Does contracting with third party payers compromise ethics?

Physicians have historically been fairly well compensated for their efforts and thus have enjoyed many of the comforts of modern life. Most would agree this is the result of years of hard work, perseverance, intellect and dedication. In general these are also traits along with professional integrity, which raised physicians to a position of relative prominence and trust within our society. But in recent years that social position and economic security have begun to decline as healthcare services have come to be characterized as a basic human right. The growth of this philosophy is the direct result of various third parties becoming interposed between the patient and their physician for the sole purpose of guaranteeing payment.

Whether the payer is Blue Cross, Aetna, or the government, the impact is the same; the third party indirectly influences medical decision making, potentially to their own benefit. About 9 years ago I made the conscious, all be it impulsive, decision to resign from every private insurance contract. I believed then, and still believe today, that these contracts with their pre-authorizations and denials of payment were inappropriately influencing a wide variety of medical decisions. Plus, under these contracts I had no say in determining what the actual value of my services should be. Essentially, I had become an employee of the insurance companies since they were the ones who paid me, according to their non-negotiable fee schedules. So I quit, and boy did everything change. I was suddenly “Out of Network,” the equivalent of a medical “Scarlet Letter.”

Almost immediately most of my referring physicians quit sending me patients. I had worked with many of them for 20 years or more. In many cases I‘d provided surgical care for their family members and even the docs themselves. When I asked them why they stopped sending patients my way the answer was “You don’t take insurance.” I tried to explain, “I still file claims for patients, I’m just not bound by the insurance companies’ fee schedules, which means I have the freedom to individually contract with each patient.” This concept seemed beyond the grasp of many who somehow believed it inappropriate for a physician to actually bill the patient directly. Others offered words of encouragement with statements like, “I wish I could do that, but my practice is different.”

Perhaps the most enlightening moment of my professional career occurred a few weeks after dropping off the insurance roles. Two separate patients called on the same day to tell me they wanted to come to me for their elective surgery but they said they “couldn’t.” I assumed it was because they couldn’t afford to pay my fee. When I explained that I’d be willing to work with them on my fee, they both issued the same rather startling statement, “My insurance company won’t let me come to you.” What? That’s right! It seems that since I wasn’t willing to play by the companies’ rules, they would do whatever they could to ensure that their policyholders didn’t become my patients, even if they had “out of network” benefits. I wondered, was this some form of coercion to force me back into the fold, or was it just a prudent business practice? Either way, it was clear that they controlled the patients and if I wasn’t willing to play by their rules I would have a tough time seeing enough patients to maintain a viable practice.

One afternoon as I was rearranging my office I happened upon my framed copy of the Fellowship Pledge of the American College of Surgeons; something that has been “revised” in recent years. As I read it again, I was struck by the third paragraph, which began, “Upon my honor I hereby declare that I will not practice fee-splitting.” Obviously, this was written nearly a century ago by the founders of the college as they formalized the basic principles of conduct and ethics they wanted their Fellows to abide by. Splitting one’s fee with another doctor in order to secure a referral was considered unethical, so the founders of the college included specific language in their pledge, emphasizing that such behavior would not be condoned. As I pondered this idea, it occurred to me that the reason I was no longer seeing insured patients had nothing to do with my skills, bedside manner, reputation, availability or even my fees. It was because I had the audacity to tell insurance companies that I was no longer willing to “split my fees” with them.

If the early leaders of the surgical profession considered fee splitting to be unethical, is it still an issue of ethics today? If not, why not? Over the last few years I’ve asked many of my colleagues that question, and I typically get a nod of agreement, or some actually say, “You’re right, but that’s just the way the system is today.” Perhaps this is in part because for decades our leaders have spent most of their time and efforts lobbying our government for more crumbs from their healthcare budget. (Payments to physicians account for only about 12% of Medicare payments) What they should be demanding is a return of the basic American freedom that would allow all physicians to determine their own fees for the services they provide. Instead, our organizations, led by the American Medical Association, have actively participated in the actual creation of the current payment system based on fixed fees, determined solely by the government based upon its willingness to allocate resources. No other component of our economy, and no other individual professionals are subject to this level of government control, which has filtered down to every insurance contract. So its not surprising that many of the best and the brightest of our nations youth are choosing careers other than medicine.

Perhaps organized medicine may have finally begun to challenge the status quo. At the annual meeting of the AMA in June of 2010, a resolution was passed by an overwhelming margin calling on the AMA to write its own legislation that would allow for physicians and patients to privately and individually contract for healthcare services within the Medicare program, without penalty to either party. The result is the “Medicare Patient Empowerment Act,” a bill, which is currently under consideration in both the US House of Representatives and the Senate. (HR-1700 and S-1042) I’m not sure whether the delegates who voted to have the AMA take this unprecedented action actually recognized it or not, but to me what they were saying is that the key to the patient/physician relationship, traditionally the core of our American healthcare system, lies in the ability of both parties to deal fairly and honestly with each other without being inappropriately influenced by any third party.

Unfortunately, over the last few decades physicians have become economically addicted to a system based on third party payment, despite the massive regulations and impersonal controls they have imposed. While many physicians applaud the effort to restore “the right to privately contract” within the Medicare system, and justifiably so, very few have actually seized that opportunity with non-Medicare patients, even though to do so is perfectly legal.

Perhaps all physicians, as well as all our professional organizations, should step back from the pursuit of better contracts and more secure government payments, and reevaluate our true roles within the healthcare system. In doing so, one basic question must be asked – does contracting with third party payers, including government programs, actually constitute a compromise of our professional ethics? Just asking.

Robert Sewell is a surgeon who blogs at The Spirit of Healthcare.

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