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Report Of The Council On Medical Service

CMS Report 5 - I-96

Subject: Physician Decision-Making in Health Care Systems
Presented by: William A. Fogarty, MD, Chair
Referred to: Reference Committee G (Harry M. Carnes, MD, Chair)

Background

The increased demand from employers and other large purchasers of health care for cost containment over the past decade has spurred an exponential growth in health plans that aggressively manage care and care costs. Many such plans currently are competing for favorable market position through acquisition strategies such as vertical and horizontal integration, purchase of physicians’ practices and widespread selective contracting. One indication of the pace of such acquisitions is a recent report by SMG Marketing Group, a consulting and research firm, that the number of integrated health networks has doubled over a one-year period--from 255 at the end of 1994 to 504 in February 1996.

As a result of this system-wide trend toward mergers and consolidation, more physicians are practicing as employees of or contractors with large health systems that employ a variety of approaches to constrain health care costs. As noted in Council on Medical Service Report 4 (I- 95), the proportion of patient care physicians practicing as employees has increased markedly over the past few years. Data from the AMA's Socioeconomic Monitoring System (SMS) indicate that, between 1983 and 1994, the proportion of patient care physicians practicing as employees rose from 24.2% to 42.3%, the proportion self-employed in solo practice fell from 40.5% to 29.3%, and the proportion self-employed in group practices fell from 35.3% to 28.4%. A separate Council report on trends in physician practice consolidation is before the House of Delegates at this meeting.

In addition, the percentage of non-employee patient care physicians who independently contract with at least one type of managed care plan--HMOs, PPOs and /or IPAs--has increased steadily, from 61% in 1990 to 83% in 1995. As described in another Council report before the House on financial incentives, a growing number of such contracts place the physician at some financial risk for covered services, through capitation or reimbursement withholds. Such at-risk payment arrangements can act under some circumstances to increase clinical autonomy when they reduce the need for external, non-physician controls on utilization.

However, there are and likely will remain a significant number of independently contracting physicians who may not wish or be able to assume risk, as well as those physicians salaried by health plans, who will continue to be subject to plan-generated oversight of and sometimes inappropriate interference with their patient care decisions, through such mechanisms as precertification, concurrent and retrospective review, referral restrictions, drug formularies, length of stay limits and the like. In addition, physicians practicing in large integrated plans may find their influence on overall plan medical policies attenuated or nonexistent, unless a viable medical staff structure or other organized medical advisory mechanism is in place.

Guidelines For Decision-Making

As this trend toward health systems integration continues, the Council believes it will be increasingly important that physicians contemplating practice in such plans determine to the extent possible the degree to which decisions impacting on patient care will be subject to influence or control by plan administration, so as to make completely informed decisions concerning plan participation. Physicians are ethically bound to recommend any or all services they believe are needed for patients, plan coverage restrictions notwithstanding, and Policy 140.978 ( AMA Policy Compendium ), among others, emphasizes that obligation. However, physicians practicing in such plans may find themselves in situations where the drug, referral specialist, length of hospital stay or treatment intervention they believe is medically indicated will not be covered by the plan and--for patients in some economic circumstances--is therefore simply not a viable treatment option. It is important for physicians to determine what the specific constraints on physician decision-making might be, and whether this type of professional frustration may be a frequent occurrence in the plan they are considering.

In Appendix I to this report, the Council has listed many of the important decisions that impact directly or indirectly on the quality of care in health plans--decisions concerning both care of individual patients and overall medical policies. The degree of practicing physician involvement in such decisions can vary across a broad continuum between the physician and the plan. Among the possible variations in the physician’s role regarding a given decision are the following:

  • Physician has sole responsibility for the decision.
  • Physician makes the ultimate decision, but is encouraged to seek and consider recommendations from the plan administration.
  • Physician makes the ultimate decision but is required to consider recommendations from the plan administration and justify any non-adoption of such recommendations in writing.
  • Both physician and plan must jointly agree on the decision.
  • Plan makes the ultimate decision but is required to consider recommendations from the physician and justify any non-adoption of such recommendations in writing.
  • Plan makes the ultimate decision but is encouraged to seek and consider recommendations from the physician.
  • Plan has sole responsibility for the decision.

Given the increased shift toward medical practice in larger, market-driven health systems, the Council on Medical Service believes there is a need for guidelines as to the extent of physician involvement in such decisions that is most conducive to good patient care. Such guidelines can be helpful as a "checklist" for physicians who are considering practice in plans with administrative oversight or controls on the utilization of health services and who are concerned about the opportunity for input to plan medical policies and procedures. However, the desirable extent of individual practicing plan physician involvement in many of the decisions listed in Appendix I may vary depending on such factors as:

  • Whether the plan is owned by a lay entity, physician group, hospital, or other provider.
  • The practicing physician’s relationship with the plan (employee, independent contractor, owner/partner).
  • The extent (if any) of an organized medical staff structure in the plan, or the size and negotiating ability of the physician group contracting with the plan.
  • Applicable state legislation or regulation affecting health plans.

For example, in plans with a viable medical staff structure or committee representing the interests of practicing plan physicians, the opportunity for participation by all plan physicians in selection of the drug formulary may be less critical. In a state with strong patient protection legislation in effect, the opportunity for participation by all physicians in developing physician or patient appeal or grievance procedures will be less critical in plans subject to such legislation than it will be in plans that are exempted by the Employee Retirement Income Security Act of 1974. The selection of practice guidelines to be used for plan quality and utilization review may be more safely entrusted to the ownership in a physician-sponsored plan than to that in a lay-owned entity. In contrast to individual physicians or a small group, a large physician group contracting with a lay-owned plan may already have in place and be able to retain appropriate medical policies and practices.

For this reason, the Council believes that for many decisions, meaningful guidelines as to the extent of physician involvement can best be developed by physicians or their medical staff structure in the individual plan or, at most, at a level no higher than that of the state, consistent with applicable state legislation and the predominant characteristics of the health care market and the health plans in that jurisdiction. An example of such state-level guidelines, titled "Decision-Making Authority for Integrated Entities Criteria," were developed by the California Medical Association in 1994, to assist California physicians contemplating practice in integrated plans that consolidate practicing physicians and lay business(es) to evaluate the potential impact on their professional autonomy, and to assess the extent to which a given plan’s operating policies conformed with state legislation prohibiting the corporate practice of medicine.

At the same time, the Council believes that certain professional decisions are so integral and critical to quality patient care that they should always be the ultimate responsibility of the physicians practicing in health plans, either alone or with consultation from the plan, irrespective of plan characteristics or the market in which it operates. These decisions are as follows:

  • What diagnostic tests are appropriate.
  • When and to whom in-plan physician referral is indicated.
  • When and to whom out-of-plan physician referral is indicated.
  • When and with whom consultation is indicated.
  • When non-emergency hospitalization is indicated.
  • When hospitalization from the emergency department is indicated.
  • Choice of in-plan service sites for specific services (office, outpatient department, home care, etc.).
  • Hospital length of stay.
  • Frequency/length of office/outpatient visits or care.
  • Use of out-of formulary medications.
  • When and what surgery is indicated.
  • When termination of extraordinary/heroic care is indicated.
  • Recommendations to patients for other treatment options, including non-covered care.
  • Scheduling on-call coverage.
  • Terminating a patient-physician relationship.
  • Whether to work with, and what responsibilities should be delegated to, a mid-level practitioner.

Depending on the sponsorship and structure of specific plans, there may be additional patient care decisions that should always be the ultimate responsibility of the practicing plan physician. However, the Council believes that the foregoing decisions should be the prerogative of the physician across all plans.

Recommendations

Based on its study of this subject, the Council on Medical Service recommends adoption of the following, and that the remainder of this report be filed:

  1. That it be the policy of the AMA that the following professional decisions critical to high quality patient care should always be the ultimate responsibility of the physician practicing in a health plan, whether in primary care or another specialty, either unilaterally or with consultation from the plan:
    1. What diagnostic tests are appropriate.
    2. When and to whom in-plan physician referral is indicated.
    3. When and to whom out-of-plan physician referral is indicated.
    4. When and with whom consultation is indicated.
    5. When non-emergency hospitalization is indicated.
    6. When hospitalization from the emergency department is indicated.
    7. Choice of in-plan service sites for specific services (office, outpatient department, home care, etc.).
    8. Hospital length of stay.
    9. Frequency/length of office/outpatient visits or care.
    10. Use of out-of formulary medications.
    11. When and what surgery is indicated.
    12. When termination of extraordinary/heroic care is indicated.
    13. Recommendations to patients for other treatment options, including non-covered care.
    14. Scheduling on-call coverage.
    15. Terminating a patient-physician relationship.
    16. Whether to work with, and what responsibilities should be delegated to, a mid-level practitioner.
  1. That the AMA widely disseminate this policy to the medical profession through all appropriate channels.
  1. That the AMA attempt to obtain information on the extent to which authority for these "core" decisions is being retained by physicians practicing in such health plans.
  2. That the AMA encourage state medical associations to consider development and wide dissemination of guidelines for the extent of practicing physician involvement in plan medical decisions and policies. Such guidelines should be relevant to their jurisdiction, allow for variation in plan sponsorship and structure, and optimize patient care.
  3. That the AMA publicize any activities of state medical associations in developing such guidelines.
  4. That the AMA encourage organizations and entities that accredit or develop and apply performance measures for health plans to consider inclusion of plan compliance with any applicable state medical association or medical staff-developed decision-making guidelines in their evaluation criteria.


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