative effectiveness research over the next few years, and if there’s a better use of my money I’m not aware of it. It is widely acknowledged that much of what we spend is wasted on unnecessary tests, advertising-driven consumer demand, unproven treatments and procedures that benefit device companies, specialists, and facility owners far more than patients.
It’s also equally clear that reining in those costs is going to be incredibly difficult, because much of it occurs in the somewhat grey area between procedures that are clearly useless or harmful, and those that are undeniably appropriate. And that grey area is where hundreds of billions are spent every year.
What does this mean for you?
Perhaps an ethical dilemma.

5 thoughts on “The ethics of clinical guidelines – the payers’ dilemma”

  1. Joe,
    You are clearly on to something here, as I have experienced the same behavior from medical directors who have worked for me at two different health plans. The default position is to cover a procedure, not deny it. At the same time, the CEO of a publicly-traded health plan is under pressure to deliver increasing profits to the bottom line, and that pressure is greater then any pressure to drive top line growth. But do not assume that CEOs sit around and try to figure out how to influence CMOs to drive profits to the bottom line. It reaaly doesn’t work that way, and medical directors have far more latitude here than you might suspect- a healthy situation I’m sure you would agree, especially with the default position I have described above. What is particularly vile, of course, is the manner in which the Administration has demonized the health plan industry since last summer to gain traction to get its health bill passed. We never deserved that bad rap.

  2. Mickey –
    I agree that the Administration abandoned principle in favor of politics by demonizing the insurance industry. Unfortunately, the business practices of Wellpoint and Anthem have made it only too easy for that effort to gain public support.
    I remain amazed that health plans can’t – or rather don’t – engage in intelligent, well-funded branding and image campaigns. If Nike can sell shoes based on marketing, health plans certainly could do far better marketing healthy kids.

  3. Joe, I wonder how many of the medical directors who talked with make a serious effort to analyze their payment and provider data to determine the contours of best practice compliance. If only a very small percentage of providers are consistently practicing outside guidelines, doesn’t that suggest that a go-along approach by insurers are misplaced? This analysis, to be ethically robust, should look not just at over-treatment but at under and simply wrong treatment.
    These medical directors are sitting on huge databases of data. What’s their responsibility to their constituents to analyze it?

  4. Unless I am missing something, I think this topic very much supports ODG and ACOEM. I don’t want to alienate our biggest clients, but I think you need to differentiate types of payers. The real payer is the employer, who incurs the ultimate costs and suffers the outcomes on employees. The others, e.g., insurance companies and TPAs, are intermediate payers whose interests may be aligned with employers, or they may not be if higher costs result in higher revenues to them.

  5. Joe, You are definitely on the right track with this topic. Insurers are “guilted” into providing approvals for extraneous unnecessary medical exams and even potentially debilitating surgeries. There is public and media pressure for excessive (“compassionate”! ?)treatments. Sometimes there is an inclination to “stiff” the medical provider with retroactive denial ,but usually the claim is paid. As a medical provider and as an employer, I have observed,that when people get insured, they generally use(and often overutilize) the benefit. Strict adherence to guidelines would be helpful as well as appropriateness criteria in ordering and approvals.Unfortunately, the simple fact is that more experienced better educated practitioners generally(unless incentivized by self refferal or greed) order and pratice most appropriately. As an example, in Texas when chiropractors were limited in their scope of “rehab” practice in 2003, Workers Comp insurance became more affordable for employers (like me).

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Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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