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CNN Today

High Court Considers Conflict of Interest for HMO Doctor- Owners

Aired February 23, 2000 - 2:21 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: The U.S. Supreme Court today weighs into the raging debate over HMOs and patients' rights. At issue is whether doctors who share ownership in HMOs face a conflict in what's best for patients and what's best for the bottom line.

More from CNN's senior Washington correspondent Charles Bierbauer.

(BEGIN VIDEOTAPE)

CHARLES BIERBAUER, CNN SENIOR WASHINGTON CORRESPONDENT (voice- over): A physician's oath pledges to do no harm to patients. But then there's the bottom line, increasingly a factor in managed care.

GREG BLOCHE, GEORGETOWN LAW CENTER: What matters is whether financial incentives put so much pressure on physicians that physicians can no longer act primarily on behalf of patients.

BIERBAUER: That possible conflict of interest played out painfully for Cynthia Herdrich, who was covered by her husband's health care at the Carle Clinic in Bloomington, Illinois. Herdrich complained of abdominal pains. Her doctor ordered an ultrasound diagnosis to take place eight days later, according to clinic policy. Too late. Herdrich's appendix ruptured. She was rushed to emergency surgery, but at Carle's hospital, 50 miles away in Urbana. Herdrich sued and won a $35,000 malpractice verdict in state court.

DEAN ROSEN, HEALTH INSURANCE ASSOCIATION OF AMERICA: That case has already been settled. Now the case has kind of been twisted into this really very bizarre theory against incentives that are in place, against the way that health plans pay.

BIERBAUER: Carle Clinic and Dr. Lori Pegram are appealing a federal court ruling that the HMO's doctor-owners violated a responsibility to their patient-customers because physician bonuses were tied to lower costs.

BLOCHE: The docs are gatekeepers with respect to access to more costly treatment and they're also clinical caretakers. That's what's new here.

BIERBAUER: The case comes to the Supreme Court based on a federal law, known as ERISA, which governs employee retirement benefits. The case puts much of the health care and insurance industry on the defensive.

ROSEN: If this case is upheld by the Supreme Court, I think consumers will see the return to the days of double-digit health-care inflation, of virtually no control over health-care dollars and higher premiums.

BIERBAUER (on camera): Insurers fear a flood of lawsuits if Herdrich wins. Not all HMOs have the Carle Clinic's physician-owner structure, but the court's opinion could affect the lifeline between patients and their doctors and the bottom line for HMOs.

Charles Bierbauer, CNN, at the Supreme Court.

(END VIDEOTAPE)

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