Physician Incentives, Generic Medications, and Ethics

A recent Wall Street Journal shows how hard it is to get incentives right.

Blue Care Network, an HMO owned by BCBS of Michigan, paid primary care physicians $100 for every patient switched from two branded statins (Lipitor and Lescol) to generic Simvistatin. The rationale for the effort was to save money for the insurer (in drug costs) and the insurees (in reduced copayments). The rationale for the $100 payment to physicians was that (a) deciding whether the switch was OK for a particular patient, (b) explaining the recommendation, and (c) answering questions, (d) takes time, for which (e) they should be paid.

The rationale for rewarding the physicians is correct. High quality cost effective practice takes time. If physicians aren't paid for the effort their compensation/time drops. They are penalized for doing the right thing.

The rationale for helping BCBS achieve savings is also correct. BCBS of Michigan is a not for profit company with a 70 year history in the state. Physicians encouraging generics don't have to wonder if the savings go to hedge fund investors. They can be reasonably confident that savings benefit enrollees, not day traders.

Despite the good reasons in favor of the incentives, the system, which was time limited, was a mistake.

The AMA correctly notes that the incentives look too much like kickbacks to pass the smell test, especially if the patient is not aware of the payments. Unfortunately the AMA's otherwise educative discussion perpetuates our national muddle-headedness about the ethics of considering costs:

“Physicians should prescribe drugs, devices, and other treatments based solely upon medical considerations and patient need and reasonable expectations of the effectiveness of the drug, device or other treatment for the particular patient.” (emphasis added)

An ethical health care system should ask its physicians to care about costs. Societies need physicians to consider the denominator(insured populations) as well as the numerator (individual patients). Patients aren't harmed by choosing the branded product over a qualified generic, but society is.

The US is a test case for what happens when we ignore communitarian ethics - uneven care, 47 million uninsured, and runaway costs. As I argued ten years ago in the BMJ ("Fairness as a Problem of Love and the Heart: A Clinician's Perspective on Priority Setting"), we can only ask physicians to take a communitarian perspective in organizational settings in which physicians and their patients can be confident that savings advance the health of the involved population.

Michigan BCBS is such a setting. The aim of the incentive program was correct, but the incentive was structured wrongly. Less direct incentives, like increasing reimbursement for office visits to physicians who practice high quality, cost-effective medicine, is the way to go.