July 1996 Bulletin

States crack down on 'gag' clauses

Respond to intense media reporting of restrictions

State legislatures across the nation are cracking down on "gag" clauses in managed care contracts in response to intense media coverage of the restrictions on physician-patient communications.

Colorado, Maine, Massachusetts, Virginia, Washington, Georgia, and Indiana have passed legislation prohibiting "gag" clauses in managed care contracts. "Gag" clause bills are awaiting the signatures of the governors of Florida, Vermont, and New Hampshire. Bills also are pending in New York, Ohio, California, Illinois, and New Jersey. Many of these "gag" clause prohibitions have been added to Patient Protection Acts that seek to improve patient access and services from managed care organizations.

National and local media have alerted the public that "gag" clauses in managed care contracts will not allow physicians to tell their patients about alternative medical treatment options. Physicians also may not be allowed to advocate on behalf of their patients to gain coverage for medically necessary treatments.

Pose dilemmas

This places physicians in a difficult situation because of the legal and ethical dilemmas presented by withholding crucial information from their patients. However, the consequences of disclosing information about medical treatment options not covered by an HMO could lead to deselection by the managed care organization.

The American Medical Association brought the problem to the attention of national media, resulting in stories in the New York Times, Time, Newsweek, and on network television. State medical societies broadened the coverage by meeting with the editorial boards of local media to gain "hometown" coverage.

The degree to which "gag" clauses are prohibited varies from state to state. In Ohio, the provider cannot be prohibited from telling a patient about medical treatment options, financial terms, and conditions of the health plan. The bill also prohibits third-party payers from discriminating, taking action against, or penalizing the provider for making those statements. If action is taken against the provider, a civil action may be filed for damages against the third-party payer. In New Hampshire, the bill allows physicians to disclose information to patients or to prospective patients. In New York, physicians cannot be terminated if they advocate on their patient's behalf, including providing reports to appropriate agencies and requesting hearings or review of certain coverage decisions.

Contacts media

Recently, the Metropolitan Medical Society of Greater Kansas City joined forces with the Kansas City Star to investigate the use of "gag" clauses in HMO contracts in Kansas City. Through a search of contracts of some members of the medical society, the medical society found four gag clauses.

The medical society telephoned Blue Cross-Blue Shield to inform the insurer that the society would meet with the newspaper about the "gag" clauses, one of which was found in a Blue Cross-Blue Shield contract. The insurer decided to change the contract because the clause posed "ethical" problems. Leigh Elmore, a spokesperson for Kansas City Blue Cross-Blue Shield recently commented in an article in Illinois Medicine, "The local medical society here made an issue of it, and we just decided that we should get rid of the disparagement clauses and move on. You can't win a war of words in the press on fairly technical interpretation of things. We said, "This is not worth fighting. We can change these clauses." The medical society also was able to get HealthNet Inc. and St. Luke's Hospital in Kansas City to remove the "gag" clauses from their contracts.

The medical society in Kansas City attributes a large part of the success of this effort to the press coverage. Richard Hellman, MD, chairman of the medical society's national government affairs committee, acknowledged in the same Illinois Medicine article, "Public opinion is what [the insurers] were sensitive about. The newspaper was acting in the public interest, and the medical society was acting in the patient's interest."

Bill in Congress

On the federal side, Rep. Greg Ganske, MD, (R-Iowa) and Rep. Ed Markey
(D-Mass.) have filed the Patient's Right to Know Act. This bill prohibits managed care plans from interfering with physician-patient communications. Managed care plans that take retaliatory action against physicians can face fines ranging from $25,000 up to $100,000. The bill also makes contract clauses that restrict medical communications null and void and, according to Rep. Ganske and Rep. Markey, can be applied to any health coverage plan including federal or state government plans, private insurance companies, and ERISA plans.

Meanwhile, many health care plans have begun to voluntarily alter their contracts to eliminate "gag" clauses. U.S. Health Care, the first large insurer to do so, inserted language in their contracts that is designed to promote physician-
patient communication related to the treatment of medical conditions.

-Reported by Amy Winn, legislative
analyst, Academy department of state
society relations


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