New York Times

WHICH side are you on?” goes an old union song. It’s a question patients might be asking their doctors in the wake of the Supreme Court’s decision, shielding health maintenance organizations from some lawsuits by patients in federal court.

The case, Pegram v. Herdrich, concerned a woman whose appendix burst after she was made to wait eight days to take a diagnostic test for abdominal pain. She contended that her H.M.O., which, like many health plans, gave doctors financial incentives to hold down costs, improperly restricted patients’ access to medical procedures.

The court’s decision for the health plan made blunt comments about the role of H.M.O.’s in rationing care. Such rationing, the court said, is intrinsic to the design and mission of H.M.O.’s, blessed by Congress since 1973. Writing for a unanimous court, Justice David H. Souter said, “No H.M.O. organization could survive without some incentive connecting physician reward with treatment rationing.”

Whatever the form of an H.M.O., “there must be rationing and inducement to ration” care, Justice Souter declared. Such inducements, he said, especially “the profit incentive to ration care,” go “to the very point of any H.M.O. scheme.” If plaintiffs could challenge such incentives in federal court, he said, it would open the courts to “wholesale attacks” on H.M.O.’s.

M. Gregg Bloche, a professor at Georgetown University Law Center, said it was “stunning to see the Supreme Court say openly that H.M.O.’s ration care.”

In 1993 and 1994, when President Clinton was trying to overhaul the nation’s health care system, and in the next three years, when Congressional Republicans tried to encourage the use of H.M.O.’s in Medicare, “they never talked openly about denying beneficial care in order to restrain costs,” Mr. Bloche said.

Among H.M.O.’s the very word “rationing” is radioactive, because it suggests that some patients are denied treatments they need.

Karen M. Ignagni, president of the American Association of Health Plans, the industry’s main trade association, said: “H.M.O.’s make decisions weighing costs against benefits. Justice Souter called that rationing, but there are other ways to talk about it. We try to provide broad access to care of the highest quality at the lowest cost. In doing so, a health plan makes decisions about the appropriateness of care.”

H.M.O.’s say they weigh costs and benefits more systematically than doctors or hospitals acting alone. However, critics, including many doctors, say that H.M.O.’s, in effect, practice medicine, by putting pressure on doctors to keep the cost of care within limits set by a distant corporation, without regard to the needs of a particular patient.

Some people — ethicists, mainly — have suggested that doctors should talk more openly about cost as a factor in medical decisions.

“Bedside rationing must be done with intelligence and fairness,” said Dr. Steven D. Pearson, director of the Center for Ethics in Managed Care at Harvard Medical School. “Rationing of medical services by individual doctors is both necessary and good. People want unlimited medical care without unlimited spending. If you are going to limit health care spending, you must consciously allocate resources and say no to some beneficial services while trying to use the money available to produce the greatest good.”

Moreover, Dr. Pearson said, “We can be more up front in talking to patients about rationing, just as we learned that we can talk to them about the reality of cancer and imminent death.”

For his part, Justice Souter simply treated rationing as a fact of life, and said Congress should distinguish between good and bad forms of it.

“Any legal principle purporting to draw a line between good and bad H.M.O.’s would embody, in effect, a judgment about socially acceptable medical risk,” Justice Souter said. He invited Congress to make this judgment, saying it was better equipped than the judiciary to collect and evaluate the data bearing on such complex issues.

Did Justice Souter use the word “rationing” in a purposeful way, to educate the public and foster a more candid debate? Or was he just unfamiliar with the word’s negative connotations?

Professor Bloche said: “I think Justice Souter knew exactly what he was doing. The court is trying to shape the debate and make it more honest.” In effect, Mr. Bloche said, the court was saying to the American people: “Wake up. Health plans are holding down costs by denying beneficial care. The essence of the H.M.O. concept is rationing.”

On the other hand, Alan D. Bloom, senior vice president and general counsel of Maxicare Health Plans, a managed care company in Los Angeles, said: “The court did not understand the use of the word ‘ration.’ It’s an unfortunate word, which implies that needed care is being cut back. I’d call it changing the incentives, or changing the site of care, as medically appropriate.”

H.M.O.’s claimed the court’s decision as a victory, but it could prove costly. Justice Souter, while shutting the door to federal court to some patients, may have opened the doors of state courts.

Prof. Sara Rosenbaum of George Washington University, whose casebook on health law was cited in last week’s ruling, said: “Justice Souter cleared the way for states to create new remedies. The H.M.O. has a life as a medical provider. If it causes injury by itself or through its doctors, it may be liable to the patient for negligence under state law.”

FOR years, lower courts rejected malpractice and negligence claims against H.M.O.’s providing care through employer-sponsored health plans. But in rulings over the last 30 months, judges across the country have allowed patients to pursue such claims in state courts. Justice Souter’s opinion may encourage that trend, for he appeared to endorse the view of lower federal courts, which have held that patients may sue H.M.O.’s in state court for negligence.

However the issue plays out on the state level, last week’s decision increases the pressure on Congress to clarify the rights of patients. Jamie Court, a consumer advocate at the Foundation for Taxpayer and Consumer Rights in Santa Monica, Calif., said, “The decision is a challenge to Congress to settle the question whether patients should be able to sue H.M.O.’s in state court, just as they can sue companies in other industries that mistreat or injure consumers.”