Chapter 9.E.3 (3.E.3) --Capitation Payment and Financial Conflicts of Interest
Most states do not regulate physician incentives very aggressively,
For additional information on the Medicare rules regulation capitation payments, see www.hcfa.gov/medicare/physincp/pip-info.htm.
For another scholar who opposes the use of physician incentives, see
S. Hall, Bargaining with Hippocrates: Managed Care and the
Relationship, 54 So. Car. L. Rev. 689 (2003). Writing in favor of
bedside rationing, see Amy L. Wax, Technology Assessment and the
Doctor-Patient Relationship, 82 Va. L. Rev. 1641 (1996).
Disclosure of Incentives. Addressing the issue left
in Pegram v. Herdrich, the 3rd Circuit held that ERISA does not require
disclosure of physician incentives unless the patient asks for this
information, or unless the HMO knows the patient needed or wanted this
information and that it would have avoided harm to the patient.
v. Keystone Health Plan East, Inc., 333 F.3d 450,
Cir. 2003). It is noteworthy that the plaintiff in this case
suffered any physical injury, unlike the plaintiff in Pegram.
analysis, see Comment, 49 St. Louis U. L. J. 245 (2004).
For a thorough analysis of the problem of adverse selection generally in insurance law and public policy, see Peter Siegleman, Adverse Selection in Insurance Markets: An Exaggerated Threat, 113 Yale L. J. 1223 (2004). Regarding risk adjustment, see David Blumenthal, et al., The Who, What, and Why of Risk Adjustment: A Technology on the Cusp of Adoption, 30 J. Health Politics Pol'y & L. 453 (2005).
The following graph illustrates the problem of risk selection
created by the
highly skewed distribution of health care costs across the population.
shows, for instance, that 70% of people account for only 10% of health
expenditures, and that the top 10% of people account for 69% of
(The graph is taken from John V. Jacobi, Consumer-Directed Health Care
Chronically Ill, 38
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