Use of financial incentives in HMOs' contracts with physicians may be losing favor, but it's not about to be declared outright illegal any time soon. The U.S. Supreme Court ruled unanimously that patients maynot sue a health plan just because it offers physicians incentives intended to limit health care services.

Cynthia Herdrich of Bloomington, Ill., sued her health plan, the Carle Clinic Association, after her appendix ruptured. Herdrich claimed that her physician delayed medical care so tests could be performed at a facility owned by the HMO. She had already won a $35,000 malpractice settlement.

Herdrich challenged the plan's exemption from liability under the federal Employee Retirement Income Security Act of 1974, claiming that by rewarding physicians for limiting care, the plan violated its fiduciary duty to act in the best interests of patients. The U.S. Seventh Circuit Court of Appeals agreed and sent the case to the Supreme Court, where arguments were heard Feb. 23.

The forcefulness of the justices' ruling would suggest that ERISA may be down but is certainly not out — to say nothing of the viability of financial incentives in HMOs' physician contracts.

"Since the provision of profit is what makes the HMO a proprietary organization, [this] remedy, in effect, would be nothing less than elimination of the for-profit HMO," Justice David Souter wrote.

The Seventh Circuit had ruled that rewards in and of themselves do not constitute a violation of fiduciary responsibility, but such violations could occur when physicians withhold care "for the sole purpose of increasing their bonuses."

Predictably, health insurance trade associations lauded the ruling. Even the AMA agreed that ERISA is no venue for arguing legal remedies to treatment decisions. Instead, the association said, patients-rights legislation would be a more appropriate vehicle for holding health plans accountable to members.

Don't look for Congress to take up that challenge, though. Last month, on a 51–48 vote, the Senate killed a House bipartisan patients-rights bill passed last October. The issue isn't likely to be addressed again until a new Congress convenes next year.

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There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.