Managed Care:

Explicit Gag Clauses Not Found in HMO Contracts, But Physician Concerns Remain

HEHS-97-175: Published: Aug 29, 1997. Publicly Released: Sep 24, 1997.

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Pursuant to a congressional request, GAO reviewed contractual limitations, known as gag clauses, imposed by health maintenance organizations (HMO), that interfere with the physician-patient relationship by impeding discussions of treatment options, focusing on: (1) the types of contract clauses that could impede a physician's ability to advise patients of all medically appropriate treatment options; (2) the extent to which these different types of clauses exist in current HMO contracts with physicians; and (3) the likely implications of HMO contract language on physician practice.

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.

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