Fee-for-Service System of Care

A 28-year-old female executive was jogging on her lunch hour and twisted her ankle. Although the soft tissues are swollen, and some support for the ankle is indicated, no fracture is evident on x-ray. A plaster posterior splint might be slightly more com­fortable for the patient than an elastic bandage. In addition, the physician will be significantly better off financially if he applies the splint, since that special procedure is very well rewarded by the insurance company.

Since the physician is paid on a fee-for-service basis (he is paid for what he bills, minus a percentage for uncollectable bills and the billing service), is the amount of reimbursement an appropriate consideration in what care he gives? Should physicians bill for their services in this manner?


Commentary

This case exhibits a common feature of many resource allocation ethical dilemmas. Often, these problems have relatively easy solutions but not at the level of the person who has the problem. By "relatively easy," I mean easy compared with most problems in bioethics, in which there is an intrinsic conflict between two important values.

In this case, the problem is, rather, that the physician is operating within an inequitable, inefficient system, the larger design of which is outside his control. The system could, and should, be designed so that he does not have the ethical problem, but it isn't.

The problem is not with the fee-for-service payment system. I see nothing intrin­sically immoral in physicians billing for their services on a fee-for-service basis. However, I think the physician's own payment should not influence the advice given.


This judgment is based on the assumption that a central ethical duty of a physician is to act as the patient's agent, that is, to help decide what the patient wants, since the patient lacks the medical information to decide alone. This implies that the physician should prescribe the care the individual patient would choose, given full information and his or her financial circumstances, after consultation with the patient to the extent practical.

If the patient cannot or will not pay and the condition is not an emergency, the physician is not morally obligated to provide the advice or the care itself free of charge, although in some cases this would be praiseworthy. Also, the physician may sometimes have to consider the competing claims on resources of other patients in making clinical decisions.

But a patient should be able to trust that the physician's own financial gain will not influence the advice given. In this case, if the patient were paying directly for her care, the physician's task would be easy. The physician should ask the patient whether or not she wants the splint after explaining its advantages and its extra cost, do what she requests, and charge her appropriately.


In fact, the patient is not paying directly but is covered by insurance. One might argue that since it is the doctor's duty to do what the patient wants, the doctor should still ask her if she wants the splint. Since the out-of-pocket cost is zero and the splint has advantages, she will probably say yes. The doctor should then give her the splint, NOT because he is better rewarded for it but because she wants it.

However, the case description implies that the additional benefits of the splint are rather small, compared to the cost. Though the patient does not pay directly, the cost of the splint is paid by insurance subscribers as a group, which contributes to the high cost of insurance. Subscribers might actually prefer a standard of care which provides only the elastic bandage, given the difference in costs.


If this is the case, the insurance company ought to take over and act as a fiscal agent for its subscribers. For example, it could develop guidelines about how such tradeoffs between medical benefits and extra costs should be made, and the doctor could follow them. The insurance company could make clear to each subscriber that the insurance contract was not for all medically beneficial care but only for care considered worth its costs.

The doctor should then decide whether the increased benefit of the splint is sufficient that this patient might want to make the choice to have it and pay the additional cost herself. This patient very well might, so he should inform her about the splint, explain that her insurance doesn't cover it, and let her decide what to do.

If the increased benefit were very small, or the probability that the patient would want to pay the extra amount very small, I think the doctor would not be ethically obligated to tell the patient about the possibility, provided patients understood that the insurance contract was not open-ended.


This is how the decision about whether or not to apply the splint could be handled in a different system. In the current system, many subscribers and their insurance companies see health insurance contracts as providing all the medical care that a doctor thinks would be of benefit. If this is the nature of the contract, and the patient wants the splint, the doctor should give it to her.

But he would be right to be troubled by this situation, even though he is not the one responsible for it. It has bad effects for subscribers themselves and for society as a whole, since it means that care is provided to patients for which the benefits are not worth the cost.

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