While Congress has been feuding for several years over how to protect those enrolled in managed care plans, a case now before the U.S. Supreme Court could have more impact on managed care and the public's health than legislation being considered by Congress. The case (Pegram vs. Herdrich) is the first case which challenges a fundamental underpinning of managed care since it addresses the question of whether ERISA plans which link payment of providers to their success in holding down costs, violates plans' fiduciary responsibility to act primarily for the benefit of their subscribers. The case challenges whether the 124 million people covered under ERISA regulated health plans should continue being prevented from suing their plans and collecting compensatory and punitive damages. In 1998, a federal appeals court ruled that the plaintiff (Herdrich) can sue her health plan on the basis that the dual role of physicians in plans whose compensation arrangements may affect treatment decisions can result in a breach of fiduciary duty, and that the mere existence of such physician compensation arrangements are actionable under ERISA. This decision was appealed to the Supreme Court. If the lower court's decision is upheld, it would appear that the incentives which are at the core of an HMO structure and a principal organizational basis of managed care plans would be challenged. This paper will discuss the public policy implications of the Supreme Court's decision which will be rendered during the Summer of 2000.
Learning Objectives: At the conclusion of the session the participant (learner) in this session will be able to: 1. Describe the underpinnings of managed care which are at question in the U.S. Supreme Court case, Pegram vs. Herdrich. 2. Indicate two restrictions imposed on subscribers of ERISA regulated health plans which are being questioned in this case. 3. Explain the concept of the fiduciary responsibility in regard to ERISA regulated health plans. 4. Discuss the impact on public policy in regard to managed care as a result of the Supreme Court's decision
Keywords: Managed Care, Public Policy
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: None
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.