The Covert Rationing Blog

Why Gag Clauses are Obsolete

June 20th, 2007 by DrRich

After the collapse of the Clintons‘ plan to federalize healthcare in 1994, the Gekkonian HMOs experienced explosive growth. For the remainder of the 1990s, American doctors had little choice, if they hoped to retain access to American patients, but to sign contracts with one or more of these HMOs. The large majority of these contracts contained clauses that subsequently came to be called “Gag Clauses.” Here is a typical Gag Clause:

“The physician agrees not to take any action or make any communication with patients or patients’ families, potential patients or potential patients’ families, employers, unions, the media or the public that would tend to undermine, disparage, or otherwise criticize (this HMO) or (this HMO’s) health care coverage. The physician further agrees to keep all proprietary information such as payment rates, reimbursement procedures, utilization-review procedures, etc., strictly confidential.”

In plain and straightforward language, a Gag Clause prohibits the doctor from disclosing certain types of information to his or her patients. The forbidden information is likely to be material to the patient’s ability to accurately assess the doctor’s medical advice, and therefore the lack of that information may impact on the patient’s health. A Gag Clause renders it a violation for a physician to tell his patient anything that might cast the HMO in a negative light, such as “This HMO, unlike the health plan up the street, won’t cover a certain treatment that might benefit you.” Or, “You really ought to have a CT scan, but the HMO pays me more if I don’t offer it to you.”

A Gag Clause clearly and egregiously negates the historically sacred physician-patient compact. Yet, physicians, completely without choice, signed the new contracts by the tens of thousands with nary a peep of complaint. The Gekkonians made a brazen assertion to doctors. They said, “You answer to me, and me alone. You’re all mine.” Doctors, by their legally-affixed signatures, acknowledged that assertion.

From a purely practical standpoint, Gag Clauses are a threat to patients.

But from a more philosophical standpoint, what the Gag Clause represents – by the fact that HMOs used them with impunity and physicians signed them with little more than a whimper – is a formal death certificate for the physician-patient relationship. It officially and legally certifies that the doctor’s first loyalty is to the integrity and reputation of the HMO, which supersedes any loyalty or duty that might exist toward the patient.

Gag Clauses attracted a fair amount of criticism in the late 1990s, but essentially only from the standpoint of it’s not being nice to “gag” physicians from telling their patients what they need to know. Little has been said about the implications of HMOs having had the audacity to include Gag Clauses in physician contracts in the first place, or of physicians quietly and timidly signing them by the tens of thousands.

In response to the voiced concerns over Gag Clauses, the General Accounting Office more recently conducted a study to assess their continued prevalence in HMO contracts. The report concluded that Gag Clauses are no longer a problem, and for the most part they don’t even exist any more.

The reason they don’t exist anymore is that the HMOs, feeling the heat, have converted them to “business clauses.” Generically, business clauses require the signer (usually an employee) to agree not to disparage the business, not to encourage clients to use some other business instead, and not to break confidentiality with the business. In other words, business clauses are merely gag clauses somewhat reworded, and then relabeled.

In this manner HMOs have asserted that, since they are a business, they have a right to the same protections as any other business. And if assertion of those business rights require the business’ contractors (i.e., doctors) to forego previous arrangements and understandings (i.e., the doctor-patient relationship), well, that’s business. The GAO, apparently, was swayed by this argument.

Various proposed Patients Bills of Rights require striking Gag Clauses from HMO-physician contracts. Presumably (now that they are just business clauses), that has already been accomplished. But even if all such clauses – whatever they are called – are struck from every contract this very day, the damage has been done.

For, when HMOs asked physicians for a declaration of loyalty that superseded all other loyalties, physicians gave it. Removing Gag Clauses from contracts at this point doesn’t change the fact that, when asked, physicians signed.

Once a dog learns to heel, you can get rid of the leash – the dog still heels just fine. The HMOs have more than made their point.

Posted in Gekkonian Rationing

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